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Issue #1458      9 June 2010

Poor families face lights out

Australian state governments are about to introduce a new national energy law that will allow them to disconnect the rapidly rising number of consumers who are too poor to pay their power bills.

In the last financial year there has been a sharp increase in the number of complaints to state ombudsmen concerning corporations that have overcharged consumers, or disconnected them rather than offering alternative repayment plans. In NSW the number of complaints rose by 47 percent, in South Australia by 63 percent, and in Queensland they rose almost fourfold.

In Victoria the State Ombudsman Fiona McLeod commented: “There is a growing hardship issue. More and more Australians are going to the energy ombudsman because they are unable to sort out credit and arrears issues with their utility companies, and need help”.

Electricity consumers in general are about to be hit by a second energy “whammy”. Despite assertions to the contrary from state and federal governments, financial hardship from rising interest rates, unemployment and under-employment increased during the global financial crisis. Moreover, families will now face a series of rate increases by energy corporations and authorities.

In Queensland and NSW electricity rates will rise by 13 percent from July 1. Other price hikes will follow in NSW, to a total of 42 percent over three years. Power bills will rise by five percent next financial year in South Australia and by 16 - 25 percent in Western Australia over the next three years.

Ineffective protection

The proposed national consumer energy law will be tabled for discussion at the national Ministerial Council on Energy this week. The legislation says that energy suppliers cannot disconnect consumers who are unable to pay heir energy bills (it describes them as “hardship customers”) unless they have been offered two alternative payment plans and the customer has rejected the plans or has still failed to pay up.

However, Ms McLeod wants the Victorian government to prohibit power corporations from disconnecting supplies until they have resolved any complaints lodged by the consumer.

Moreover, consumer and welfare organisations say that energy is an essential human requirement, and that the legislation is inadequate to protect consumers. The Australian Council on Social Service (ACOSS) has stated: “Anyone can end up in hardship, even temporarily – you lose your job, you get sick, your partner dies. Rather than be disconnected, you should have some assistance to help you pay it off. No consumer should be disconnected solely due to an incapacity to pay”.

Regarding the proposed legislation, ACOSS commented: “The current wording does not guarantee that the most vulnerable people in our community are protected from disconnection”.

And that’s not all. The Consumer Action Law Centre says that penalties imposed on energy corporations under the new energy consumer legislation are so low that they will actually make it more profitable for the corporations to break the law than obey it.

The Centre’s Director of Policy and Campaigns, Nicole Rich, noted;” Australia’s energy providers turn over billions of dollars in profit every year. To think that a maximum possible penalty of $100,000 – which could only be imposed if a government agency wins a lengthy court battle – is going to deter them from breaching consumer protection laws is about as logical as thinking that a rubber duck could stop a freight train.”

The energy rate rises are typical of the profit-obsessed grasping behaviour of private corporations intent on ramping up power rates to the point of profit maximisation. Victoria’s energy sector has been privatised, One might have expected better of the NSW power authorities, but the NSW government is proceeding with the sale of the energy retail businesses, which will leave only the power generation facilities in public hands. The overall trend is for state governments to either privatise their power organisations or to treat them as though they already have been, so that they will be a tempting prospect for a potential purchaser.

The state governments should be retaining or taking over the various state energy authorities; implementing a fast program of conversion to renewable energy production; implementing new regulations that offer real protection to consumers; initiating a program of energy conservation for both household and industrial energy consumers; and establishing multiple small electricity grids. That would certainly obviate the need for massive rate rises.

But that’s not the way that either of the major parties want to go. It looks as though we will have to convert our governments to a totally different form, in order to convert our energy facilities to low cost, clean and highly efficient production.  

Next article – Unanswered questions on Barangaroo

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