Late payment fees outlawed for energy retailers

Industry cash cow outlawed in favour of fairer deals for all.

bill shock

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?

If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.

RELATED ARTICLES





COMMENTS

To make a comment, please register or login
Karen
6th Mar 2020
10:27am
Does this mean there is another price hike to cover the perceived 'need' of the power suppliers to garner more cashflow? You don't usually see much going the way of the consumer.
Karen
6th Mar 2020
10:27am
Suppliers will be crying poor, and the government will be 'forced to act'.
KB
6th Mar 2020
10:40am
Late fees should be abolished in the telecommunications as well. $15.00 for late payment is a lot of money for pensioners struggling on apnsion
KB
6th Mar 2020
10:40am
Late fees should be abolished in the telecommunications as well. $15.00 for late payment is a lot of money for pensioners struggling on apnsion
Star Trekker
6th Mar 2020
10:43am
I cannot see the problem. If people pay their accounts fortnightly there wouldn't be the need for late payments. I have been doing this since I left home at 18. Never been penalised as my accounts are always in credit.
People need to learn to budget. That is one thing that has been needed in schools for a long time.
My electricity bills are very high due to medical problems but my account is always in credit.
Anonymous
6th Mar 2020
11:04am
I agree there is no excuse for people not paying their bills on time.

If you don't pay for your groceries when you get them you simply don't get them. Same with electricity.
Mariner
6th Mar 2020
11:35am
Every fortnight on pension day a $50 note goes into a tin, get our power bill every 3 months and it works out at roughly $300, and sometimes I pay a bit more in than I have to so we will never be hit with late fees. Good point above by Retiring Well about the groceries, same goes for a drink at the pub - When the Bank serves Beer, we give Credit (sign behind the bar).
SuziJ
6th Mar 2020
3:14pm
I've been budgeting for 46 years (since I left home).

I've never had a bill fall behind as I also pay them on a fortnightly basis.

I receive a great discount on my electricity which is far better than any savings or term deposit could ever pay me, that's why I pay my bill each fortnight. Then if the bill ever gets into excess credit and I 'need' a little cash injection, I ask for a portion of the 'savings' credit to be returned to my bank account. No problems.
older&wiser
6th Mar 2020
3:44pm
I'm with you SuziJ - do practically the same. Solo, on aged pension. Always budgeted. I NEVER have a bill to pay as I pay all my bills regularly, and by the time the bill comes, I am always in credit. I get a good discount on my power bill, quarterly bill averages around $100 a quarter.
I do this with my power, rates, rego. I've never paid overdue fees on anything, or interest on my credit card - this also just a little bit in credit.
Anonymous
6th Mar 2020
4:16pm
One solution to the late payment issue is to use direct debit: the bill comes out of your bank account automatically on time. No late fees!
Hasbeen
6th Mar 2020
9:41pm
Everyone should know what bills are coming in when. I know that from the end of November until the end of March I will have,
2 electricity bills, [$700 each ],
2 car registrations & insurances,
Council exorbitant rates.
House & contents insurance
Plus all the regular like internet & phone bills.

These will consume my entire pension for that period. To buy Christmas presents, eat & run my cars I know I will need at least $4500 in the bank on the first of December. Knowing this I put away money during the months when no such high bills come in, so I have this cash on hand.

It is not that hard,. it merely takes discipline in not spending excessively when my bank balance is high.

I suppose today fortnightly payments are a good idea. A few years back having that money in your bank account earned good interest, but alas no more.
jaycee1
7th Mar 2020
1:44pm
Star Trekker,
I do this also with all my bills. I have them all set up to be paid automatically via Bpay the day after my Pension hits my bank.
My gas, electricity, rent, water are all well in front. My internet is paid monthly but always a week before the due date.
It is great at Christmas time, as I don't need to pay rent for at least a month and that money can be spent on family presents etc.
I always take the same amount out for shopping, anything not spend is put in a separate purse and kept. It is used every couple of months to stockpile things I buy regularly that are on special, which again saves money at Christmas time.
jaycee1
7th Mar 2020
2:05pm
I also pay extra on all my bills.
i.e if my rent was $178 a week, I would round it up to $180. It might only be $2 but over a year it all adds up, which means if you are short one fortnight you have a bit of leeway with at least one of your bills. [I do this with all my bills]
hyperbole
9th Mar 2020
6:11pm
my credit rating is 832 and I have never not paid a bill on time. you know what you owe and you live within your means
Ted Wards
6th Mar 2020
10:45am
I often question what a late fee is for these days. Who actually does something in an organisation that costs this fee and how do they arrive at an amount? Also where do these fees go? Part of my job is invoicing and the only thing I do is send a reminder email that takes less that two seconds to do. I realise when you are talking thousands of customers its a different role, in fact no one does the role, a computer spits it out. Should we be questioning late fees and why they are so much?

6th Mar 2020
11:01am
Discounts to pay on time and by direct debit are awesome and reward those who do the right thing. If you don't pay your bills on time then you should pay a fee as it costs money to chase up debts and write off bad debts.

It wont be long before you have to pay you electricity bill in advance instead of in arrears. I hope they give a good discount for people who pay say 212 months in advance.
Karen
6th Mar 2020
11:17am
Point is - if the 'pay on time' amount is what the company really should be getting for its service, why should there be any need for a huge increase for not on time?
Mariner
6th Mar 2020
11:39am
When I was a kid in Europe, slow paying families had a Coin Slot Meter installed. You had to put coins in first to get power. Electricity Companies were not allowed to cut the power off to families with young children so the Meter was the solution. Suppose it could be done here with a plastic card these days.
Star Trekker
6th Mar 2020
11:45am
My parents had coin meter for gas. This was inner-city Melbourne during the '60s. The Gas man would come around to collect the coins and give you change according to the meter.
FrankC
6th Mar 2020
2:32pm
When I lived in Qld, my early payment discount was 15%. Now I am ion Tasmania, Aurora doesn't give you anything, but the company my son is with , name I forget was getting 5% off, until he installed solar, then they stopped his early payment discountb !!!!! Two mean firms. Reading what Mariner said, shortly after the war, when living in L:ondon, we had a gas meter and an electricity meter, with the company man counting out the money in the meter and giving you back any that was availabe on your account, the only problem then was that you had to make sure you always had 1/- or pennies for the meter ( I think that is right, (were talking 70 years ago !) Currently I put $116 into a power account each fortnight, which covers electricity, water and rates, here in Tassie. Our water is half the price of Unity water, --sorry Qld. ! $1.06/kilolitre

6th Mar 2020
11:05am
Late payers bills might drop by 40% but everyone else will pay 40% more.
Karen
6th Mar 2020
11:18am
See above.. already commented on that... indeed - the way I see it, any 'reduction' in the opportunity for suppliers to add fees will result in an overall 'need' for a cost increase approved by the same government that is now 'outlawing' late fees of this magnitude.
Tood
6th Mar 2020
11:17am
Most late fees have been reduced or there is a "pay by due date amount" or " pay after due date amount"... its still all smoke and mirrors, what needs to happen is that the price of electricity needs to come down dramatically as promised by the government AND WE ARE STILL WAITING BECAUSE THAT IS NEVER GOING TO HAPPEN!
Neil
6th Mar 2020
11:21am
Work out ave bill say $10 week . Then pay $11 per week and over time nice to end up with small credit
Mariner
6th Mar 2020
11:43am
$11 a week? Where do you live? That is almost the supply charge before you switch anything on. But then again you just might be lucky with bills like that.
Mariner
6th Mar 2020
11:45am
Got the bill here: Supply charge 165c/Day. Company: Origin.
Star Trekker
6th Mar 2020
11:49am
Neil was using it as an example. My electricity bills were about $1000 x 4 / 26 =$153.85.
I paid $160 per fortnight.
hyperbole
9th Mar 2020
6:13pm
my elect bill is never over $45 a month..mostly about $30...live in a village which has negotiated a rate with supplier and we read our own meters
ray @ Bondi
6th Mar 2020
11:51am
this is clickbait at its best, they are not talking about everyday bills just overdue bills, I will see no reduction, utter rubbish.
Sceptic
6th Mar 2020
2:01pm
Absolutely correct, Ray. Disgusting clickbait from YLC.
DaveL
6th Mar 2020
2:24pm
The discount for paying on time mean exactly that. Pay after the event, pay the higher rate. Again the cost is being borne by those that pay on time. If you owe money, then you will incur additional costs.
Taragosun
6th Mar 2020
5:08pm
Until you don't receive the electricity bill in your email box. Today received an "overdue"
notice that our bill had not been paid and we would have to pay the non discounted amount. We did not receive the bill in our emails. Paid the non discounted amount then Hubby got on the phone to AGL - discount re-instated to next account and an additional $20 credit for the "inconvenience" as AGL couldn't prove they had actually send us the bill. Also never received a "reminder" first that the bill had not been paid. Having an exemplary payment record helped.
Connie
6th Mar 2020
2:50pm
You could get a discount for paying on time or earlier paying as they make interest on that money that you pay early
SuziJ
6th Mar 2020
3:18pm
What about the fees that your billers charge you for paying your bills @ the Post Office? They're outrageous!

You 'should' be able to go to the local library or service centre and pay your bills if you don't have the internet on. Then you can withdraw any cash you need at the ATM.
jaycee1
7th Mar 2020
1:59pm
SuziJ
Or the fees for paying via Bpay instead of letting the direct deposit from your account.
I am with Optus Internet and pay via Bpay always a week before bill due [automatically set up] and they charge me $2.50 because I will not let them have access to my bank account. [This fee is only meant to be applied if you pay via credit card according to the Optus bill. NOTHING about when paid by Bpay] Have complained to the Ombudsman who are looking into it for me.
Mind you, the person in the Ombudsman said that Bpay is not the same as direct deposit, which I have to disagree with.
Direct deposit - Optus takes payment out of your account - needs someone to do so /set up automatic payment
Bpay - YOU pay or set up for automatic payment. You do all the work, no input from Optus needed as it goes into your account automatically where a machine checks it's there.
So why are they charging the fee????
Blossom
14th Mar 2020
10:10pm
The banks charge more fees if you pay accounts at the post office using your Debit or Credit Card too.
older&wiser
6th Mar 2020
3:34pm
What a totally misleading and FAKE heading! Said - "New rules could see energy bills reduced by up to 40 per cent".
Totally wrong - story simply talks about overdue FEES being reduced.
Wow! - what a saving! Certainly not reducing power bills!
Robyn
6th Mar 2020
4:11pm
I always paid on time and got a good discount. My latest bill gives me a 26cent discount if I pay on time - ridiculous! No incentive in that.

6th Mar 2020
4:14pm
The energy sector has been gouging the public for decades. It's high time that a Royal Commission was held into the entire sector.
Eddy
6th Mar 2020
5:02pm
Not decades nameless one, only since all our power and gas companies were privatised on the false assumption that competition would reduce prices. Well it doesn't and it didn't. The same could be said of the banking sector, once the Commonwealth Bank was sold off there has been no brake on the fees and charges levied by the banks. Probably the same could be said about airport charges and port charges.
Mariner
6th Mar 2020
8:19pm
Yes Eddy and you can add Qantas and possibly Telstra, Medibank to the mix as well.
KSS
6th Mar 2020
8:24pm
Just pay on time. Its not that hard. Either put the money aside every week, arrange a direct debit from your transaction account into an online high interest account to pay bills from, or so as others here have said, pay fortnightly.

Most people paying just a day or so late are just lazy. Its those paying really (or rather not paying at all) that need budgeting help and maybe special payment plans.
skinner
6th Mar 2020
9:12pm
We place $100 a week into our Bill A/C which helps tp pay them when they arrive.
skinner
6th Mar 2020
9:12pm
We place $100 a week into our Bill A/C which helps tp pay them when they arrive.
BillF2
9th Mar 2020
12:52pm
Try doing this with the banks!
Blossom
14th Mar 2020
10:08pm
I think there may also be a late fee on SA Water accounts too.


Join YOURLifeChoices, it’s free

  • Receive our daily enewsletter
  • Enter competitions
  • Comment on articles

You May Like