Energy Minister Angus Taylor to crack down on sneaky late fees by energy companies

Households could save up to $1000 a year on their energy bills under a proposal by the Morrison government to crack down on late fees associated with conditional discount plans.

Exclusive: Households could save up to $1000 a year on their energy bills under a proposal by the Morrison government to crack down on sneaky late fees associated with conditional discount plans.

Energy Minister Angus Taylor will on Monday take the first step on cracking down on the fees by submitting a rule change proposal to the Australian Energy Market Commission.

The proposal, to benefit households in New South Wales, South Australia, Queensland and the Australian Capital Territory will limit conditional discounts for both gas and electricity retail offers — and the associated fees — to “reasonable costs”.

If enacted the change could see affected households in NSW save up to $1000 a year, South Australian households up to $600 a year and up to $500 a year in Queensland.

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Queenslanders Aline and Marco Pratts, with their daughter Summer, are fed up with high electricity prices. Picture: Nigel Hallett

The measures could be enacted within six weeks of commencing the rule change process if the AEMC views it as an expedited process.

Under conditional discount packages, when a customer fails to meet conditions such as paying on time, they are charged late fees and are left with a significantly higher overall bill.

The packages are heavily marketed to new customers, sometimes offering up to 45 per cent off a customer’s bill if strict conditions are met.

“This rule change will not only reduce confusion for families and small businesses but also enable them to make more empowered and informed decisions about their energy plan,” Energy Minister Angus Taylor told News Corp.

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Energy Minister Angus Taylor says the Morrison government wants to reduce energy cost pressures for Australians. Source: AAP

Under Mr Taylor’s plan, retailers would also be prevented from hitting customers twice with a late payment fee and withdrawing the pay-on-time discount.

Australian Council of Social Service CEO Cassandra Goldie welcomed the crackdown on conditional discounts.

But she said the federal government could do more to bring down power prices.

“The federal government could be doing more to relieve energy stress for low-income households by investing in home energy efficiency measures, increase Newstart and putting in place a plan to transition to clean energy,” she said.

The Australian Power Project’s Nathan Vass said while measures to help ease energy costs for families such as the rule change were positive, they were just a distraction from the absence of a clear national policy.

“Until Canberra gets serious and brings in a policy that guarantees affordable, reliable and cleaner energy, other initiatives are little more than a side show,” Mr Vass said.

Australian households are under increasing pressure due to rising power costs.

A spokesman for the Australian Energy Council, who represent energy retailers, said customers needed to be aware of the conditions of their energy deal.

“Often the offers with conditional discounts are the cheapest, but it is important for customers to have a look at the offer and make sure it’s right for their circumstances,” the spokesman said.

The nation’s largest energy provider Origin said 95 per cent of its customers paid on time, thereby benefiting from their discount.

“We have generous grace periods in place for those customers who are unable to pay their accounts on time,” a spokesman said.

The proposed rule change comes as dysfunction reigns over the government’s “big stick” energy divestiture legislation and if it will be put to parliament before an election.

Sources told News Corp they believed the announcement by Mr Taylor and the AEMC submission was simply a distraction tactic.

Last week the government shelved bringing legislation to parliament enabling it to forcibly divest energy companies engaged in anti-competitive behaviour for fear of losing another vote on the floor of the House of Representatives. Labor, the Greens and the crossbench want to amend the bill to prevent the underwriting of new coal fired power.

And the government’s own frontbench are divided about when it will be brought to parliament with Finance Minister Mathias Cormann last week saying it would be taken to the election but Sports Minister Bridget McKenzie saying it would be put to parliament before it rises.

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HOW PRICES COULD BE IMPACTED

For an average household, customers who may only miss one payment due date can, per year, pay anywhere up to:

$1000 more in New South Wales

$600 more in South Australia

$500 more in Queensland

* The figures are derived from AER data and the Government’s EnergyMadeEasy website.

The cost to a customer in each state is based on:

— the customer has failed to meet the pay on time discount for every billing period over the course of an entire year and any other conditions on the offer

— the customer uses 5000 kwhr over the course of a year

— the customer is on one of the deepest discounted offers