Victorian energy retailers failing struggling customers – disconnection on the rise

The Energy and Water Ombudsman Victoria (EWOV) Annual Report for 2013/14 suggests energy retailers are failing to offer sufficient assistance to customers struggling with high bills. During the year, EWOV received an average of 37 calls a day from Victorians concerned about imminent or actual disconnection.

EWOV reported its highest level of cases level in one year, with 84,758 cases taken to the Ombudsman. Out of that total, 18,065 calls were about credit issues such as disconnection, debt collection or payment difficulties—that’s a 48 per cent increase on the previous year and a 200 per cent increase in just four years.

‘Electricity is an essential service—we need it to cook, clean, heat and cool. So new Ombudsman figures showing calls about disconnection are on the rise is a real concern,’ said Denise Boyd, Director of Policy and Campaigns at Consumer Action Law Centre. ‘Increasing disconnections are a sad reflection of energy retailers’ poor quality assistance programs. If retailers got it right in the early stages, it should rarely need to end up in disconnection.’

Ms Boyd said the most damning statistic for energy retailers was that 78 per cent of people who called the ombudsman about credit issues had unsuccessfully tried to resolve the issue with their retailer on at least two occasions. And almost a third of that group had tried to resolve the issue five or more times.

‘Retailers say they use disconnection as a last resort, only after all other avenues have been exhausted. But these numbers suggest retailers are failing at the first hurdle, being unable to direct customers to assistance or offer them an affordable payment plan’, said Ms Boyd.

‘Energy retailers are in the privileged position of being able to sell an essential service, but with that privilege comes a significant responsibility backed up by a legal requirement to help customers struggling to pay their bills. That so many customers have been unable to get adequate help from energy retailers and have had to escalate their matter to the Ombudsman shows retailers’ assistance programs are failing.

‘Identifying and assisting struggling customers isn’t easy, and customer service staff need to develop expertise to deal with vulnerable or marginalised clients.  That’s why we’ve been working with the Energy Retailers Association of Australia and some individual retailers to improve practices. But it’s clear retailers need to invest more in their support programs and they need to invest now,’ said Ms Boyd.

New figures released by the energy regulator, the Essential Services Commission, also find that many disconnections are in breach of consumer protections. ‘In the six months to 31 December 2013, the energy retailers reported 460 Victorians who were disconnected wrongfully’, said Ms Boyd.

‘In addition to wrongful disconnections, the ESC’s annual compliance report shows numerous systemic breaches of consumer protections relating to incorrect charging, failures with billing, marketing by sales agents and transfers without consent. Many of the breaches are caused by failures in IT, systems and processes.

‘It’s positive that this misconduct is publicly acknowledged, but it begs the question—why aren’t these companies penalised for breaching the law?’ said Ms Boyd.

Consumer Action has called for the Essential Services Commission to be provided with the resources and enforcement tools to keep the industry to account, including powers to issue fines and penalties.