A new report reveals that rising energy costs are driving more working families, middle-income earners, and mortgage-holders towards disconnection due to unpaid energy bills. 

The Public Interest Advocacy Centre (PIAC) report indicates a troubling trend in energy affordability.

It includes a survey of 1044 people who, in the last 2 years, experienced a disconnection, been notified about an impending disconnection or been seriously worried about risk of disconnection.

The research uncovers several critical points. 

While traditionally disadvantaged groups continue to face higher disconnection rates, there is a notable increase in disconnections among higher-income households. 

The proportion of disconnected households with mortgages has surged to 31 per cent, up from 18 per cent in 2018. This is the highest level recorded since 2009, during the aftermath of the Global Financial Crisis. 

Renters are significantly more likely to experience disconnection or payment difficulties. 

A significant 57 per cent of disconnected households have at least one person under the age of 18 living at home, 39 per cent of disconnected households reported that someone in the home had a mental illness, and 13 per cent disclosed experiencing family or domestic violence. 

A striking 64 per cent of households used money needed for other essentials to pay energy bills on time, and 62 per cent reduced their energy use to the detriment of their wellbeing.

“Financial strain from the cost of living crisis has coincided with an increase in energy prices, and that’s having a major negative impact on people,” says Thea Bray, PIAC Senior Policy Officer. 

“Our research shows many people are struggling to afford essential services, including more working families and people on mid-range incomes.

“There’s an assumption that people who get disconnected can afford to pay their bills but choose not to. Or that the threat of disconnection will push someone to ‘get the help they need’. 

“In reality, people are not paying because they can’t. And the current disconnection framework just makes it harder and more expensive for them to get their debt under control.”

Douglas McCloskey, Director of PIAC’s Energy and Water Justice project, criticised both the government and energy retailers for inadequate support measures. 

“Energy retailers are required to proactively identify and help people experiencing payment difficulty, and to only consider disconnection as a last resort,” he said. 

“But 60 per cent of the households we heard from were not receiving any type of support, indicating widespread failure by retailers to meet their obligations.”

The report calls for several key changes to help mitigate these issues. 

It says bills should be issued monthly by default, with options for smaller, more manageable payments. 

It also calls for at-risk households to be given better information and earlier intervention to prevent debt accumulation, and for retailers to demonstrate all possible measures to avoid disconnection before proceeding. 

Additionally, the report says energy rebates and emergency supports should be adjusted to better reflect household circumstances and should be accessible to more families.

“Households that have been disconnected or threatened with disconnection are reporting concerning rates of mental illness and family violence. Instead of being threatened with losing an essential service, these people need support to make ends meet,” McCloskey said. 

The full report, Powerless: Debt and Disconnection, is available in PDF form.