Government Energy Consumer Hardship Policy Statement
In March 2005 an expert Committee of Inquiry was established to advise the Bracks Government on key principles, policies and programs designed to mitigate energy consumer hardship.
Through implementation of the key recommendations, the Government seeks to address energy consumer hardship through a series of initiatives. We aim to ensure that no Victorian who is unable to pay their energy bill due to financial hardship is disconnected from supply. We want to enhance the framework of collaboration and responsibility by energy retailers and the Government to tackle hardship issues.
Energy Retailer Actions
Whilst Victorian energy retailers operate in one of the most competitive markets in the world, the delivery of energy is an essential service. As such, it should be governed by public policy considerations designed to protect those consumers facing genuine financial difficulties. As such, each energy retailer must:
- have a clearly articulated hardship policy that reflects Best Practice principles; and
- acknowledge and participate in a collaborative hardship mitigation framework with Government, consumers and the community welfare sector.
Retailer hardship policies will need to be approved by the Essential Services Commission.
The Government will ensure, through legislation, that the ESC has adequate powers to determine appropriate principles and practices for the development of the best-practice hardship policies. The Government will also ensure that the ESC is sufficiently empowered to monitor and audit retailer compliance with best practice hardship policies and oblige them to publicly report on retailer performance thereby enhancing the transparency and effectiveness of such policies.
The Government has also negotiated a hardship package with the major energy retailers, under which they will spend $9.6 million over the next two years to address the issues of those consumers who are finding it difficult to pay their energy bills due to financial hardship. This money will be in addition to existing expenditure by those retailers on hardship programs for their customer base.
The Government recognises that retailers have legitimate commercial objectives, and are entitled to expect that energy bills will be paid by consumers. The envisaged hardship framework is not intended to enable consumers who are not in genuine and severe hardship to avoid payment of legitimate energy bills, and will not protect those consumers avoiding their responsibility.
Whilst avenues of assistance do exist through retailer hardship programs, Government schemes and community welfare organisations, consumers who experience hardship should be encouraged and supported to be pro-active in accessing hardship mitigation programs. Consumers experiencing payment difficulties should notify their energy retailer as soon as practicable. This will minimise the accumulation of their energy debt, and ensure that the resources required to operate hardship mitigation programs by retailers, Government and community welfare organisations are best utilised.
The Government also strongly encourages all consumers, upon entering retailer hardship programs to provide all reasonable information on their circumstances, and collaborate as fully as possible with agreed measures to improve their bill payment outcomes. In most situations, this will involve a commitment to meet bill payment arrangements that have been tailored to meet their particular circumstances.
A collaborative and pro-active approach to dealing with consumers in hardship will provide consumers with a complete response to their hardship related needs. The Government recognises that a degree of collaboration currently exists amongst all stakeholders, however, we need to continue enhancing assistance programs provided to consumers so they have affordable access for energy.
The Government believes that the management of cases of energy consumer hardship is primarily the responsibility of the energy retailer. The retailer is best placed to coordinate the principal measures, as it is their customers who are experiencing bill payment difficulties. However the new arrangements will provide energy retailers with a stronger capability to assist consumers through clear and agreed actions in dealing with hardship issues. In addition to actions that may be undertaken by retailers themselves, further actions may be taken by financial counselling agencies, Government agencies or extended social services.
The Government is supporting the facilitation of collaborative relationships through the provision of enhancements to Government assistance programs such as utility relief grants, energy efficiency programs and financial counselling services.
The response of the Bracks Government to the Hardship Inquiry represents the most comprehensive and far-reaching consumer hardship package since the deregulation and privatisation of the energy sector in Victoria during the 1990s.
While the Government has taken a number of steps to encourage retail competition so that consumers can benefit from lower prices and better service, we are committed to assisting those consumers who fall into financial hardship and find it hard to pay their energy bills.
The Government believes that this response to the Hardship Inquiry will serve as a model for other jurisdictions for dealing with energy consumer hardship issues as we move towards national regulation of the energy sector in Australia.