Our Two Cents – A new disconnections safeguard is needed

Every week Consumer Action’s financial counsellors hear from people who have had their energy disconnected—or are facing disconnection—and about the severe impact on their lives.

 

Apart from fundamental risks to people’s health and safety from lack of heating or cooling, or using candles for light, disconnection has less obvious costs that are economic (spoiled food, paying to be reconnected) and social (having no clean clothes).

 

Despite Victorian energy suppliers facing stiff penalties for wrongful disconnection, the number of disconnections in this state has remained at a high level after spiking in 2012-13.  In Victoria in 2014-15 34,000 households were disconnected for non-payment.

 

Disconnection should be a genuine last resort for suppliers and should never happen just because someone can’t pay their bills.

 

The Essential Services Commission of Victoria (ESC) has acknowledged these principles in its revised Payment Difficulties Framework, about which it is currently consulting with stakeholders.

 

We are hopeful the framework will improve outcomes for consumers. However, even with the best regulatory framework, some of the most vulnerable energy customers in our community will always face a higher risk of disconnection.

 

Our financial counsellors regularly talk to people who don’t contact their energy supplier when they get into financial trouble, even though they would be eligible to receive assistance under their supplier’s hardship program. Mental health issues, language difficulties, fear of authority, and feelings of shame and embarrassment about their financial situation, are some of the reasons someone might not pick up the phone to head off a disconnection.

 

To minimise the possibility of an unfair disconnection, Consumer Action has proposed the creation of a new agency, which we have called Connections Victoria.

 

Connections Victoria’s role would be to establish whether there are genuine reasons not to proceed with disconnected, before an energy supplier can flick the switch. They would visit at home anyone who an energy supplier believed may not be able to afford their energy use or was experiencing financial or other issues.

 

Connections Victoria could take a range of forms, but its key features would be:

 

  • Independence from energy suppliers—services could be performed by a social welfare group or a government agency, but it will be important staff aren’t seen as representing suppliers.

 

  • Staff with appropriate social work or welfare qualifications would perform home pre-disconnection home visits with the aim of engaging with customers, understanding their circumstances, and linking them to appropriate support services – including, interpreter services, family violence support, welfare, financial counselling, mental health and energy efficiency services

 

  • Binding powers to prevent an energy supplier disconnecting a customer, or authorise a disconnection to proceed if the grounds are established.

 

Connections Victoria is last-gasp safeguard against inappropriate disconnection needed to make sure that disconnection is a genuine last resort.

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