Energy bills: Households crippled by utility debts as high as $18k

RISING power bills are leaving Victorian families with debts of up to $18,000 for unpaid gas and electricity.

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RISING power bills are leaving Victorian families with debts of up to $18,000 for unpaid gas and electricity.

A Sunday Herald Sun investigation into Victoria’s three largest energy retailers, AGL, Origin and Energy Australia reported the shutting down of Hazelwood power station had driven prices up.

And up to one in 10 Victorians remain on the more expensive “standing offers” rather than cheaper market contracts.

Energy and Water Ombudsman of Victoria Cynthia Gebert said she was shocked at the dangerous debt levels her office had observed, with credit issues now making up a quarter of cases her office handled.

“What we are seeing are some real challenges for customers who have got themselves into significant arrears,” she said.

“It is not unusual for customers to present to us with $5000 worth of outstanding arrears.

“There are customers finding themselves in really dire situations.”

Households are often caught out by being cut out of generous discounts for paying on time.

In one case EWOV was contacted by a woman with $18,172 in electricity debts and faced disconnection despite needing power for life support equipment.

Retailers are not allowed to charge late payment penalties to customers in Victoria but struggling households are often caught out by being cut out of generous discounts for paying on time. This then adds to their bills as their debts rack up.

The total energy debt of customers in hardship programs rose from $58 million to $63 million from July to December 2016.

Ms Gebert said she was concerned about the financial positions customers were finding themselves in before they contacted the ombudsman.

“The thing that’s more worrying is how dire some people’s circumstances are,” she said. “The businesses are dealing with the short-term payment difficulties but we’re noting some really significant financial hardship.

“Quite often people will experience bill shocks … When you have those credit-related issues everything all falls down as well.”

The electricity market price for a standard Victorian household has risen from $800 in 2012 to $1107 in 2017, according to the State Government’s independent review into electricity and gas markets.

AGL, Origin Energy and Energy Australia said electricity costs were going up because of rises in wholesale prices.

Current contracts, also known as standing offers where retailers set their own prices, rose over the same period from $1300 to $1600.

Since 2000 retail electricity and gas costs have increased by 200 per cent across the state.

Financial Counselling Australia policy adviser Anna Dooland said if customers were unable to pay retailers often sold their debts on to collectors.

“We often come across families who can’t afford to pay their usage. It could be as simple as only having one person at work because someone falls pregnant,” she said.

“Anyone who is sitting in front of me is sitting is usually sitting on at least six months of energy bills.

“People who are not paying their bills are under a lot of stress and collectors sometimes threaten repossession or other stuff they’re not really allowed to do.

“There are also a bunch of really good debt collectors who we have good relationships with, it’s when they get sold to small debt collectors that don’t have the relationships with community services that we see issues.”

AGL, Origin Energy and Energy Australia said that electricity costs were going up because of rises in wholesale prices.

The companies also said they were trying to keep costs down for customers.