Poor and struggling West Australian households are racking up record amounts of debt to their power providers as state government COVID protections fall away.
A report by the state's economic watchdog examining the performance of WA electricity retailers shows average debt levels owed by customers in financial hardship hit record highs in the year to June 30.
The increase came despite a $600 handout by the government to every residential electricity customer's account and measures to shield consumers from the economic effects of the pandemic.
Figures in the Economic Regulation Authority report, to be released today, show average bill debt for hardship customers of state-owned utilities Synergy and Horizon Power leapt from $772 in 2019-20 to $1,195 last financial year.
The rise was even steeper among hardship customers of regional power provider Horizon, jumping from $859 to $1,547 over the same period.
Some positive trends
However, the ERA noted that while average hardship debt was increasing, overall there were fewer customers who were having trouble keeping on top of their bills.
Fewer customers were on hardship programs, with combined numbers for Synergy and Horizon falling to 24,400 last year compared with 35,000 two years ago.
The authority said the proportion of household customers on instalment plans fell significantly in 2020-21 to 4.2 per cent — the lowest rate in six years of reporting.
What's more, it said the number of customers disconnected for failing to pay their bills plummeted from 15,014 in 2019-20 to 2,683 across WA thanks to a state moratorium.
According to the ERA, WA also compared well with other states such as South Australia and New South Wales, where customers in hardship had far higher levels of debt and were more likely to be disconnected.
Despite this, ERA chairman Steve Edwell said some trends were heading in the wrong direction.
Safeguards fuel complacency?
He said customers who were already struggling appeared to be getting even further into debt with their power providers, querying whether temporary safeguards might have given people a false sense of security.
Among the protections were a freeze on electricity prices, extra time to pay a bill, easier access to instalment plans and financial hardship programs and a pause on disconnections.
"It is possible that the limitations on disconnections in place for most of 2020-21 reduced the incentive for some customers to constructively engage with their retailer to manage bill debt," Mr Edwell said.
"The ERA expects that this issue will be addressed by retailers restoring their normal collections and disconnection policies during 2021-22."
Mr Edwell said the ERA was introducing a number of changes to beef up safeguards for hardship customers including minimum $300 limits on disconnections, easing access to help and providing better protections for victims of family and domestic violence.
The agency also noted that for some struggling customers, instalment plans were not enough to prevent debts owed increasing with each bill.
"The amount of debt owed is likely to continue increasing unless these customers are able to access additional assistance," it said.
