Across Australia, almost three million households – around 28 per cent of all customers – receive financial assistance for their energy costs in the form of concessions or rebates on their electricity bills.

These entitlements are supposed to help ensure that people on low incomes or experiencing financial hardship are able to pay their energy bills without forgoing other essential expenditure.

Yet too many people in Australia still can’t afford to pay for the energy they need, leading to one or more damaging outcomes:

• Non-payment of energy bills, leading to growing energy debt to their energy retailer and possible disconnection of their energy supply.
• Defaulting on other financial obligations in order to pay energy bills, leading to indebtedness and loss of housing or other essential goods or services.
• Going without other essentials such as food or medicine in order to afford energy bills.
• Reducing energy use by not heating or cooling their homes, cooking less or taking fewer showers, leading to serious health or social outcomes.

With energy price rises still expected in the next few years, these problems will only get worse.

For decades, energy consumer advocates have been concerned that the design of most state and territory energy concessions, delivered as a fixed amount (flat-rate), is not adequate to meet needs; not responsive to changes in price, seasons, circumstances, and technology; and leads to inequities in the assistance they provide with some households getting more assistance than they need, and others getting less.

Advocates are also concerned that many people who need additional financial support to afford their energy bills are missing out due to eligibility restrictions or accessibility barriers. Failure to clearly articulate clear objectives and criteria regarding who needs assistance and how much assistance is necessary has hindered good policy design.

This concern was echoed by the Australian Competition and Consumer Commission (ACCC) in 2018 when it concluded that most state and territory energy concession schemes delivered via a fixed amount were not fit for purpose, being poorly targeted and giving disproportionate support for low and high-consumption households. The ACCC recommended Energy Ministers should urgently improve energy concessions schemes in several ways, including means testing and targeting people most in need, giving a fixed rebate on the supply charge and a percentage discount on usage, and improving access. These recommendations have not been acted upon.

On behalf of the Energy Concessions Enabling Group, SACOSS and ACOSS commissioned research to better understand the flaws and inequities in existing concessions schemes and propose a new approach that better meets households’ needs. This report looks at what is required to deliver effective energy concessions, summarises the research findings, and makes a series of recommendations.