Energy & Water Ombudsman NSW. Addressing Consumer Vulnerability. Janine Young, Ombudsman

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1 Energy & Water Ombudsman NSW Addressing Consumer Vulnerability Janine Young, Ombudsman Energy Networks Association & Networks NSW Seminar Supporting Vulnerable Energy Consumers 24 September 2015

2 About EWON EWON is an industry Ombudsman scheme. We offer an independent dispute resolution service for customers of all electricity and gas providers and some water providers in NSW.

3 About EWON Independent dispute resolution Keeping essential services within reach Working with industry, stakeholders and customers

4 Customer Dispute Resolution Benchmarks Accessibility EWON makes itself readily available to customers by promoting knowledge of its services, being easy to use and having no cost barriers. Independence EWON s decision-making process and administration of the office are independent from participating organisations. Fairness EWON s procedures and decision-making are fair and seen to be fair. Accountability EWON publicly accounts for its operations by publishing its final determinations and information about complaints and reporting any systemic problems to its participating organisations, policy agencies and regulators. Efficiency EWON operates efficiently by keeping track of complaints, ensuring complaints are dealt with by the appropriate process or forum, and regularly reviewing its performance. Effectiveness EWON is effective by having an appropriate and comprehensive jurisdiction and periodic independent reviews of its performance.

5 Complaint volumes are changing Budget

6 Complaint issues are also changing Billing / Credit now represent 62% of our casework - High disputed bills - Payment difficulty arrears, high bills - Disconnection impending and completed - Payment arrangement declined - Debt collection - Credit listing 2013/2014 data

7 The challenging issues Financial hardship and energy affordability Rising disconnection rates in NSW, estimated 35,000 in 2014/2015 Large and complex debt and hardship Difficulty in arranging payment plans Credit default listing and debt collection Credit repair/ fix agents

8 Average NSW household electricity bill $2,500 $2,000 $1,500 $1,000 $1, kWh $1, kWh $2, kWh $500 $0 Low income with concession Low income without concession Middle and high income

9 Bill complexity, fees and charges

10 My observations about hardship 2003/2004 large debt $2,000 Won t pay / can t pay discussions 2006/2007 large debt $4,000 Hard ship programs gaining momentum Recognition/acceptance of hardship Debt waiver, low value payment plans 2009/2010 large debt $5-6,000 Billing system issues debt impacts Low value payment plans debt impacts Hardship programs - effectiveness varied from retailer to retailer

11 2015 observations about hardship Large debt is now $10-12,000 we being the customer, Barriers to hardship programs based on poor past performance the retailer, adherence the network to payment plans; and success operator, the government, the ombudsman, the financial counsellor, the Number of people community trapped agency in the cycle has grown In many ways, we are still taking the So. same approach as we did five years ago

12 It s time to draw a line in the sand

13 What s needed moving forward Recognition: that it is a shared problem. Examination: of the relationship between income and affordability Collaboration: to achieve effective strategic and systemic solutions.. Exploration: of ways to find sustainable solutions.. Implementation: of customised responses to address individual, situational and generational poverty

14 Recognition Poverty in Australia 2.55m people in Australia live below the poverty line (14% of us) Poverty has increased by 1% over the past few years 240,000 more people Counter cyclical when you consider low inflation / low interest rates over the past five years Poverty line is defined as being 50% of median income: $400/week for a single adult $841/week couple with 2 children 1-1.5m people in Australia live in entrenched poverty (4-6%)

15 Recognition Situational and generational poverty 70% face situational poverty short term crisis driven addressed by emergency assistance can arise from time to time 30% face generational poverty life time, multi generational Only known way of life emergency assistance does not break the cycle education / intervention required, perhaps for the next generation Majority of households only temporarily enter poverty, but the longer they remain poor, the lower their probability of exiting Households in outer regional / remote communities are more likely to become poor

16 Recognition Customer hardship in NSW Average debt of all NSW electricity customers is $ % of all customers were on hardship programs 28.73% received a concession 1.5% of these customers were on a hardship program 1.03% of customers were disconnected 22.4% of disconnected customers were concession customers AER 2013/2014

17 Recognition NSW customers on hardship programs RETAILER ELECTRICITY GAS ActewAGL AGL Dodo Power & Gas EnergyAustralia Lumo Energy Momentum Energy Origin Energy Powerdirect Qenergy Red Energy Simply Energy TOTAL per People in poverty 14% v People on Hardship Programs 0.61%

18 Recognition Other factors Reduced funding for financial counsellors Decreased number of community agencies and/or agency staff Demand outweighing services Customers may not be able to access the help they need when they need it Natural events such as recent NSW flooding increases demand further

19 Examination Income and affordability 62% of people in poverty rely on social security as the main income 29% of people in poverty live in wage-earning households 20% of all households can be classified as being low economic resourced low income, low wealth Income equality has increased 24% of NSW households on $52-104k experience financial stress

20 Collaboration Partnerships Industry retailers and networks Government Regulators Community agencies Ombudsman Offices

21 Exploration Using data to better identify hardship triggers How can data be used to proactively identify customers experiencing situational poverty? What are the key barriers to customer access to hardship assistance? How can short term capacity to pay be more quickly assessed? In what ways can retailers provide an early response to customers who are experiencing a short term crisis which prevents the financial impact becoming a long term challenge?

22 Implementation Are there new ways to respond to customers in generational or situational hardship Flexible, tailored responses for different customers / customer segments Debt reduction partnerships Rebate and concession review and systemic application Market engagement and best contract offers for low income customers Energy efficiency - community education

23 What are we doing differently Real time response to actual and imminent disconnection cases Working with stakeholders to identify partnership opportunities Systemic and proactive focus on emerging issues Ombudsman from different industry sectors are collectively collaborating with peak bodies to identify strategic opportunities for change

24 Collaborative solutions Indigenous engagement working with vulnerable communities Dareton NSW, extreme weather, geographic isolation, poor housing, peak meters, poor / no public transport, inadequate mail service, poor general health, mental health issues, literacy challenges Aboriginal Local Land Council: strategic and focused on long term sustainability EWON, in turn, involved Origin Energy OE s Hardship Manager, visited Nov 2014 OE has since offered funding for community home audit training and audits Business plan under development

25 Collaborative solutions Long term sustainable solutions in partnership Legal Aid, Origin Energy, Essential Energy, NSW Office of Environment and Heritage, the local Dareton Aboriginal Land Council, housing providers and community agencies to deliver some targeted assistance such as energy savings / efficiency education and home energy visits / retrofits. The Dareton community has identified other priorities such as training for local workers to be energy assessors, and solar power as a longer term objectives. Challenging work EWON s Aboriginal Project Officer opens the door, long term engagement / relationship building, acceptance of cultural differences

26 A thought to finish on..

27 CONTACT US Freecall Freefax Web Freepost Reply Paid Sydney South NSW 1234 Interpreter services TIS Keeping essential services within reach Facebook.com/ewonsw Twitter.com/ewonsw