VICTORIAN pensioners are entering electricity retailer hardship plans in droves, but the number being refused access to hardship programs has almost doubled.
Some customers have reported being given alarming advice to reduce their bills, such as wearing warmer clothes.
A Consumer Law Action Centre report released in July found while retailers were making an effort, there were “fundamental flaws” in the way they were identifying and helping struggling customers.
Unaffordable payment plans and threats of debt collection or disconnection were among the issues identified.
Even with affordable repayment plans, many customers continued to accrue bills at a rate that meant they were unlikely to ever be able to pay unless new strategies were introduced.
The report found while participation in hardship programs increased by 29 per cent in 2012-13, the number of customers denied access to programs rose by 93 per cent.
Even more concerning was the fact that while the average debt on entry to a hardship program had dropped from $919 to $742, the average debt on exit had increased from $715 to $1054.
In addition, the rate of disconnections rose by 150 per cent over the preceding five years.
The report cited the case of a 77-year-old carer who was already using bill smoothing when she received a $1500 gas bill for a three-month period.
When she told the retailer she could not pay, she was told supply would be cut unless she doubled her normal payment amount to $60 a fortnight for gas in addition to her $25 a fortnight electricity payment.
She was told to avoid the costs she could turn off the gas heating or wear a coat and blanket to keep warm.
“This isn’t appropriate advice; in fact, it’s potentially dangerous,” Consumer Action policy director Denise Boyd said.
“It shows a lack of understanding on behalf of the call centre representative, which is a common theme in this report.
“Energy is needed to wash, cook, heat and cool – it is the definition of an essential service, and that’s why retailers are required to assist struggling customers.
“Our concern is about the quality of this assistance. There appears to be a lack of understanding and consistency in how customers are treated.”
Ms Boyd said the 45 per cent increase in energy costs over the past three years meant that even with affordable repayment plans, many customers were slipping into “energy poverty”.
“Sadly, these customers can’t afford energy-efficient appliances or accommodation, so their bills will often be high regardless of how vigilant they are,” she said.
“With energy prices increasing much faster than income levels, retailers, governments and advocates need to keep looking for new and innovative ways to make energy affordable.
“Raising the energy-efficiency performance of the homes of low income earners should be high on the list.”
The report recommended energy retailers take steps to identify struggling clients before their debts became insurmountable; develop and maintain well-trained hardship teams to focus on at-risk customers; and ensure easy and consistent access to information for financial counsellors working with low-income consumers.
