Joint media release: Some win, some lose in concessions shakeup

New restrictions on Victoria’s energy concessions will make it harder for some low income Victorians to access affordable electricity and gas, and discriminate against concession holders based upon their postcode, according to a new report from Consumer Action Law Centre and the Victorian Council of Social Service (VCOSS).

From 1 December, energy concession holders will have to reapply for their concession once their annual electricity spend hits $2763 or their winter gas spend hits $1462.

‘Victorians who reach the new concession caps will be those who can’t afford quality housing, or efficient heaters. They will be the people who can least afford to be cut off from their energy concessions,’ said Janine Rayner, Senior Policy Officer at Consumer Action.

Ms Rayner also criticised the details of the new policy. ‘Capping concessions at a dollar value rather than a usage level is clumsy and discriminatory. It means customers in suburbs where electricity and gas costs more, will have their concession cut off well before customers with the same usage in other areas. Residents in Geelong, Footscray, Williamstown, Flemington, and Broadmeadows will be among the worst affected,’ said Ms Rayner.

Emma King, CEO of VCOSS, said around 30 per cent of eligible Victorians already don’t get the concessions they’re entitled to, and that making people reapply for the concessions once they’ve reached the cap is likely to lead to even more Victorians missing out.

‘Creating extra layers of red tape for low-income Victorians and energy retailers will not reduce energy costs for those people who are already struggling to pay high energy bills,’ said Ms King.

‘The Victorian Government has estimated the new caps will deliver $9 million in annual savings to concessions spending in the State Budget. We’re concerned that these savings will be made at the expense of more low income households missing out on concessions they are entitled to.’

Winners and Losers: the impact of energy concession caps on low-income Victorians recommends the Government reconsider the introduction of a concessions cap and explore alternative ways of helping high-usage low-income households reduce their energy bills.

‘It’s important that the Government take proactive steps to help low-income households with high energy bills due to poor-quality, uninsulated housing and inefficient heaters and other appliances. Programs like the Victorian Energy Efficiency Target scheme help Victorians cut electricity and gas consumption, but should be more effectively targeted at concession holders, particularly those facing the highest energy costs,’ said Ms King.

‘Any plan to reduce the financial impact of high energy use needs to target households based on their usage levels, not cost alone; otherwise we will have a policy which picks winners and losers based on where they live.’

Notes:

As there are the significant differences between the tariffs and tariff structures in the various electricity network areas and gas zones, a household in one area will reach the new concessions cap while a household, with the same level of consumption, in another area will not. By introducing a concession cap based on dollar value, the Victorian Government has effectively chosen winners and losers based on their geographic location.

Concession cap: Winners and losers

 

Fuel/tariff type Winners Losers
 Electricity (single rate)^ Melbourne CBD, inner south and east (Citipower and United Energy) Melbourne’s west and north-west (Powercor and Jemena), and the outer northern and eastern suburbs (SP Ausnet)
 Electricity (controlled off-peak) Melbourne CBD, inner south and east (Citipower and United Energy) Eastern Victoria (SP Ausnet)
 Gas Melbourne’s eastern and south-eastern suburbs (Multinet/Origin Metro) Melbourne’s west and north-west (SP Ausnet/AGL North), and Greater Geelong and Bellarine Peninsula (SP Ausnet/Tru Central)
^ Typically dual fuel households
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