Households on energy payment plans surge 19 per cent

Thousands of households are already struggling to pay utilities bills and more are tipped to face pain as the cost of living crisis worsens.

The number of households on hardship payment plans to repay electricity bills surged by 19 per cent during the first quarter of 2023, the Australian Energy Regulator has revealed, as a cost of living crisis sees Australians struggle to pay for basic utilities.

The soaring number of households on payment plans underscores the impact of the recent surge in electricity prices, and the figure could yet grow further as Australians will from July 1 begin paying even higher bills.

The AER said between January 1 and March 31, 1.3 per cent of all Australian households were on payment plans to repay electricity bills, growth of 19 per cent from the same three month period one year earlier.

Customers repaying gas bills via payment plans also rose, the AER said. Just over 20,000 customers were repaying gas bills via a hardship plan between January and March, growth of more than 20 per cent year-on-year.

Queensland had the largest quarter increase, with 15 per cent more households on payment plans. South Australia has the biggest number of customers on hardship plans – with about 2 per cent of all customers on structured payments after being unable to pay their bills when due.

Further underscoring the pain many households are feeling, the AER said the average debt has fallen as Australians struggle to pay bills that they may have previously coped with.

The average debt of someone on the hardship plan was $1.256, down 27.9 per cent to $1,741, the AER said.

The findings will intensify pressure on the government, which is grappling with arresting rising voter frustration without stoking inflation. The federal Labor government in its May budget offered some 5 million households some price relief to their electricity and gas bills, and has urged retailers to be mindful of the unprecedented cost of living crisis on their customers.

There, however, was some sign recent government intervention has helped. Labor late last year moved to cap the price of coal, the biggest source of electricity in Australia, intervention which lowered the wholesale cost. The AER said the median offer made by retailers fell between 1-5 per cent over the three month period.

Retailers – some of whom are expected to post bumper profits – have promised greater assistance for customers struggling, but data from the AER also illustrates the ongoing pain felt by customers already struggling.

The AER said 40.9 per cent of electricity customers with a hardship repayment plan did not meet their usage costs during the first quarter of 2023, although this value has decreased by 3 per cent since this quarter last year.

Further increases are also coming. The AER in May approved increases to power bills of around 20 per cent across Australia’s east coast, the second consecutive year of such rises.

Electricity prices have soared in recent years amid a global energy crunch, triggered by Russia’s invasion of Ukraine. Once major buyers of Russian gas were forced to look elsewhere for energy, pushing up the prices of commodities such as coal and gas.

While the underlying cost of electricity was rising, Australia was also hampered by a spate of outages across its fleet of coal power stations, removing much needed generation capacity from the system as demand soared due to unseasonable cold weather.