Unaffordable energy leaves more working households facing disconnection

New research from the Public Interest Advocacy Centre (PIAC) shows more working families, people with mid-range incomes and households with mortgages are facing disconnection because of unaffordable energy bills.

Powerless: Debt and disconnection is the fifth in a series of reports into debt, disconnection and payment difficulty related to electricity, gas and water services in NSW. The report makes findings from research undertaken in 2023, including a survey of 1044 people who had, in the last 2 years, experienced a disconnection, been notified about an impending disconnection or been seriously worried about risk of disconnection.

Key findings include:

  • While groups often associated with disadvantage continue to experience higher rates of disconnection and risk of disconnection, there is a greater representation of people from higher income groups compared to past surveys.
  • There has been a rise in disconnection of households with mortgages: 31% of disconnected households had a mortgage compared with 18% in 2018. This is the highest proportion since our 2009 survey, conducted after the Global Financial Crisis.
  • People living in rented homes are disproportionately impacted by disconnection or payment difficulty.
  • Disconnected households are likely to have children living in the home, with 57% having at least one person under 18 years old.
  • 39% of households who were disconnected said someone in the home had a mental illness.
  • 13% of disconnected households disclosed that there was family or domestic violence in the home.
  • 64% of households used money they needed for something else essential to pay energy bills on time.
  • 62% of households used as little energy as they could, even though it impacted on their wellbeing.

A 7-page summary of the report is also available.

Report lead and PIAC Senior Policy Officer, Thea Bray, says the research shows energy affordability is becoming an issue for a much wider range of NSW households.

‘Financial strain from the cost of living crisis has coincided with an increase in energy prices, and that’s having a major negative impact on people. Our research shows many people are struggling to afford essential services, including more working families and people on mid-range incomes.’ 

‘There’s an assumption that people who get disconnected can afford to pay their bills but choose not to. Or that the threat of disconnection will push someone to ‘get the help they need’. In reality, people are not paying because they can’t. And the current disconnection framework just makes it harder and more expensive for them to get their debt under control.’

‘People are making unreasonable sacrifices to try to save on energy costs, risking their health and wellbeing. But they are still unable to afford their bills.’ 

‘After a household is disconnected, retailers can require hundreds of dollars in fees or payments to reconnect. If someone can’t afford their energy bills in the first place, this is just more unpayable debt.’ 

‘Households that have been disconnected or threatened with disconnection are reporting concerning rates of mental illness and family violence. Instead of being threatened with losing an essential service, these people need support to make ends meet.’

Douglas McCloskey, Director of PIAC’s Energy and Water Justice project, says both government and retailers can do more to help households stay connected to energy and water.

‘Energy retailers are required to proactively identify and help people experiencing payment difficulty, and to only consider disconnection as a last resort. But 60% of the households we heard from were not receiving any type of support, indicating widespread failure by retailers to meet their obligations.’

‘Retailers can better align billing with the reality of people’s lives. Bills should come monthly instead of quarterly by default, with flexibility so people can make smaller payments as they can afford them.

‘Households at risk of disconnection need better advice about the help that’s available, and they need to be given that advice, and help, earlier, before debt builds up.’

‘Retailers should have to demonstrate they have done everything possible to avoid a disconnection before being allowed to. Our research shows people are struggling. They need to be given assistance and every opportunity to get their finances under control before losing a service that none of us should have to live without.’ 

We see evidence that Government energy rebates and emergency supports can really make a difference. But they need to respond better to people’s circumstances. They should be provided as a proportion of people’s bills, and there should be scope to ensure families and others not currently eligible can get them.’  

Media contact:
PIAC Media and Communications Manager, Dan Buhagiar: 0478 739 280. 

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