Disconnection (electricity/gas) and restriction (water) for debt
Information for community agency workers in Victoria, Australia    

Getting reconnected or avoiding disconnection
Assessing the company’s actions
Wrongful disconnection payment (WDP) (electricity/natural gas)
What does EWOV do when it receives a complaint about disconnection?
Disconnection trends since the wrongful disconnection payment
Victoria’s disconnection rates compared to other states
Disconnection in error
Restriction of water for non-payment
Related EWOV webpages
More information: EWOV’s fact sheets

Do you have a client who is facing disconnection of electricity or gas or restriction of their water supply? Or has their supply already been disconnected or restricted? The first thing is to get their supply reconnected or remove the threat of supply being cut off, then you can consider other
aspects of the situation.

Getting reconnected or avoiding disconnection

Talking with the company

• You or your client needs to talk to the company.  If it’s you, the company will ask about your authority to act. If you don’t have a form of your own, the company may be able to fax or email one to you. 
  
  
• The company is likely to ask for a substantial amount of arrears before it will reconnect or remove the threat.  If the amount asked for is beyond your client’s capacity to pay because of financial hardship, it is important to make that situation clear to the company. It has different obligations once it is made aware that its customer is in hardship. It has to take your client’s capacity to pay into account. 
  
  
• Once the company knows your client has financial difficulties, the situation will probably come down to negotiating a payment plan. The company is likely to want your client to pay an amount that covers ongoing usage, as well as making inroads on the arrears that has built up. 

 When to contact EWOV

If you're not able to come to an arrangement despite two attempts, you can contact EWOV (on 1800 500 509) and we will investigate the complaint. (We’ll need an Authority to Act as well.)

Once a complaint has been accepted for investigation by EWOV, your client’s supply cannot be disconnected. If their supply has already been disconnected or restricted,
the company must reconnect or remove the restriction, without charging a fee to do so.
(This is subject to EWOV’s discretion where, for example, there are electrical safety issues.) 

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Assessing the company’s actions

Once the threat or reality of disconnection or restriction has been removed, you can consider
whether the company acted appropriately. This is important for electricity and gas disconnections because of the wrongful disconnection payment (WDP). There is no WDP equivalent for water restrictions.

If your client’s electricity or gas was actually disconnected for non-payment, check if the company:

• sent a bill in the first place
• sent a reminder notice not less than 14 business days from the date it sent the initial bill. 
  The reminder notice must have a new pay-by date that is not less than 20 business days
  from when the bill was originally sent. (However, if your client was on a ‘shortened collection cycle’ which is something the company can do if there’s a patchy payment record, no reminder notice is required.)
• sent a disconnection warning notice. For customers not on a shortened collection cycle, the disconnection warning notice cannot be sent earlier than 22 business days after the original
  bill was sent. For customers on a shortened collection cycle, there is no reminder notice and
  the disconnection warning notice is sent not less than 16 business days from when the
  original bill was sent.
• included certain information on the disconnection warning, namely
• a telephone number of the company that the customer can ring to inquire
  about payment assistance
• EWOV’s phone number.
• disconnected your client no sooner than seven business days after the disconnection
  warning was sent.

If the above steps were not followed, then a WDP may apply (see below for more details).

Even then there are some provisos about the company’s right to disconnect. If the customer makes
contact with the company after the disconnection warning and before the disconnection, the company
has to accept a reasonable assurance that the customer is willing to pay and negotiate a new payment arrangement. Only if the customer does not meet that new payment arrangement is it entitled to disconnect.

There’s another important proviso. If the customer’s failure to pay the bill is ‘through lack of sufficient income’, the company is obliged to:

• comply with clause 11.2 of the Energy Retail Code about assessing the customer’s capacity to pay and offering assistance, and
• use its best endeavours to contact the customer in person or on the phone.

The ‘capacity to pay’ clause of the Code requires the retailer to:

• assess the customer’s capacity to pay taking into account advice from a financial counsellor
  where applicable
• offer the customer an instalment plan (unless the customer has had two instalment plans in
  the past year and not met them)
• provide details on concessions and assistance and give advice by phone about energy
  efficiency and the availability of an independent financial counsellor.

If the company does not comply with these requirements, a WDP may apply (see below for more details).

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Wrongful disconnection payment (WDP) (electricity/natural gas)

In December 2004, the Victorian Government introduced a new law that requires energy retailers in
Victoria to pay residential customers who have been disconnected wrongfully $250 a day for each day
they were disconnected, or part thereof. It doesn't apply to water companies. 

What is ‘wrongful disconnection’?

It's a disconnection where the electricity or natural gas retailer has failed to comply with the terms and conditions of its contract with the customer. In practice, that means whether the retailer followed all the provisions of the Energy Retail Code because that code is part of the terms and conditions of the contract between the retailer and the customer.

What can make a disconnection wrongful?
See above.

Who decides if the disconnection was wrongful?

Energy retailers may, in reviewing their actions, decide a disconnection was wrongful and make the payment themselves.

When EWOV investigates a disconnection complaint, we carefully consider whether a ‘wrongful disconnection payment’ (WDP) applies.  The energy retailer will also closely review its actions.

If we think the WDP applies but the retailer disagrees, or if we don’t think the WDP applies but the customer (or their authorised representative) does, we refer the question of WDP applicability to the Essential Services Commission (ESC) for a decision.

These decisions are published (identifying the retailer but not the customer) on
the ESC’s website.

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What does EWOV do when it receives a complaint about disconnection?

As with any other complaint, the company must have an opportunity to resolve the matter before
EWOV becomes involved. Normally that means if a customer hasn't phoned the company at all
before contacting EWOV, we'll refer that customer back to the company’s call centre. However, if
it’s an actual disconnection and the situation seems quite serious, we'll often contact the company
and ask it to phone the customer.

EWOV won't take a disconnection case for investigation unless the customer has made two
attempts to resolve the situation. Once we've taken the case for investigation though, we ask
the company involved either to reconnect the service (or de-restrict it if it’s water) if it has been disconnected or not to disconnect if the complaint is about an imminent disconnection.

It's standard procedure for EWOV that a customer is expected to pay the undisputed portion of
money owing. However, in disconnection cases, there are often capacity to pay issues which make
this policy difficult to apply. EWOV does expect that customers will negotiate a payment plan that is within their capacity to afford. It's not unusual for EWOV to suggest to a customer who has capacity
to pay issues that they see a financial counsellor. Sometimes, especially if there is difficulty in negotiating a payment plan, EWOV may arrange for the customer to see a financial counsellor, specifically to advise on capacity to pay.

A typical resolution to a disconnection case is the negotiation of a payment plan.
Often the customer will be referred to the company’s hardship team.

If the customer doesn't adhere to the payment plan and is disconnected again, it may not be
possible for EWOV to accept another complaint from that customer, unless something has changed.

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Disconnection trends since the wrongful disconnection payment

What effect has the WDP had on the rate of disconnections in Victoria?

The following table is taken from the ESC’s Energy Retail Businesses Comparative Performance Report for the 2006-07 Financial Year (p. 69).

Historical Disconnection Rates

Year	Electricity		Gas
	Disconnections	Reconnections	Disconnections	Reconnections*
1996	1.19%	0.82%	1.28%	n/a
1997	0.56%	0.30%	0.92%	n/a
1998	0.49%	0.28%	1.00%	n/a
1999	0.36%	0.19%	1.20%	n/a
2000	0.45%	0.21%	1.09%	n/a
2001	0.55%	0.24%	1.08%	n/a
2002	0.58%	0.28%	0.75%	n/a
2003	0.70%	0.32%	0.28%	n/a
2004	0.84%	0.43%	1.10%	n/a
2004-05	0.54%	0.25%	0.69%	n/a
2005-06	0.22%	0.07%	0.27%	0.05%
2006-07	0.33%	0.12%	0.50%	0.18%

* The retailers only commenced reporting gas reconnections in the same name from
1 January 2006 so there was only six months of data reported in 2005-06.

EWOV cases about disconnection

EWOV cases about actual disconnection of energy show a similar pattern: a drop following the introduction of WDP in December 2004.  However, we noticed an increase
in 2007, although not to the level of disconnections prior to the introduction of WDP:

EWOV cases about the actual disconnection of electricity and natural gas 2004-07

	Electricity	Gas
July to December 2004*	351	285
January to June 2005	113	123
July to December 2005	82	76
January to June 2006	84	91
July to December 2006	82	96
January to June 2007	129	160
July to December 2007	197	122

* the Wrongful Disconnection Payment provisions came into effect on 8 December 2004.

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Victoria’s disconnection rates compared to other states

This table is taken from the Australian Energy Regulator’s State of the Energy Market 2007 report
(p. 195).

Share of residential customers disconnected for failure to pay amount due

	2002-03	2003-04	2004-05	2005-06
New South Wales	0.68%	0.80%	1.00%	0.90%
Victoria	0.60%	0.80%	0.50%	0.22%
Queensland	1.31%	1.30%	1.57%	-
South Australia	0.80%	2.10%	1.20%	1.14%
Tasmania	0.80%	0.65%	0.44%	0.72%
ACT	0.40%	0.30%	-	-

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Disconnection in error

Disconnection in error doesn’t happen very often, but it can happen.  Typical causes are:

• a previous resident’s request for disconnection being acted on after the
  new resident has moved in
• a mistake in the address to be disconnected.

In these cases, reconnection is very quick, as soon as the error is realised.  However, WDP may
not be payable in the case of error. It can depend on whether the disconnecting retailer had
a contract with the disconnected customer.  It may be possible for the customer to apply for compensation if, for example, food was spoiled while the electricity was disconnected, or for
an energy retailer to make a financial gesture in recognition of the customer service deficiencies.

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Restriction of water for non-payment

Urban water is not disconnected for non-payment in Victoria. Instead the flow is severely restricted
to no less than two litres per minute at the tap nearest the meter. EWOV receives far fewer cases
about restriction of water than it does about disconnection of energy. Nevertheless, a significant
number of restrictions take place. 

The following quotation is from the ESC’s Water Performance Report: Performance of Urban Water and Sewerage Businesses 2006-07 (April 2008) (p. vi):

In 2006-07 a total of 2,125 domestic customers (including 438 domestic customers on concession) and 40 non-domestic customers had their water supply restricted for non-payment of water bills. This is an increase of 16 per cent on the previous year. All bar 123 of these domestic restrictions occurred in regional Victoria.

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Related EWOV webpages

Need help paying bills?
The legal framework protecting consumers
Government concessions and grants

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More information: EWOV’s fact sheets

You can download our fact sheets which are intended for general consumer use:

Payment assistance
Disconnection (of electricity/gas) and restriction (of water) for debt

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Last updated: 9 June 2008
Feedback about this webpage: website@ewov.com.au
For enquiries and complaints, phone 1800 500 509 or see our enquiries and complaints webpages.