Bills could be reduced by 40 per cent

Energy retailers have been ordered to reduce the heavy penalties they charge customers for late payments, under new rules announced by the Australian Energy Market Commission.

Usually, ‘conditional discounting’ protects savings for consumers with ‘pay-on-time’ conditions in their energy contracts.

These conditions also lead to excessive charges and financial hardship for those who can’t pay on time.

“We think this rule balances protecting consumers from excessive fees with retailers’ need to recover reasonable costs when people don’t pay on time,” said acting commission chief executive Suzanne Falvi.

“Large conditional discounts that we have seen in the past are a big hit for a small consumer under financial pressure.

“Penalties vary and have reached as much as 40 per cent in the past. So, depending on how much energy a household uses, this could cost them as much as several hundred dollars a year.”

The changes were proposed by Energy and Emissions Reduction Minister Angus Taylor, who said they would limit late fees and pay-on-time discount conditions to cover only the retailer’s reasonable costs.

“We are protecting consumers from dodgy retailing practices, and making sure discount deals are fair and transparent,” he said.

“Our focus is lower electricity prices, making sure Australian consumers get the best possible deals on their energy and ensuring retailers put their customers first.”

Consumer Action Law Centre chief Gerard Brody told The New Daily that the discounts had for too long been “a cash cow for the industry”.

“For too long, individuals and households have been whacked with these huge penalties if they’re not able to make their bill repayments on time,” he said.

“Sometimes, 30 to 40 per cent of the total cost is added on again just because someone has paid a day late.”

Those being stung by late fees may also be experiencing financial difficulties.

“If someone is having financial difficulties, then of course they might be paying a little bit late,” he said.

“I think the obligation of energy retailers as essential services providers is to assist their customers to get back on track. Charging them more is really counter to that.”

The new rules will apply to gas and electricity contracts signed after 1 July.

Other industries have been let off the hook.

Mr Brody said the new rules set “an important precedent” for other industries still guilty of “exploitative charges”.

He hopes the new fee restrictions in the banking space could also lead to tighter regulation of fees in other industries.

Do you ever cop high late fees? What do you think of the new rules?

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Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.


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