Fears of Robodebt 2.0 as state-owned water company allowed to chase old debts linked to an ‘unprecedented’ billing bungle

Thousands of Victorians have been caught up in a fight over water bills that were delayed by up to a year due to a bungled IT upgrade.

The Allan government and Essential Services Commission this week approved a plan for Greater Western Water to chase customers. Picture: Luis Enrique Ascui

A state-owned water company is pursuing struggling families for bills worth thousands of dollars that were delayed by up to a year – but Victoria’s essential services watchdog says customers may not have to pay.

The Allan government and Essential Services Commission this week approved a plan for Greater Western Water to continue to chase tens of thousands of customers over old bills that were delayed due to a bungled $100m IT upgrade – which is still not fixed.

The move has been dubbed by advocates as an unprecedented abuse of customers’ rights, which could trigger a mass legal action.

Thousands of customers are being chased over old water bills.

And in an explosive development on Thursday, the state’s water ombudsman published advice to customers saying they may not be obliged to pay bills that were delivered more than four months late, due to legal protections in contracts and direct debit agreements.

It led one legal source to compare the saga to the Robodebt scandal, which saw welfare recipients cough up debts they did not owe, due to a faulty automated IT system.

The GWW bill bungle began early last year when the company tried to upgrade a billing system, which cost about $100 million to develop and is likely to cost taxpayers hundreds of millions of dollars to fix.

Some households have been sent incorrect charges totalling several thousands of dollars, while bills have been sent to wrong customers or addresses, alarming family violence groups, and have even halted property settlements.

The bill bungle began early last year when GWW tried to upgrade a billing system.

The Herald Sun can reveal that in one case, a resident was charged $4500 for their entire apartment block’s water use before a complaint reduced their bill to $420, while a battling family had bills reduced by $1800 after learning their water use was wrongly estimated.

The ESC decision to allow backfilling for last year’s water charges is contrary to customer legal protections, which say essential services companies must forgive undercharging beyond four months – called a “back billing protection”.

Those protections were partly why energy giant Origin recently copped a $17.6m fine for a range of customer breaches that included pursuing 411 customers over delayed bills.

The ESC says its $130m remediation scheme for Greater Western Water allows it to sidestep protections as long as it applies credits of $80-$240 to customers, writes off $75m in charges, and offers payment plans.

Consumer advocates have warned about “bill shock” from the decision, following a flood of complaints sent to community legal centres and the state’ Energy and Water Ombudsman, Catherine Wolthuizen over eye-watering charges.

On Thursday, the Ombudsman’s office posted advice to customers about billing rights, pointing to protections embedded in direct debit agreements and customer charters that also have four-month back billing protections, and which the ESC can’t override.

“This means Greater Western Water may need to reduce or waive your bills,” it says.

Consumer Action Law Centre chief executive, Stephanie Tonkin, said the scale of the GWW fiasco was “unprecedented’’ in the water sector and decisions to allow retrospective debt collection meant “customers will have to pay for a big business stuff-up”.

Ms Tonkin said this would disproportionately affect vulnerable customers and was “especially concerning in the current economic climate”.

“Delayed billing can result in unexpectedly large bills, which may be difficult to manage for households already under financial stress and with fixed incomes.’’

Western suburbs community legal centre, West Justice, has also warned of dire impacts if people prioritise paying a delayed water bill for fear of restrictions and miss rent or mortgage payments, which could lead to homelessness.

About 20 per cent – or 130,000 customers in Melbourne’s west and north – have been swept up in the billing debacle.

In a sign the crisis is far from over, GWW has been allowed to keep issuing back bills beyond the four-month cut-off until June, next year.

Essential Services Commission chair Gerard Brody defended the regulator’s green light for GWW to recover old costs, saying there would be $75m of “unbilled” 2024 charges cleared from customer accounts and measures in place to tackle bill shock, such as hardship grants and flexible payment plans.

When the decision was released Mr Brody said customers had been frustrated for 18 months and this “compensates those customers and holds Greater Western Water accountable”.

The Herald Sun put a series of questions to the Allan Government about why customers were being forced to pay for a state-owned entity’s mistakes.

In response, a spokesperson pointed to $55m in billing credits set to be applied and the $75m in waived charges.

It said an independent review had set a return to service plan for GWW and normal billing cycles were due to begin again in June, next year.

GWW acting managing director Craig Dixon said the corporation acknowledged the billing issues had caused significant frustration for its customers and “we’re genuinely sorry for the impact this has had”.

“The enforceable undertaking we’ve offered to the ESC is about taking responsibility, ensuring we deliver the experience our customers deserve and expect from us and offers some relief to our most impacted customers,” he said.

“Almost four in five residential customer accounts are up to date, and we’re working hard to deliver on the commitments in our return-to-service plan to get the remaining accounts and

billing system features back on track.’’

Greater Western Water was formed when Western Water and City West Water merged in 2021.

The invoice mix-up occurred after the billing systems from the previous two entities were combined, with problems emerging early in 2024.

Consumers can contact the Energy and Water Ombudsman on 1800 500 509 or www.ewov.com.au