COVID-19 sparks need to tackle energy affordability
COVID-19 has amplified an existing and worrying issue for many Australians – energy affordability.
Now the stakes are even higher, with consumers concerned about increased power bills resulting from unemployment and self-isolation.
But from crisis comes great opportunity, and this week we have seen energy networks and retailers working together to provide energy affordability solutions for their customers.
The recent announcement of a COVID-19 relief package for consumers and small businesses by Australian energy networks is unprecedented and paves the way for electricity grid owners to become involved in affordability programs.
All energy retailers offer these programs; strengthened over recent weeks by many retailers in response to COVID-19.
Last week, the Australian Energy Regulator (AER) released a comprehensive Statement of Expectations which called on all energy businesses to put customers first during the pandemic.
Principles include protection from disconnection and referral to debt collection agencies until 31 July, access to affordability programs and payment plans, and waiving disconnection, reconnection and contract break fees for small businesses that have ceased operation.
Energy retailers and network businesses, having already recognised the challenge, have proactively responded.
Moving towards long-term energy affordability
In the decade before COVID-19 upended our world, electricity prices increased significantly. As the Energy and Water Ombudsman NSW (EWON), I’ve witnessed first-hand the impact of electricity price increases on many New South Wales households and small businesses.
High bills are consistently the main reason customers seek assistance from EWON. Figures just released by the AER show 77,669 New South Wales customers were repaying energy debt in the October to December 2019 quarter, an increase of 6,278 on the previous quarter.
Average household energy debt was $809 at the end of 2019, compared with $491 in 2013/2014. This is why these initiatives, together with Federal and State Government energy stimulus support, are so vital.
Clare Savage, AER Chair, in her call for energy companies to “put customers first”, also reminded energy retailers that they “have a deal, a social contract, with the community in which they operate.”
This approach presents a significant opportunity to change how we think about consumer protection.
Time to ride the fourth wave
Fiona Guthrie AM, Chief Executive Officer of Financial Counselling Australia, has been leading this approach for some time. In 2018, Fiona spoke at the National Consumer Congress about a “fourth wave” of consumer policy development.
A wave where business, regulators and governments are people-centred; focused on service and product delivery that does no harm, looking to implement business models which are underpinned by values including empathy, kindness and responsibility-based regulation; and all of which would be underpinned by a strong consumer movement.
COVID-19 could be the circuit breaker and the stimulus for making a long-term sustainable shift.
My office’s frontline experience means we are well-prepared to respond to increased calls from energy consumers arising from COVID-19. In fact, over the last few weeks, our planning has focused on our work becoming even more critical than it has previously been, ensuring we can continue to independently achieve ‘fair and reasonable’ outcomes for consumers and their energy providers.
In crisis times, we are called upon to support not only individual customers, but the community more broadly – this is our social responsibility.
An increased call on EWON for assistance arising from COVID-19 impacts should now see us linking customers and communities to effective and available energy provider affordability initiatives rather than working with anxious customers about high bills, disconnection and debt collection. We welcome this opportunity.
Breaking down the barriers
An ongoing challenge we all have is engagement with customers who are unable to reach out and ask for assistance; perhaps due to fear of disconnection and/or lack of knowledge that energy affordability initiatives are available.
Self-respect and dignity also create a strong invisible barrier between consumers and government and energy provider assistance programs – it is so difficult to say ‘I can’t pay my energy bill’.
This barrier needs to be broken down, particularly as energy affordability affects many consumers who have not experienced financial vulnerability in the past.
Making these new and additional energy affordability initiatives broadly available and avoiding stigmatised words such as hardship could be the first steps in breaking through engagement barriers.
It is difficult now to plan beyond today’s current challenges when we are not sure what tomorrow will bring. But history repeats itself and we all know every crisis comes to an end.
The energy affordability challenge has existed far longer than COVID-19 – but COVID-19 initiatives could be the blueprint for addressing energy affordability in the long term. This opportunity is too great to overlook. We all need to be open to riding the fourth wave.
I strongly encourage energy customers who need assistance to reach out to their energy provider in the coming weeks; knowing you can confidently ask for the assistance you need to make your energy bills affordable, now and in the future.
Visit our Coronavirus support page for up-to-date information on COVID-19 energy affordability initiatives.
This article was originally published in Utility Magazine.