Power bill relief sparks concern for retailers
Fresh measures are being imposed on electricity operators to shield customers from energy bill shocks.
The Morrison government’s move to extend relief for households unable to pay power bills due to COVID-19 economic shocks has sparked concern among retailers hit by bad debts, with EnergyAustralia the latest large operator signalling it will take a hit from the pandemic.
With a surge in COVID-19 cases threatening to deepen a national recession, fresh measures are being imposed on electricity operators to shield customers from energy bill shocks while an existing plan to defer debt referrals and waive supply charges will be extended for at least three more months.
However, the nation’s biggest power players are worried they are unfairly shouldering the burden and have called for a broader government and energy sector response amid signs bad debt charges have developed into a material earnings risk.
After Origin Energy flagged a charge of up to $35m from bad debts for its electricity and gas retailing business, rival EnergyAustralia said it would also take a hit as some customers struggle to pay their bills.
“Without a doubt we’re all going to have people who are unable to pay not because they’re avoiding it but because they can’t. We’ll all be faced with bad debts,” EnergyAustralia energy executive Liz Westcott told The Australian.
“The market we operate in is very similar with a large number of customers, exposure to small and larger businesses, so in general most of the big power retailers will be similarly impacted based on market share.”
The Australian Energy Regulator estimates an extra 20,000 customers were on payment plans in March compared with December, while energy debt reached $35m among 40,000 households and small businesses in July.
But while utilities have already put in place a raft of measures to protect households and small business through a COVID-19 hibernation period, a plan by the AER and Energy Minister Angus Taylor to extend the scheme until at least the end of October has caused frustration among retailers.
“Energy retailers stand ready and willing to help customers experiencing financial difficulties, but there is a critical need for government, regulators and all participants in the energy supply chain to consider what further steps may be needed in coming months,” Australian Energy Council chief executive Sarah McNamara said.
“But we need to be mindful that the Australian Energy Regulator’s statement of expectations and these customer support measures mean retailers, who carry all the risks of non-payment in the market, will see increasing debt levels with limited scope to recover costs.”
The move threatens to provoke a fresh spat between the industry and government, with power players still wary after a string of new regulatory burdens, including the “big stick” legislation and default market offers aimed at lowering prices and sparking greater competition, were introduced last year.
The AEC — which represents major electricity and gas businesses including the big three of Origin, EnergyAustralia and AGL Energy — hinted that a relief package from electricity network owners that was announced in April should also be part of the response to the emerging issue.
“Retailers cannot control costs from other parts of the energy supply, such as the fixed costs recovered by network businesses to maintain the poles and wires. A network package to defer charges announced earlier this year provided some initial relief but it was limited in time and scope. That relief package was also released before the full impact of COVID-19 on households and businesses emerged,” Ms McNamara said. “For that reason, we need a collaborative response from all parties to find ways to share costs.”
The regulator said it understood the statement of expectations may add to both risks and costs facing energy businesses.
Mr Taylor said the measures included offering payment plans including a period where no payment would be made, and not disconnecting customers under financial distress.
