Energy companies able to defer bills for six months to avoid collapse

 The energy commission has moved to avoid retailers collapsing in the virus downturn
The energy commission has moved to avoid retailers collapsing in the virus downturn

Energy customers aren't the only ones seeking requests to defer paying their power bills due to COVID-19.

So, too, are energy companies themselves, following a decision handed down by the Australian Energy Market Commission.

The decision has allowed energy retailers to defer paying their bills to network providers for six months, to ensure energy companies don't collapse due to the economic downturn brought on by coronavirus.

It comes as more Canberrans were seeking to be placed on payment plans this year with thousands losing their jobs due to coronavirus restrictions.

Acting chair of the commission, Merryn York, said the move would help to protect energy customers in the months ahead.

"We want to avoid the domino effect of multiple retailers failing because this would put immense pressure on the remaining businesses to service larger numbers of customers unable to pay their bills during the pandemic," Ms York said.

"This could reduce choice and increase prices."

Figures from the Australian Energy Regulator have revealed more than 20,000 customers have requested to be placed on payment plans for their energy bills between December 2019 and March this year, with household energy debt sitting at $35 million.

In their decision outlining they payment deferral, the commission said the impact of coronavirus restrictions was likely to increase energy debts by consumers, leading to a downturn in energy company revenue.

"While the impacts of the pandemic to date appear to have been manageable for most retailers, the full scale of these impacts are still unfolding and are likely to detrimentally impact retailers' cash flows over the next six to 12 months," the commission said.

Some energy companies, including Origin, AGL and Energy Australia are exempt from the changes, along with government retailers.

"Insulating consumers in this way is an entirely appropriate and important thing to do," Ms York said.

"Both [the commission] and the regulator recognise that asking retailers to manage higher levels of non-paying customers is causing financial strain, particularly for smaller businesses."

Social service organisations have said energy customers seeking to defer payment for energy bills due to coronavirus impacts were heading for cliff, with higher power bills for the winter months set to come through around the same time as JobKeeper and JobSeeker payments were reduced.

While energy retailers have said that financially vulnerable customers won't have their power disconnected up to and potentially beyond the end of October, the commission said financial protections to large numbers of customers posed risks.

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"Consumers' access to bill relief of hardship payments should not be affected regardless so whether their retailer qualifies," Ms York said.

"Some have suggested that the risk of consumer bad debts should be shared across the supply chain. That's beyond the scope of this temporary measure to boost cash flow."

Retailers will be able to defer their payments for network charges between August and February 2021.

This story Energy companies able to defer bills for six months to avoid collapse first appeared on The Canberra Times.