New research from RMIT University shows that electricity disconnections for non-payment of bills can be stopped without significantly destabilising the market.
Over 23,000 households across Australia experienced electricity disconnections for non-payment of bills in the 2023-24 financial year, causing significant harm to the mental, social and physical well-being of affected communities, with some households prioritising paying their bills and compromising on essentials like food and medicine to keep the power on.
Lead researcher, Dr Nicola Willand, said the research highlights the need for an 'honest and courageous' discussion about more extensive electricity disconnection prohibitions in Australia.
"Calls for an end to disconnections have previously fallen on deaf ears, with the assumption being that there was no workable alternative. But this research proposes initiatives that may help secure equitable access to essential energy," said Willand.
"Energy disconnections mean more than sitting in the dark; they amplify stress, risk health problems and can deepen financial hardships.
"By looking to international models, Australia can further refine its policies to protect consumers more effectively – and given the depth of harm caused by disconnections, we really should be considering other options."
A comprehensive literature review of electricity disconnections in Spain, France and Ireland found alternatives did exist. These included:
- Vulnerable customers in Spain may never be disconnected. The electricity costs of the most vulnerable customers are shared equally by the retailers and local governments.
- In Catalonia (Spain) energy retailers must check a household's vulnerability status with the social services before they can disconnect anyone.
- The social bonus tariff in Spain offers discounts of up to 65% to designated vulnerable households.
- Households in France and Ireland may not be disconnected during the winter months.
- Instead of immediate disconnection, the electricity supply to households is reduced in France and Spain, so that essential household services can be maintained.
Individual electricity companies in France, Catalonia and Ireland also have voluntary disconnection restraints for all their customers.
The research also shows that there can be benefits for the energy industry from ending disconnections, including better debt recovery and a better reputation.
"The report makes recommendations that aim to protect households and suggest that more secure access to electricity may be possible without destabilising the energy industry," said Willand.
Disconnection protections in Australia should also extend to prepayment meter users and residents in embedded networks, who currently lack many safeguards given to credit meter customers.
"This important research underlines how we must explore alternatives to disconnections, especially for consumers in vulnerable circumstances," said Carol Valente, Executive Manager, Advocacy and Policy with Energy Consumers Australia, who funded the research.
"Energy Consumers Australia is currently undertaking further research in this area, including what steps retailers, governments and policymakers must make to identify, engage and support consumers in vulnerable circumstances and help ensure households facing payment difficulties can access affordable and sustainable payment plans."
'How do electricity disconnection bans work? Lessons learnt from exemplary case studies' (full report available here: https://doi.org/10.25439/rmt.29062499) was funded by Energy Consumers Australia as part of its Grant Program to support consumer advocacy and research projects that benefit household and small business consumers.
