Submission in response to the AER review of minimum amount owing for disconnection, r. 116 of the National Energy Retail Rules

This is PIAC’s second letter to the Australian Energy Regulator (AER) in response to the AER’s review of the minimum amount owing for disconnection. The current approved amount is $300 (GST inclusive) for both electricity and gas. PIAC is of the view that the amount be increased to $520. PIAC agrees with the AER that, in principle, customers should not be disconnected from an essential service for owing a relatively small amount or for being one quarterly bill behind.

At an AER forum held on 22 September 2016, stakeholders raised a number of concerns about increasing the minimum disconnection amount in response to the first round of submissions. These include:

• A higher minimum disconnection amount encourages bad consumer behaviour
• A higher minimum disconnection amount decreases the incentive for consumers to engage with their retailer on payment difficulty, leading to debt accumulation, and,
• The minimum disconnection amount is the last consumer protection under the National Energy Consumer Framework (NECF) and it need not increase due to the points above.

PIAC submits that a customer who cannot afford to pay a bill needs support, not stigma suggesting their inability to pay is insincere. PIAC believes the minimum disconnection amount owing needs to reflect continuing price rises in consumer bills and that stronger retailer engagement practices be put in place to assist struggling households. Consumers facing disconnection will benefit from a higher disconnection amount as it will avoid the associated stress and costs that come with the disconnection and reconnection of energy supply.