Cut Off III: The Social Impact of Utility Disconnection is a study commissioned by the Public Interest Advocacy Centre’s (PIAC) Energy + Water Consumers’ Advocacy Program (EWCAP) to better understand the experience of people in NSW who are disconnected from electricity, water or gas, and the impact disconnection has on their daily lives.
The methodology was designed to provide a broad understanding of the experience of disconnection.
Quantitative data collected via a confidential self-complete survey, distributed via utility companies and community organisations, was augmented with qualitative data collected through two workshops with the Project Steering Committee and a small number of case studies with consumers disconnected from utilities.
A total of 171 completed surveys were included in the analysis, representing a 3.3% response rate which is similar to that achieved in 2008. This response rate constitutes a valid sample for this research.
Although in practice water retailers usually restrict rather than disconnect consumers from water for non- payment, the remainder of this report refers to both disconnection of electricity and gas and restriction of water as ‘disconnection’. This is to enhance the readability of the report.
THE INCIDENCE OF DISCONNECTION
Of the respondents who were disconnected from at least one utility, the majority were disconnected from electricity, followed by gas and then water.
Close to one in ten were disconnected from more than one utility at the same time.
The proportion of respondents reporting two disconnections in a 12 month period has decreased significantly since the first survey in 2004. Importantly, however, more than one in four respondents in
2012 reported being disconnected more than once in the last 12 months. This suggests that disconnection may be chronic for some people, and the negative effects of disconnection felt repeatedly.
PEOPLE WHO GET DISCONNECTED
The majority of households reporting disconnection are family households, the proportion of which is broadly in line with the general NSW population. However, compared with the NSW general population, the likelihood of disconnection increases as household size increases.
Compared to the NSW general population, respondents who were disconnected from utilities were more likely to be:
- unemployed (40% in the survey compared to 6% in the general NSW population)
- a sole parent (29% compared with 16%)
- Aboriginal and/or Torres Strait Islander (15% compared to 3%)
- renting (43% compared to 24%) or living in public housing (24% compared to 3%)
- aged 45 or less (77% compared to 62%).
These results suggest a correlation between disconnection and social disadvantage. However, given 44% of those surveyed were in paid employment, the ‘working poor’ arguably comprise a sizeable proportion of households disconnected from utilities.
Almost half (45%) of respondents reported a household member with one of a number of listed health conditions. Mental health issues were present in 30% of households disconnected from utilities.
These trends are broadly comparable with previous years with a few key exceptions in the composition of survey respondents. In 2012, there was:
- an increase in households where a language other than English is spoken
- a slight increase in households with members aged 45 years and over, and a decrease in households with very young children
- a slight increase in the proportion of respondents living in a home that was fully paid off.
GETTING DISCONNECTED
Difficult financial circumstances continue to be the main factor leading to disconnection. The findings suggest that disconnection is often the result of long term financial stress rather than a one-off event, although unforeseen circumstances (e.g. unusually high utility bills or loss of employment) can also impede the payment of bills.
In 2012, there was a significant increase in respondents who reported that their gas/water/electricity bill was unusually high. Although most respondents owed between $300 and $1,000 prior to disconnection, almost one in four (23%) owed a sizeable amount, in excess of $1,000. Respondents who owned their home (37%) were more likely to owe more than $1,000 compared to respondents in private rental (10%).
A third of respondents who were disconnected reported making payments in the three weeks prior to disconnection. More than a quarter (28%) reported a debt relating to multiple bills.
One in three (31%) respondents reported having no contact at all with their utility company prior to disconnection, either at their or the utility company’s instigation. This is broadly comparable to the 2008 results. Respondents who did have contact with retailers were mainly offered a payment plan or an extension of their bill.
However, payment plans were considered unaffordable by more than half of those respondents who were offered them, and were not clearly understood by some.
Embarrassment continues to be the most common barrier to people seeking assistance, followed by a lack of information and knowledge.
The large majority of consumers (79%) were aware they could ask for assistance, and a vast majority knew who to contact for assistance (82%).
BEING DISCONNECTED
In 2012, most reconnections (65%) occurred within 24 hours of disconnection, 86% occurred within 2-3 days and 93% within one week. Electricity was reconnected more quickly than gas.
Disconnection was disruptive to households, with a range of strategies deployed to cope with the situation, including using candles or lanterns, having cold showers/baths, and buying takeaway/prepared food. Those living in public housing were significantly more likely than others to take several courses of action to deal with the disconnection.
A range of impacts resulted from disconnection, most commonly anxiety and emotional disorders, loss of food and an inability to wash. These impacts were compounded the longer the disconnection.
These trends are broadly comparable to those in previous surveys. However, since 2008, there has been a significant increase in respondents reporting other people in their household becoming anxious or stressed following disconnection.
GETTING RECONNECTED
Just over half of respondents said that getting reconnected was very or fairly easy. However, more than two out of five found that it was not very easy or not at all easy.
Most people started the reconnection process within 24 hours. However, those disconnected from gas tended to wait much longer before trying to get reconnected.
During the reconnection process, respondents most commonly spoke to their utility company to get information and assistance. However, those living in public housing were much less likely than those living in their own home or renting privately to do this, and were much more likely than others to seek assistance from friends or family, community organisations or Centrelink.
In most cases, respondents said they received the information they needed or wanted that led to reconnection. There was a significant increase since 2008 in the proportion of respondents reporting that the utility company provided the information or assistance they needed to get reconnected. Assistance sought from friends/family, a charity or community group, and Centrelink was less likely to be productive.
CONCLUSION
The table below sets out some of the implications arising from the key findings of the 2012 survey.
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KEY FINDING |
IMPLICATION OF THE FINDING |
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One in four of those surveyed have experienced disconnection on more than one occasion in the past 12 months. |
Suggests ongoing difficulty in meeting financial commitments for some, and the need for assistance in managing long term financial stress. |
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There has been an increase in respondents who reported that their electricity/gas/water bill was unusually high. |
Suggests the rise in energy prices is having a detrimental impact on household budgets, and is contributing to disconnections. |
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Embarrassment continues to be the most common barrier to seeking assistance. |
Suggests more needs to be done to break down any stigma associated with asking for help. Efforts in this area should highlight to consumers the benefits of acting early, seeking help and avoiding disconnection in the first place. |
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About one third of consumers surveyed reported having no contact at all with their utility company prior to disconnection. |
Suggests utility companies could do more to successfully contact consumers prior to disconnection to negotiate an outcome that would avoid disconnection. Utility companies could consider different ways of communicating with consumers. For example, text messaging or emailing may be a non-threatening way of making initial contact with some consumers at risk of disconnection. |
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KEY FINDING |
IMPLICATION OF THE FINDING |
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One third of those surveyed reported making bill payments in the three weeks prior to disconnection. |
Suggests there is a willingness by consumers to act to avoid disconnection, but a lack of understanding of what exactly they need to do to avoid disconnection. Also suggests any payment arrangement or plan did not work for the consumer in question. Early and better communication with utility companies would assist in this regard. |
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Respondents who contact their utility company prior to disconnection are most commonly offered a payment plan. However, more than half offered this form of assistance consider it unaffordable. |
Suggests that when negotiating payment plans, utility companies need to give greater consideration to a consumer’s capacity to pay, and may also need to consider whether there are other, more suitable, forms of assistance. |
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Almost half of those surveyed did not know about energy vouchers or the water Payment Assistance Scheme (PAS), and some of those who were aware reported trouble accessing them. |
Suggests more needs to be done to better inform consumers of the assistance available to them prior to disconnection. This may be addressed through the combined efforts of retailers, government and the community sector.
Also suggests the channels used to distribute vouchers and PAS, as well as the amount and the availability of these forms of assistance, could be improved. |
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Most respondents are reconnected within 24 hours of being disconnected. |
Suggests that while these respondents suffer many negative impacts of being disconnected, they may avoid some of the more serious impacts by being reconnected quickly.
Also suggests consumers may be disconnected over matters that can be resolved relatively quickly. |