Confusing discounts drive up unpaid power bill disconnections

CONSUMERS are being baffled by “meaningless” discounts, Victoria’s energy regulator says, and some risk being slugged as much as $500 a year for failing to meet conditions.

VICTORIA’S energy regulator has hit out at electricity retailers for continuing to baffle customers with “meaningless” discounts.

Essential Services Commission chairman Ron Ben-David’s criticism comes as new figures reveal a spike in disconnections due to unpaid bills.

There were 39,544 electricity and gas household disconnections over the nine months to March, up 22 per cent compared with the same period a year earlier.

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Dr Ben-David said some retailers were now advertising even bigger discounts that did not guarantee lower bills, despite concern about confusing marketing methods.

“It’s been more than a year since we first showed how confusing and indeed meaningless these discounts can be,” he said. “When a 40 per cent discount from one retailer can result in an annual bill that is about the same as a bill with no discount from another retailer, it’s clear the market has a problem.”

The watchdog is in the process of setting new standards for bills and marketing material to make it easier for customers to understand and compare deals.

New figures reveal a spike in disconnections due to unpaid bills.

The ESC’s latest market update has found in some cases, electricity use discounts of 20-47 per cent for new market offers resulted in a higher or similar annual bill to an undiscounted offer.

Big discounts linked to paying on time could have “a significant financial impact on customers facing payment difficulties”, it also notes.

Some risked being slugged as much as $500 a year more for failing to meet conditions.

Dr Ben-David said while there had been a rise in disconnections in the year to date, there were signs of earlier intervention to help those having trouble paying bills.

“More customers with large debts are being put on more realistic payment plans,” he said.

From July 1, the minimum debt before disconnection will increase to $300, up from $132.

Struggling customers will also be entitled to a wider range of help, such as flexible payment options, from January 1 next year.

The ESC is investigating whether companies are heeding estimated billing rules after reports of some customers receiving hugely inflated costs.

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@KarenCollierHS