Date October 12, 2014 – 4:53PM Ester Han SMH
“Very worrying numbers of people are making terrible sacrifices to pay their bills”: Oliver Derum. Photo: Kirk Gilmour
One in three Australian households have missed an electricity bill payment in the past year and one in 10 have skipped three or more, largely because they could not afford to pay, new research shows.
As soaring energy prices squeeze family budgets, consultancy firm Ernst and Young found among those who missed a bill, 60 per cent could not afford to pay, 32 per cent had forgotten to pay, and 7 per cent had disputed it.
However, the alarming figures released on Monday are part of a report pitched at energy retailers seeking to expand their customer base and boost on-time payments, as families increasingly struggle with higher bills.
It said customers were more likely to pay on time if they were offered discounts, text reminders, the ability to select billing dates, and mobile phone apps.
But Oliver Derum, senior policy officer of energy and water at the Public Interest Advocacy Centre, said energy retailers should first focus on rebuilding customer trust by pricing their services fairly and correctly.
“Very worrying numbers of people are making terrible sacrifices to pay their bills,” Mr Derum said.
“They buy food that’s not healthy, they have two meals a day, they retreat into social isolation and don’t invite people over because they can’t afford to heat the living room,” he said.
For an essential service, “customer relations was severely deteriorating”, he said. “People feel like they don’t have a choice about consuming electricity and yet they’re buying it from these companies who don’t understand the situation that they’re in.”
Complaints against providers to the NSW Energy and Water Ombudsman hit a record high in the past financial year, in line with a series of big price hikes related to overspending on poles and wires in the past half decade.
Customer service-related complaints surged 21 per cent on the previous year, with the bulk relating to poor treatment and a company’s failure to respond.
Mr Derum also said customers were frustrated that retailers could raise prices during contracts at will. Last month, the Australian Energy Market Commission rejected a proposal to stop retailers from varying prices during contracts.
The Ernst and Young report also found 55 per cent of customers had switched energy providers or considered it in the past year. Among those who considered changing, a quarter was prompted by bill shock.
But 20 per cent of potential switchers decided to stick with their provider because the process of finding another was too daunting, up from 15 per cent last year.
NSW Energy and Water Ombudsman Clare Petre said, while the deregulation of energy pricing in July meant customers could start saving hundreds of dollars a year, the market was “too confusing and intimidating” for most to participate in.
“That’s a real issue. The regulators and the government need to address that,” she said.
The Ernst and Young report also found 90 per cent of Australians have, or would consider, including solar in their home energy mix. Among those using solar, 70 per cent said they added it to save money.
“Energy affordability is a big issue for many people so they are looking at alternatives including more self-sufficiency,” Ernst and Young managing partner Stuart Hartley said.
“Given the advances being made in solar and battery technology, uptake could increase further, impacting demand and adding to the pressure on traditional retailers”.