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Reflect

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The Ombudsman's view

Cynthia Gebert

"We explored customer debt and the related issue of the Payment Difficulty Framework in a major investigative report, released in December 2020, called Missing the Mark."

Our case numbers dropped in the last quarter of 2020, down 20% from the previous quarter, despite expectations of higher cases due to the effects of the COVID-19 pandemic and associated lockdowns. Predicting rises or falls in overall case numbers has proved difficult during the pandemic, as the community’s response, combined with government support and the response of the regulator, have changed significantly during this period.

We did see a rise in backbilling complaints in the final quarter of the 2020 calendar year, up 20% compared to the previous quarter – reflecting a high proportion of overall cases, considering overall case numbers are down. Backbilling reforms began on 1 January 2021 and the rise in complaints is likely related to these measures.

Disconnection cases spiked in the lead-up to Christmas. While disconnections overall are low, due to regulatory expectations set during the pandemic, we remain concerned about the possibility of a future surge in disconnections, particularly in response to the amount of customer debt in the sector.

We explored customer debt and the related issue of the Payment Difficulty Framework in a major investigative report, released in December 2020, called Missing the Mark. We hope this report starts some valuable discussions in the sector.

We delve into this and more in the latest edition of Reflect. As always, you can find more data relating to our casework in the Data Hub.

The big picture

  • From October to December 2020, we received 4,728 cases, down 20% from the previous quarter and down 27% on the same quarter in 2019.
  • There were big drop-offs in case numbers, with supply cases dropping 52%.
  • Provision was the only issue type to go against the trend, rising 0.4% compared to the previous quarter, however, it is lower than the same quarter of 2019 (down 14%).
  • Provision cases were driven by electricity (up 7%) while gas provision cases dropped (down 8%).

We’re watching a rise in disconnection cases

  • Disconnection cases rose 39% in October-December 2020, compared to July-September 2020.
  • The increase was largely due to a rise in electricity disconnection cases in October-December 2020, compared to July-September 2020 (up 47%).

Backbilling was one of the few billing categories to rise in October-December 2020

  • Up 20% compared to July-September 2020.

Disclaimer

  • This is an archive version of Reflect without data visualisations.
  • Reflect and Data Hub data is a ‘live’ view of case data up to the end of the previous period.
  • Cases can sometimes be amended, reopened and reallocated — adjustments made to cases in previous quarters will be shown in the previous quarter's figures within the visualisations.
  • For these reasons, there may be discrepancies between previous quarter data presented in the visualisations and the information presented in past editions of Reflect.

Issues watch

Disconnections

At the end of 2020, overall case numbers were low but we did notice a worrying late surge in disconnection complaints.

Our overall case numbers fell in the final three months of 2020 to a low of 1,319 in December 2020, dropping from a plateau of just under 2,000 cases a month from July and September 2020. December was the lowest monthly case total for the year, less than April 2020 when there was a sharp drop in cases due to the Victorian COVID-19 lockdown.

Despite the low case numbers, we did see a spike in disconnection cases in the lead-up to Christmas. We registered seven disconnection Investigations on 16 December alone, just before the Christmas period where disconnections are prohibited. In many of these disconnection cases, customers had accrued substantial debt, potentially highlighting issues with how the Payment Difficulty Framework (PDF) was applied. We examined the PDF issue in our December 2020 investigative report, Missing the Mark.

Backbilling

Backbilling complaints were high in mid-2020 and remained prominent at the end of the year. By the end of 2020, we had registered 388 backbilling complaints for the 2020/21 Financial Year. While these numbers are roughly equal to the same period in the previous Financial Year, overall case numbers this Financial Year are well below those for 2019/20. In that context, backbilling complaint numbers remain higher than expected.

Much of the increase in backbilling complaints relative to overall case numbers was likely driven by the backbilling reforms which came into effect on 1 January 2021. These reforms reduced the allowable backbilling period from nine months to four months. Backbilling will remain an issue to watch as the post-reform implementation period is likely to give rise to further billing and other administrative errors.

Gas high bills

We often see a spike in high gas bill complaints in the last quarter of the calendar year, as this is the period when customers receive their winter gas bills. The winter period typically sees increased usage of heaters, often fueled by gas, and can lead to high bills arriving in the last quarter of the year.

We were concerned that the spike in high gas bill complaints in the last quarter would be higher than usual, due to unusually large unemployment rates and social support dependence, along with increased fuel usage due to Victorians being confined to their homes during the COVID-19 lockdown. The high gas bill spike did not appear in the last quarter. While high billing complaints remained our dominant complaint sub-issue, they were not unusually high and electricity was the dominant fuel type, accounting for around 60% to 70% of high billing complaints.

Outreach

Virtual outreach continued in the last quarter of 2020, with sessions held around Victoria with a variety of groups.

Ombudsman Cynthia Gebert hosted a virtual energy vulnerability event with representatives from energy companies and community partners. The focus of this was to grow and maintain awareness of the lived experiences of Victorian energy consumers and the barriers they may face accessing support as well as ensuring awareness of EWOV services and approach. Community groups shared insights into the communities they support and offered practical solutions to enhance accessibility for their communities to EWOV.

We held community events in the local government areas of Towong, Alpine, Wangaratta and Wodonga with the Hume Riverina Community Legal Centre, sharing insights on trends, customer rights and responsibilities. Attendees also shared their stories about last summer’s bushfires and the challenges they’ve faced.

We co-hosted an event with Anglicare with a focus on engaging with those who are supporting communities impacted by the bushfires. As the communities move into recovery, we want to recognise their journeys and learn from their experiences with their energy and water companies. We combine these insights with data to help us identify emerging trends.

We also ran sessions with South East Water, Wannon Water and City West Water, focusing on raising awareness of the broader role we play in the community, and the trends and issues during COVID-19.

Customer stories

Billing

Embedded network customer’s missing bills leads to investigation

BILLING FEES AND CHARGES | EMBEDDED NETWORK

Case number: 2020/16329

Xu Kang* contacted us about fees and charges on his business electricity account. Xu Kang’s business is within an embedded network and he told us that bills weren’t issued to him because of an error. He found out that he owed $3,000 and he asked for copies of the bills so that he could pay the balance. He said he still didn’t get copies of the bills and his debt continued to increase. He told us he eventually received a bill for $4,300, which included $900 of missed pay-on-time discounts, by his calculation. Xu Kang paid the bill but asked for a refund for the missed pay-on-time discounts, as he didn’t receive the bills on time due to the embedded network’s administrative error. When he didn’t receive the refund, he decided to contact us.

We started an Assisted Referral to Xu Kang’s embedded network to try to resolve the matter. Xu Kang contacted us after this referral to say that the embedded network told him the pay-on-time discounts missed were less than his calculation. The embedded network stopped returning his calls and emails, and so he contacted us.

We started an Investigation. In discussing the case with Xu Kang’s company we learned that another tenant had incorrectly signed up for an account at his address in March 2020, and the embedded network had mistakenly closed Xu Kang’s account. The bills in question included pay-on-time discounts up to 1 September 2020, when embedded networks were required to lower their prices to match the Victorian Default Offer (VDO). From 1 September 2020, Xu Kang’s account didn’t have a pay-on-time discount but featured the new lower tariff and supply charges.

Xu Kang’s embedded network apologised for not applying the pay-on-time discounts totalling $787.37 and agreed to credit his account. As part of our Investigation, we discovered that Xu Kang’s case manager had been on leave and that was why the embedded network had stopped returning his messages. The embedded network apologised and offered an additional $50 in recognition of this. Xu Kang accepted the proposed resolution and his case was closed.

*Names have been changed

Credit

Twelve months without power and in debt

CREDIT | DISCONNECTION | FINANCIAL HARDSHIP

Case number: 2020/17136

Nigel* got in touch with us because of debt and payment difficulties. He told us he had not had electricity at his home for 12 months. In and out of hospital for the past 18 months and living with friends, he said he had experienced long-term financial hardship, made worse by serious health issues. He told us he had a debt of around $700 which had been sold by his electricity company to a credit agency. He contacted the credit agency and made arrangements to pay $50 per fortnight but wanted his electricity reconnected, to enter a payment arrangement with his electricity company instead of the credit agency, to discuss the Utility Relief Grant Scheme and to access best offer and energy consumption advice.

Due to Nigel’s long-term hardship and health issues we initiated a discretionary upgrade straight to Investigation. As part of our Investigation, we ensured Nigel’s electricity was reconnected. Nigel’s company confirmed that it had sold his debt of $767.15 to a credit agency. It arranged to have the credit default listing removed and to buy the debt back from the agency. It also offered to waive the debt and provided advice about the best offer available to him. It said it could offer a payment plan once a new account is established.

We tried to contact Nigel and left him messages to let him know of the developments in our Investigation but we didn’t hear back from him. Because of this, we closed his case, writing to Nigel of the details of his company’s response and offer, and directing him to contact his company’s resolutions team.

*Names have been changed

Provision

Delayed reconnection and living in a caravan

EXISTING CONNECTION | RECONNECTION DELAY

Case number: 2020/17629

Darrell* called our 1800 number. He told us he was dissatisfied with his local electricity distributor because of a reconnection delay. Darrell had resorted to living in a caravan because of delays in reconnecting electricity to his home. He told us the electricity line to his home was pulled from the property when a truck hit the line. His distributor installed an electricity pit needed for underground electricity. Darrell said it told him he would need to have his retailer send a service order in order to have the electricity connected. He then had a request from his retailer to send in an application to have one meter at his property abolished as there were two meters on the property. He completed the required paperwork, including the Certificate of Electrical Safety, only to find out from the distributor that the electricity pit needed to be energised and that the service order from his retailer had been rejected because of that issue. His retailer then asked for the Certificate of Electrical Safety, which he had already sent. He said his retailer told him that it sent a new service order but that it may take up to 20 business days for the electricity to be connected.

We raised an Investigation, bypassing the Assisted Referral stage of our process because of the length of time Darrell had been without power. We contacted the distributor with Darrell’s concerns and requested that his supply be reconnected. We were able to bring Darrell’s reconnection forward and to provide Darrell with the contact details of a staff member at his distributor if he had any questions. Darrell indicated he was happy with the resolution and we closed his case.

*Names have been changed

Outreach

Home destroyed by bushfires, still receiving backbills

BACKBILL | BUSHFIRES

Case number: 2020/17126

Tony and Jean’s* home was destroyed by bushfires in January 2020. They contacted us because of a backbill they had received about the property. In a previous case we investigated, they were issued with a refund for bills that were sent to them for electricity usage after their property had been destroyed. The account was closed in May 2020 and they believed they would not hear from the electricity retailer again, however, near the end of 2020 they received a bill for $22 and then a week later they received a letter stating that the company owed them that amount and would refund it if they could get in contact with their account details. They advised that they were still traumatised by the events in January 2020 and were upset about receiving the correspondence. They sought a resolution for the retailer to review its processes and make sure it did not contact previous customers in the future.

We raised an Investigation without a usual Assisted Referral because of the customer’s mental health impact due to the bushfires. We put Tony and Jean’s complaint to their retailer. It offered an apology about the system-generated bill they had received. It committed to investigating its internal processes to prevent the issue from happening again. It also offered to send Tony and Jean $100 as a gesture for the inconvenience caused. Tony and Jean accepted the apology and commitment to action, however, they opted not to accept the money. We closed the case.

*Names have been changed

Scheme participants

In our Data Hub, you'll find the latest quarterly case data for all of EWOV's scheme participants.

Systemic issues

From October to December 2020, we closed four energy systemic issues identified through our case handling.

Appliance usage information incorrect

An energy retailer published a tool on its website where usage information could be broken down by appliance. Our technical consultant reviewed the tool as part of complaints that reached us and formed the view that the information was incorrect. The retailer removed the tool from its website and contacted affected customers to explain the tool was intended as a guide only. SI/2020/45

Dashboard overestimating predicted bills

A customer account dashboard created by an energy retailer which was designed to predict the cost of upcoming bills was shown to be overestimating the bills by three to four times for those customers who complained to us. We investigated and found that the dashboard wasn’t suitable for customers who received a large solar rebate. The company decided to disable the dashboard while they worked to improve it. We determined the historical impact of the dashboard to be low, as it would be more concerning if the dashboard was underestimating bills, as this could lead to unexpected high bills for customers. SI/2020/36

Fraudulent door-to-door sales

We identified fraudulent activity related to door-to-door sales as a result of our case handling. The energy retailer reported the individual to police and cancelled the affected sales. We determined that the customer identification process used by the retailer was suitable, however, it was open to fraudulent abuse. The Essential Services Commission (ESC) is making further enquiries. SI/2020/34

Non-compliant disconnection notices

We found that an energy retailer was issuing disconnection notices that we believed to be non-compliant, as they did not outline reconnection procedures, a breach of the Energy Retail Code. The retailer amended its notices but stated that it didn’t believe it had breached the code. We sought the ESC’s advice and it requested that we close our investigation so that it could investigate. The ESC found that the retailer had breached the code and sent the retailer a formal warning. SI/2019/2

Public submissions

Consultation paper – Bill contents and billing requirements

Australian Energy Market Commission (AEMC)

We contributed to a joint submission with the New South Wales, Queensland and South Australian energy and water ombudsman services in response to the consultation paper about a proposal for the Australian Energy Regulator (AER) to develop a mandatory guideline for bill contents, replacing the current rule 25 of the National Energy Retail Rules (NERR). Our submission was broadly supportive of the change and we offered insights from the Victorian experience of bill content reform.

Read the submission

Consultation paper – Data strategy

Energy Security Board (ESB)

We led a joint submission with the New South Wales, Queensland and South Australian energy and water ombudsman services about a proposed approach to the data strategy, which outlined a way to take Australia’s energy system forward into the next decade and beyond, when increasing diversification will lead to greater complexity. We strongly supported the ESB in its efforts to ensure complexity does not result in poor consumer outcomes.

Read the submission

Reports

Investigative report – Missing the Mark: EWOV insights on the impact of the Payment Difficulty Framework

We released a substantial investigative report highlighting the successes and failures of the Payment Difficulty Framework (PDF) since it started on 1 January 2019. We concluded that, while disconnections and credit complaints have dropped, there is still room for significant improvement in the application of PDF, particularly for vulnerable consumers with unmanageable levels of debt. The report provides context for the Essential Services Commission’s upcoming review of the PDF.

Read Missing the Mark

Glossary

Visit the Data Hub for a full glossary of terms.