ACCC blasts conditional energy discount ‘penalties’

ELECTRICITY retailers offering big discounts are aware many customers won’t score savings because they don’t meet conditions such as paying on time, internal documents reveal.

ELECTRICITY retailers offering big discounts are aware many customers won’t score savings because they don’t meet conditions such as paying on time.

Data obtained by the nation’s consumer watchdog during its landmark power price inquiry has raised major concerns about the impact of lost discounts on household budgets.

The Australian Competition and Consumer Commission’s report reveals residential customers don’t satisfy discount conditions 27 per cent of the time.

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The situation is worst for financially struggling families.

Conditional discounts are achieved only 56 per cent of the time for payment plan customers, and only 42 per cent of the time for hardship customers.

The ACCC is concerned about the financial impact of failing to satisfy discount conditions. Picture: AAP

“Customers who do not pay on time are, in effect, paying very large late payment penalties, often amounting to hundreds of dollars a year …” the report says.

“These findings are concerning, as hardship and payment plan consumers are more likely to be experiencing payment difficulties already and their exposure to penalties in the form of forgone discounts is adding further unnecessary burden.”

One retailer’s internal document indicated the industry was aware that many consumers will not obtain the benefit of the discount, stating it “is standard practice in the electricity industry to provide for a pay on time discount … It should be noted that many customers do not pay on time and hence do not receive the discount”.

The ACCC this week released a raft of recommendations including requiring any advertising of discounts to be unconditional, and referenced against a consistent, set default price.

It also suggested restricting conditional discounts “to be no more than the reasonable savings to the retailer from the condition not being met”.

ACCC chairman Rod Sims. Picture: AAP

Choice campaigns director Erin Turner said retailers had been hurting people with unfair and unreasonable late payment penalties disguised as discounts.

“Energy is an essential service, and people need to have access to fair contracts, and fair prices,” Ms Turner said.

The Australian Council of Social Service said skyrocketing power prices and a dysfunctional energy market had left millions of low-income households in energy poverty.

A survey conducted for the ACCC found more than a third (37 per cent) of sole parent households had missed a non-solar electricity payment due to financial difficulties.

Thirty per cent of households with a $50,000-$99,000 income and two or more dependants also missed a payment in the period from December, 2016 and March this year.

The survey also showed about one in seven respondents who were eligible for an energy concession were not receiving one.

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