Bill shock grows as energy giants fail ‘pub test’ on profits

There has been a surge in Victorians seeking help for rocketing energy costs, with data showing the number of people complaining about “bill shock” jumped 22 per cent in a year.

Meanwhile, energy expert Gavin Dufty said recent rising profits at Australia’s two biggest energy retailers did not pass “the pub test” during the cost-of-living crunch.

The Yallourn Power Station in Victoria’s Latrobe Valley.Credit: Bloomberg

Origin Energy and AGL Energy have reported higher annual profits and bumper dividends.

Dufty, national director of energy policy research at St Vincent de Paul, said power companies did need to bank healthy profits to fund the switch from fossil fuels to renewable sources.

“But it doesn’t pass the pub test, it doesn’t line up with people’s experience,” he said.

“We’re in a cost-of-living crisis, energy prices are going up, and these guys are making more money than they did last year.

Gavin Dufty of St Vincent de Paul says energy retailer profits don’t pass the pub test.Credit: Dominic Lorrimer

“They need to talk about how they’re building the energy system in a nation-building and transformational way.”

The Energy and Water Ombudsman of Victoria – an independent body that helps resolve complaints between customers and utility companies – said there had been a 22 per cent year-on-year jump in people seeking help for bill shock in the June quarter.

“We saw an increase in cases that reflect cost-of-living pressures, as consumers experiencing bill shock look closely at their bills, question their accuracy, and seek help to pay bills,” ombudsman Catherine Wolthuizen said.

A typical residential energy consumer using about 4000 kilowatt-hours of electricity a year is paying 17 per cent more than they were in 2020, according to the Essential Services Commission, a regulator that assists consumers on the price, quality and reliability of essential services. Prices rose $180 – 14 per cent – in the year to June.

Energy retailers must assist customers who are experiencing payment difficulty. Customers may be entitled to the following support:

• Payment plans – to pay off bills over a period of up to two years.
• Concessions for 17.5 per cent of gas (during winter) or electricity usage and service costs, accessible to account holders who have one of the following eligible concession cards:
  • Pensioner Concession Card
  • Health Care Card
  • Veterans’ Affairs Gold Card
• Utility relief grants – if you are eligible, your retailer must assist you to complete the application form and lodge the form on your behalf.
• Information about your energy use and how to lower it.

Source: The Essential Services Commission

However, more customers are switching plans or retailers and being offered payment difficulty support, while fewer are being disconnected for non-payment, the commission said.

Dufty said energy retailers could prevent bill shock by providing price certainty to customers with simplified billing structures, as phone and mobile data retailers do.

“You could have products a bit like data packages: small, medium or large consumption. Medium could be $1200 a year, $100 a month,” he said.

“And then in 12 months’ time, they come up with another offer.”

Origin said the energy sector was “one of the most closely regulated and monitored sectors of the economy”. AGL said it understood the pressure on households and businesses amid broader cost-of-living pressures.

Grattan Institute energy and climate change program director Tony Wood said that while both major energy companies had reported substantial jumps in profitability, there was no evidence they had ripped off consumers.

“That doesn’t mean they behaved perfectly or that they should not continue to be scrutinised and subject to appropriate regulation,” he said.

Essential Services Commission chair Gerard Brody said: “Where there are breaches or non-compliance with rules, we stand ready to take compliance and enforcement action.”

Economist Saul Eslake said soaring energy prices had contributed “significantly but not uniquely” to inflation. The impact on inflation would have been greater but for energy bill relief measures brought in by state and federal governments, he said.

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