Deferral decision acknowledgement of emerging retail risks

The Australian Energy Council has backed the decision by the Australian Energy Market Commission to extend network charge deferrals by six months.

The Australian Energy Council’s Chief Executive, Sarah McNamara, said the measure recognises the challenges and risks facing retailers, particularly smaller retailers, as they support more customers during the COVID-19 pandemic.

“Energy retailers are assisting customers experiencing financial difficulties and today’s decision will help them to continue to provide that support.

“Our members have committed to supporting their customers with tailored assistance if they are unable to afford their energy bills.

“For customers, your retailer can provide different kinds of support – from short term payment plans to longer term hardship assistance. I encourage anyone facing challenges to contact their retailer as soon as they become concerned about their ability to pay their bill.

“That conversation will ensure someone is not disconnected for not being able to afford their energy bills.

“Today’s decision acknowledges the emerging challenge of how to manage the sheer volume of customers who are vulnerable to payment difficulties.

“With retailers carrying all the risks of non-payment in the market, we can expect to see increasing bad debt levels. This will lead to increased financial stress on retailers and a greater risk of retailer failures and potential financial contagion.

“Smaller retailers are vulnerable to potential cashflow problems, so this change offers a temporary buffer from the fallout of the health and economic crisis.

“The decision, however, is not a fix for the challenges facing retailers broadly. As this crisis continues, there will be a need for government, regulators and market participants to consider further measures to help share the risks,” Ms McNamara said.

About the Australian Energy Council

The Council represents 22 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.

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