The Australian Energy Regulator (AER) has released its Annual retail markets report 2023-24 analysing key consumer outcome metrics and data from energy retailers in the financial year to 30 June 2024.
AER Board member Jarrod Ball said the report shows the importance of effective support for vulnerable energy consumers, including retailers looking for opportunities that will provide better support and cheaper energy options for consumers.
“Energy rebates and concessions from federal, state and territory governments have helped support some households with energy affordability, with low-income households spending proportionally less of their annual household income on energy bills in 2023-24 compared to the previous year.
“The proportion of residential customers with energy debt of more than 90 days has also stabilised at around 2.9%. However, many consumers continue to struggle with energy costs, as indicated by the total number of customers in debt and in hardship programs,” Mr Ball said.
The proportion of electricity customers participating in energy retailer hardship programs increased from 1.4% to 1.9%, with more customers initiating entry to a hardship program compared to last year. The average debt for those in hardship programs has decreased by 4.3% for residential electricity customers and 4.9% for residential gas customers, but the average debt on entry to these programs increased by 23.7% for electricity and 33.5% for gas.
“Hardship programs impose obligations on retailers to assist clients experiencing payment difficulty and offer protections and support, including protection from disconnection. The increase in the number of customers in hardship programs shows that many are getting assistance and getting it earlier. However, there is evidence more customers may need assistance with payment difficulties and that hardship programs are not always effective,”
Mr Ball said.
The number of residential electricity customers on payment plans but not in hardship programs was also slightly higher, up to 1.9%, while the proportion of gas customers remained stable at 1%. Around one-third of customers with debt of more than 90 days are neither on payment plans nor in hardship programs and, therefore, may not be getting assistance that they need.
“If you’re struggling with your energy bill, please contact your retailer as soon as possible. Under the national energy laws, they must assist you,” Mr Ball said.
For small business customers, energy debt rose from 3% to 3.4%, however, the average debt of these customers decreased.
There are signs market competition is improving gradually, with more consumers shifting from larger to smaller retailers leading to less market concentration in most jurisdictions. Newer retailers are also providing more innovative new products, such as offers that include a battery or electric vehicle (EV) component. The proportion of customers who changed retailers each quarter during the period ranged from just under 7% of customers in Victoria to around 3% in the ACT.
Median market offers for residential electricity customers increased in all jurisdictions in 2023-24, however prices fell in most jurisdictions on 1 July 2024.
Billing related issues were a key driver in a sharp increase in calls and complaints to retailers and ombudsman schemes during the period. The AER will continue to monitor customer experience metrics.
“Between July and September 2024, we saw median market offer prices fall by up to 4% so it’s vital that all customers shop around regularly to ensure they are on the best energy plan for their individual circumstances.
“Ask your retailer to be put on their best available plan. Your retailer must regularly include on the front page of your bill whether they can offer you a better plan and how to switch. You can also visit the Energy Made Easy or Victorian Energy Compare website to compare your current plan against the reference price and other offers in the market,” Mr Ball said.
The AER continues to progress its Towards energy equity strategy, and is conducting a review of the payment difficulty protections in the National Energy Customer Framework. The goal of this review is to ensure that consumers experiencing payment difficulty are proactively identified, engaged early, and supported appropriately with assistance that is tailored to their individual circumstances.
We are also continuing to advocate for the proposed Game Changer reforms, a package of solutions designed to break the cycle of energy debt, including through more seamless access to concessions and debt relief for customers facing financial hardship, automatically placing customers in hardship programs on better offers and improved access to financial counselling. These were presented to Energy and Climate Change Ministers in November 2023.
ENDS
Notes to editors
About the Annual retail markets report
The Annual retail markets report 2023-24 is the AER’s most detailed and comprehensive report into the performance of the retail energy market and energy retailers. It covers a broad range of topics, including energy pricing and affordability, customer service and all aspects of the customer debt cycle.
The report covers jurisdictions that have adopted the National Energy Customer Framework (NECF) and are covered by the National Energy Retail Law and the National Energy Retail Rules – NSW, Queensland, South Australia, Tasmania, and the ACT. Although not part of the NECF, Victoria is also included in some sections of the report.
The report covers trends in the retail markets for the financial year of 2023-24 and does not include government rebates that commenced on 1 July 2024.
Supporting vulnerable consumers
The AER worked in collaboration with stakeholders from across the energy sector to design Game Changer, a package of solutions which was presented to Energy Ministers for consideration at the Energy and Climate Change Ministerial Council (ECMC) meeting on 24 November 2023.
The AER launched its Towards energy equity strategy in October 2022 which details 15 specific actions to tackle market complexity, remove barriers to participation, increase protections, and improve affordability for all consumers by reducing retailers’ cost to serve customers.