Energy bill rebates disconnected from outcomes: NSW auditor

By Julian Bajkowski

Wednesday September 20, 2017

Just how effective the established policy of state governments handing out energy bill subsidies to households in need is again under the spotlight after a report from NSW Audit Office found many rebate schemes “do not have measurable objectives or outcome measures.”

It might sound like a no-brainer — helping out families struggling to make ends meet in the face of apparently surging power prices — but the reality of administering more than one million discounts to more than 800,000 households, worth $245 million in 2017-18, is turning into an increasingly costly and convoluted system, with rising inequities.

Like many long-term welfare programs, there’s little question that the people in receipt of specific discounts or payments actually need the assistance, but as schemes endure and specific measures and support mechanisms multiply, it simply gets more complex and laborious to keep all the schemes running.

In NSW the Department of Planning and Environment now administers five different energy rebate schemes targeted to low-income households.

However, they are delivered via a network of ‘partnership arrangements’ that includes 25 energy retailers, 340 charities and NGOs. Service NSW also plays its part by informing people about their entitlements.

“The structure of rebates providing ongoing support is complex and can be inequitable for some households. Reducing the number of separate schemes and simplifying eligibility requirements offers the most scope for improving effectiveness of ongoing support schemes,” the Auditor’s report concluded.

Myriad of messages

Part of the challenge of such a complex myriad of providers is that not everyone gets the right message at the right time.

“Households learn about rebate schemes through a mix of communication channels including retailer websites and call centres, Department websites, Centrelink, financial counsellors, the Energy and Water Ombudsman and Service NSW. Some low-income groups, such as those with poor English language skills, do not find out about energy rebates,” the Audit report found.

Simplifying the systems may sound like common sense, but it’s an ultimately tough call to make when rising power bills have become a political lightning rod the routinely fires-up talkback radio.

One inescapable issue public servants and policymakers now face is that as both population and prices increase, so too does the call on rebate schemes.

That means that existing kinks in the system — like households that have both gas and electricity getting more assistance than those with just electricity — risk being amplified even further.

Sleeper cells

There are also some disruptive sleeper issues creeping into the mix, especially as people try to minimise their costs before claiming a rebate.

One of them is the advent of so-called ‘embedded networks’ where a group of energy users pools their consumption to get a volume discount from a supplier.

It used to be predominantly caravan parks and retirement villages buying energy in this manner but as prices increase, households become more thrifty and technology evolves, embedded networks are now appearing in apartment blocks and housing co-operatives.

Embedded networks are also increasingly also trying to offset consumption with feed-in generation and storage — something governments like Queensland are actively encouraging — potentially adding another unrelated power payment or discount into the mix.

The trend towards embedded networks hasn’t escaped the attention of the auditor.

“Eligible households that receive energy through embedded networks apply directly to the Department for rebates, which are paid by the Department into bank accounts,” the audit report said.

“The Department is yet to develop strategies to address a forecast increase in such households.”

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