Good morning and thank you to the Commissioner and the AER for the opportunity to speak today. My name is Rose McGrath and I am from the Essential Services Team at the Queensland Council of Social Service. Firstly like to acknowledge the First Peoples of the land we are meeting today – the Jaggera and Turbull peoples of the Brisbane area. For those that may not be familiar with what we do we are the peak body for the community services sector in Queensland – and our members include non-government organisations large and small from the St Vincent de Paul Society and UnitingCare, through to small local neighbourhood centres delivering vital services in local communities across the state. Our role is not only to SUPPORT and provide a voice for those service providers and the people who work and volunteer in those organisations – but also to give a voice to the people they serve. People who are experiencing some other form of disadvantage and vulnerability in their lives – whether that is low income, disability, etc. Our organisation has engaged with the consultation process to determine the network pricing rules firstly by the AEMC in the development of the rules and then by Energex and Ergon in the development of their TSSs. We have made a submission to both Energex and Ergon and have participated on the workshops which both companies. These submissions are on the QCOSS website and on the websites of both distributors. Just for the record we are also on the Ergon Customer Council now for a few years and have recently been engaging with Energex on their Vulnerable Customers project. I would like to also acknowledge and thank the staff of both companies working on TSS process for their efforts to explain and include consumer and community representatives. Secondly, I would like to acknowledge the other consumer and community organisations that have also engaged with the TSS process here in Queensland. I hope that it has improved the process and got better outcomes for consumers. . 1
I will obviously talk about Energex or Ergon’s proposed network tariffs but today as there is a wider audience, I want to take the opportunity to canvass the value proposition that we all have a role to play to ensure that cost reflective tariffs work for all people. This is not just about Ergon and Energex and how they comply with the rules. I will talk you through: • Why is this process important for people on a low income or at risk in some way due to a vulnerability. • The barriers to getting the benefits of network tariff reform (also referred to as cost reflective tariffs in this presentation) especially for low income and vulnerable people; • The enabling factors that will we purport will help; and • Some issues/concerns we have going forward 2
The network tariff reform is a big deal and game changer for the electricity sector. From what we are told, we are all to benefit in the long term as the demand tariffs will reduce peak demand and we can stop the augmentation of the RABs – which we know by 2019-20 in Qld is projected to be in excess of $27 Billion. In the long term the RABs will be much reduced and stable and we will be in energy utopia and we will be all driving around in the autonomous, electric vehicles with our (very cheap and accessible) batteries and solar. And everyone is a winner! However in the shorter term with any tariff reform there will be winners and losers. We want to ensure that vulnerable people are not worse off because: • as electricity is an essential service; and most importantly, • they cannot afford the bill shock 3
So that is the first key message I want to make today – people cannot afford the bill shock during what will be a period of transition from the current tariffs to the new regime. This is because in Queensland the experience of low income vulnerable customers in recent years has not been a good one. We all know that electricity prices have increased significantly over the last ten years. The community sector is seeing this impact and they tell us that……READ OUT 4
Here we have selected a comment from an ER volunteer who states… READ QUOTE 5
But I hear you say but prices are stabilizing and I know that Ergon and Energex are finding efficiencies etc. And I have borrowed this chart from the QPC draft report to illustrate the point that retail prices are stabilising. However this is all very well but these prices are stabilising at a very high relative level if you are a low income… 6
…….and we can see this in a very simple example of a single person on the newstart allowance and essentially price stablising means that you will be paying about 15% of your after-housing income in energy and this is assuming you very frugal and living in one of the cheapest rental areas in Brisbane. Obviously if you were in a higher rental area then the proportion of after-housing income paid in energy would be much higher. Also like to use this example to point out that Queensland has not have a well targeted social policy to assist people on certain concessions such as newstart. There is not rebate for single people and couples without children. 7
For those who cannot manage the 15% of their income then chances are they will end up on the hardship programs which in Qld the number of customers accessing hardship has been steadily rising. In the June quarter of 2014-15, over 15,000 Queenslanders were on a hardship program with their retailer – which is the highest number ever. This graph shows the hardship program participation is growing as a proportion of the overall customer base – so we can see that there is growing demand for hardship support and a growing proportion of customers needing assistance. 8
Or even worst they end up getting disconnected for non payment of their bill. This has been increasing in Qld in recent years as we can see in this chart. Just under 30,000 households disconnected during 2014-15. 9
Now the second key message today is that we must walk before we can run with tariff reform. People need to understand what they are signing up – can’t rush them – otherwise risk community backlash and people on low incomes will get bill shock which will lead to falling behind in payments, growing debt and ultimately disconnection for non payment of bills. We are expecting people to make fundamental shift in the way people think and use electricity. People will need to know how to work out the cost of running their appliances and what it means for them to put on a few different appliances at the same time. They will need to know about the implications of “appliance stacking” and if necessary spread that out over and outside the half hours the charging window. 10
There are some real barriers to achieving this outcomes for some people. When we asked the community organizations in our annual survey which word best described their clients – we got this response. Please note that as we allowed multiple responses the percentages do not add up to 100%. But the vast majority selected ‘in crisis’ and ‘vulnerable’ with a few saying they were also ‘confused’. There is a long way to go to shift these consumers to becoming informed, confident and empowered consumers that can navigate tariff reform effectively. They will need to understand them, understand the energy costs of the fixed and non fixed appliances in their properties, and then decide how to change their behavior (if they can). 11
For starters there are some real barriers about information and communication. We asked this question last year (2015) in our survey of community organisations and put the response in pictogram form. As you can see it is – overwhelmingly LITERACY. LACK OF UNDERSTANDING, INTERNET ACCESS, LANGUAGE, CONFIDENCE, ETC. 12
Many people in the community have literacy and numeracy barriers. An especially vulnerable group will be refugees. From our Bright Actions (LIEEP) program we know that for recently arrived refugees that about 24% (415 people) have effectively no education out of sample of 1,712 people and about 45% have either no or just primary school education. 13
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