MEDIA RELEASE: Aged reeling as ‘bill shock’ bites

Aged reeling as ‘bill shock’ bites | The Australian


AS the temperatures soar this week so do the concerns of many older Australians worried about the increasing cost of electricity bills.

By mid-year electricity prices will have climbed a whopping 40 per cent since the same time in 2010, and household bills are skyrocketing despite electricity consumption plunging downwards.

All electricity users are going to be doing it a bit tougher staying cool and making ends meet. But for older Australians, the implications are worse.

The reasons why are pretty straightforward. Older Australians usually spend more time at home and rely more on their residential energy supply than younger people, who spend part of their day at work or school.

Older Australians are also more likely than others to make sacrifices and forgo other activities to make sure their bills are paid in full and on time, and to cut back on consumption to reduce the bill itself.

Most retirees are dependent on fixed incomes that haven’t increased enough to make the rising costs affordable.

While electricity bills have risen 40 per cent the aged pension will have increased just 11 per cent for single people and 4 per cent for couples. For self-funded retirees, low interest rates mean income from their savings has actually decreased.

This means older Australians are also less able to afford measures to improve the energy efficiency of their home, such as replacing old fridges or electric hot water systems, or to take advantage of solar generation opportunities, measures of great benefit to consumers who are in a financial position to act.

Many Australian households experience “bill shock” when quarterly energy accounts arrive, and struggle to meet their payments.

The budgetary shock on older low-income households can be even worse.

Recent analysis in South Australia suggests that older sole-occupant households outlay as much as 4.1 per cent of disposable income on energy compared with a median household outlay of 3.6 per cent.

This suggests bill shock for older households on fixed low incomes will be greater despite their generally lower energy consumption.

In addition, a higher proportion of their energy bills will be for supply charges, not actual usage.

As extreme heat events become more regular, the urge to constrain energy costs can have serious, sometimes devastating, health effects.

In the 2009 Victorian heatwave there was a 64 per cent increase in deaths, with the largest increase among people over 75.

There has been a giant leap in electricity prices since then and the scary reality is that many will be forced into making a choice between food and air-conditioning. Then we could see even more otherwise preventable deaths.

At the end of last year the federal government released an energy white paper with recommendations on how to help people deal with the increase in electricity prices.

They are a step in the right direction and all state and territory governments should feel obligated to implement them so households can get through the summer a bit easier.

But because older Australians have different electricity consumption patterns and budgeting habits, it’s important to understand the implications these recommendations will have on them.

Take time-based pricing, for example. This initiative puts higher tariffs on electricity use during certain periods of the day, reducing the rate outside of these times.

While this system of pricing might have winners and help some consumers, it needs to be recognised that it won’t really benefit older Australians. In fact, it might even cause their bills to increase.

To ensure this initiative doesn’t unfairly affect older Australians already doing it tough, the time-based pricing regime needs to be voluntary.

Consumers should be able to opt in, depending on what pricing system best suits their needs and consumption patterns.

It won’t mean the end of high energy costs but increasing the opportunities for all consumers to input into national energy policy and regulatory developments is the smart way to ensure everyone’s needs are catered for into the future.

We can’t control what Mother Nature throws at us but we can make sure that older Australians aren’t hit hard in the back pocket, or their health jeopardised, when these summer heatwaves arrive.

Ian Yates is chief executive of the Council on the Aged, representing more than 500,000 older Australians.