Is electricity affordable in South Australia?
The use of electricity is considered vital for the maintenance of social, physical and economic wellbeing in 21st century, Australia. Many of the technologies used in our daily lives are powered by electricity, ranging from the incandescent light to refrigerators, heaters and personal computers. Many of these technologies have significantly enhanced the well-being of society as a whole. For example, the ability to heat and then store hot water in the home has contributed to increased hygiene and health standards, as has the cool storage of fresh foods.
Over the last few years, however, the South Australian electricity industry has undergone restructuring, driven by the policies of National Competition Council. State-owned monopolies and vertically integrated electricity providers have been disaggregated, and in Victoria and South Australia privatised. In January 2003, therefore, South Australian small consumers entered into a full retail contestability (FRC) electricity market, situation unprecedented in the state. While this enabled 730,000 domestic and small business consumers to choose their electricity retailer, the encouragement of retail competition in South Australia has failed to lower electricity, prices. On the contrary, small consumers have been exposed to substantial price rises of approximately 25%.
With such a substantial increase in the cost of an essential service, it is of concern that little is known about the impact on the community of such price rises, in particular the impact upon vulnerable groups in the community--pensioners, the unemployed or low-paid workers. Greater understanding of the effects of the price rises on groups such as these might guide the development of appropriate public policy, responses to ensure all in the community have access to an affordable supply of electricity. The development of a framework to monitor electricity affordability would help to meet this objective.
While the observations and proposals offered in this paper do not attempt to establish a framework to monitor electricity affordability, they do provide a contribution to the scoping of the nature of such a framework by exploring three key factors. Firstly, the key elements of electricity affordability are identified. Outlining these key elements provides a guide to how affordability can be monitored. This scoping exercise is followed by a review of the United Kingdom framework to draw upon the methods by which the UK government monitors the affordability of electricity. Key Australian research is also reviewed to investigate the applicability of the UK model to the current South Australian situation.
Secondly, current research into electricity affordability and monitoring and current available data are used to foreshadow the impact of price rises in South Australia. Future research and public policy needs are discussed in the light of existing levels of research and knowledge.
Indicators and their use
Monitoring of systems generally occurs through the use of indicators, which provide a reference point for observing changes over a period of time (NILS 2002: 33). Indicators monitor complex systems over a period of time by reporting on the state of a system in a format that is more easily understood and which enables changes to be identified (Davidson 2004: 7). For example, economic indicators are seen as the most powerful determinate of public and political perception of national performance, for example, the Gross Domestic Product (GDP), which is used to indicate how much economic growth a country is experiencing. Furthermore, indicators play an important role in communicating issues and encouraging change and the adjustment of policies in order to address negative circumstances identified by application of the indicator (UN Commission on Sustainable Development 2001: 2).
It can be seen, therefore, that indicators create awareness of issues by providing information which may not otherwise be available or accessible. Policy makers and planners need this information to become aware of and understand issues in order to respond effectively (Meadows 1998: 5).
Indicators, therefore, potentially assist in guiding and evaluating public policy, so the choice of appropriate indicators is critical. They can be seen as influence points. An indicator's presence or absence, accuracy or inaccuracy; use or non-use, can change the behaviour of a social system, with either a positive or negative impact (Meadows 1998: 5). Key characteristics of indicators are that they are policy relevant and useful for the user; exhibit analytical soundness; and provide measurability (OECD 2000: 149).
In terms of the provision of electricity, it is difficult to judge and, if required, to increase its affordability if there are no clear, timely, accurate and visible indicators for monitoring what is occurring in the electricity market. The role of an electricity affordability indicator should encompass, but not be limited to, the following (adapted from UN Commission on Sustainable Development 2001: 9):
* bringing important issues to the political agenda
* facilitating reporting on the state of electricity affordability to decision-makers and the general public
* promoting dialogue on electricity, affordability
* helping to assess the fulfilment of government goals and targets, and in the revision of these goals and targets
* facilitating the preparation and monitoring of plans and
* stating the concept of electricity- affordability in practical terms.
In summary, not only is it important that indicators encompass the identified key characteristics, but they should also be part of a sound analytical framework. This framework needs to offer criteria for indicators, characteristics for indicators, the presentation of indicators, and clear definitions.
The concept of electricity affordability
Affordability could be simply defined as 'ability, to pay'. But this definition does not take into consideration whether the consumption of the good or service would seriously compromise the consumer's ability, to consume other goods and services. Affordability, therefore, needs to relate to the price and consumption of a particular good or service, such as electricity, relative to disposable income. Incorporating disposable income ensures there is a mechanism--percentage of income spent on the product--to determine if there will be enough income left to buy other essential goods and services. The variables (price, usage and disposable income) associated with electricity affordability and their related contributing factors are outlined in Figure 1.
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Figure 1 illustrates the complexity of monitoring electricity, affordability. Usage, for example, is affected by many different factors, including demography, household activities, weather/climate, opportunity cost of consumption, the thermal properties of the residence, the energy efficiency, of appliances, and access to advice on efficient use of electricity.
Usage for a retired couple on a pension, for example, who spend considerable time at home due to ill-health, will result in a markedly different electricity, need than that of a couple both working full-time. Moreover, for both couples the 'hard' infrastructure of the household residence--insulation, siting in relation to the sun, position and number of windows, landscaping--will depend on access to disposable income.
Low income households, such as those of pensioners, immediately face a barrier if they want to improve the energy efficiency of their homes in order to decrease energy costs. They are unlikely to be able to make the upfront cost required to improve the thermal properties of the residence or to purchase more energy efficient appliances. If the thermal properties are low, and the residence is situated in an extreme climate, like summer in South Australia, there will be a greater reliance on electricity, usage.
It can be seen that in developing the mechanism to monitor electricity affordability, not only will the three main variables (price, usage and disposable income) and consideration of their associated factors be required, but also the interrelations between the variables and factors. For example, the variable 'usage' must be considered in relation to the factor of influence 'household need' and its relationship with the variable 'disposable income', which is tied to the factor of influence 'Commonwealth support payments'. This cross analysis between variables is important to ensure that a thorough understanding of electricity affordability is developed.
Lessons learnt: The UK experience and relevant Australian research
United Kingdom experience
The United Kingdom appears to have developed one of the most advanced strategies for monitoring electricity, affordability. This strategy has adopted the term 'fuel poverty' ('fuel' referring to the energy sources--gas, electricity, heating oil and coal and smokeless fuels) to describe the situation which occurs when electricity costs a household too much of its disposable income.
Such extensive monitoring approaches are costly to implement, but it would appear that the elimination of fuel poverty is a priority for the UK government. This government has set the target of no fuel poverty among vulnerable groups by 2010. Vulnerable groups include older people,
families with children and those who have a disability or long-term illness.
Monitoring is conducted using the UK Fuel Poverty Strategy Indicators, which consist of headline (or benchmark) indicators and then supporting indicator categories in three main areas: income, fuel and housing. The headline indicator for the UK Fuel Poverty Strategy is the number of households in fuel poverty., which is measured by a household needing to spend more than 10% of its income on household fuel use (UK Department of Trade and Industry 2004, online). The supporting indicators are outlined in Table 1.
The UK approach is comprehensive, enabling a clear picture of fuel poverty, to be developed. The indicators not only reflect the three core variables of fuel poverty. (income, fuel prices and housing), but also interrelations between the variables. For example, indicators 1, 2, 6, 10, 13 and 19 all incorporate a cross-analysis between the variables.
To some extent it could be argued that the 10% target for percentage of income spent on fuel is too arbitrary. The origin of the 10% figure is the average amount spent on fuel in the lower three income deciles in the Family Expenditure Survey 1998. But the definition of income for the purposes of the survey excluded housing benefits and income support of mortgage interest (NILS 2002: 17), unlike the actual headline indicator within the UK Fuel Poverty Strategy. Nevertheless, at least the definition for fuel poverty, is clear, with an established benchmark and it is being monitored.
In 2002 the Essential Services Commission of South Australia commissioned research into the applicability of the concept fuel poverty to South Australia. A report Fuel poverty: A concept with power in South Australia? was prepared by the National Institute of Labour Studies (NILS). This report recommended a strategy for monitoring fuel-driven hardship in South Australia. The recommended strategy incorporated the following elements: hardship baseline, changes in income, changes in prices and supplier actions.
The hardship baseline recommends the monitoring of the proportion of households in the bottom 10-50% of the distribution of household disposable income that spend more than 6%, 8% and 10% of income yearly on fuel, and who indicate that due to a shortage of money they are unable to heat their homes. In this way, the baseline can provide a high level overview of fuel poverty in the state, and a 'powerful' tool for simplifying and communicating messages about the cost of electricity to the public.
The focus of the hardship baseline serves several purposes. Firstly, the identified income distribution, bottom 10-50% of the distribution of household disposable income, is identified as a key element to be monitored. Secondly, the report recommends that the dollar value of the main forms of social welfare benefits, including supporting parents and unemployment benefits and the old age pension, also be monitored. Income changes can then simultaneously be cross checked against the rate of increase in fuel prices. Finally, the report recommends that suppliers be required to monitor and report particular actions, including the extent of fuel debt, the number of disconnections, and all actions taken to reduce the fuel bills faced by low income households (NILS 2002: 1).
Areas that could be further developed within this strategy include developing the interrelations between the variables of electricity affordability: price, income and usage. The variable 'usage', in particular, is not adequately represented within this strategy. It is only considered through expenditure on fuel.
In summary, the NILS strategy, although limited, appears to propose a useful framework that considers the key elements to be monitored, and suggests appropriate indicators. This framework provides a useful contribution to the development of a framework to monitor electricity affordability.
The potential mechanism to monitor electricity affordability in South Australia
It is unlikely that a single, unambiguous measure of electricity affordability could be developed for South Australia. A single measure would require considerable subjective and value judgement of what is the single most important element of electricity affordability. It is likely that the development of a benchmark or headline indicator for electricity, affordabilitv would be feasible if supported with a suite of relevant secondary indicators, as with the UK Fuel Poverty Strategy Indicators.
As in the UK example, the percentage of income spent on the good or service could be used as the headline indicator for monitoring electricity, affordability in SA. Because of the inherent weakness that this measure cannot distinguish between sufficient and insufficient usage of electricity oil the part of a household, however, it would have to be applied in association with a suite of secondary indicators that could recognise adequate usage and not just usage.
Adequate usage of electricity, that is, usage that actually meets the needs of a household is different to what households actually spend. Some households may not be able to afford their true electricity requirements; therefore they underspend on electricity. This observation, along with the price of the electricity and the income or the household, must be considered in the development of the monitoring framework.
The development of electricity affordability indicators for South Australia or an indicator framework is outside of the scope of this paper. However, as a first step to the development of such an monitoring framework, a review of the indicators that are currently being used ad hoc to monitor electricity affordability in South Australia has been undertaken.
Review of electricity affordability in South Australia
Developing a better understanding of electricity affordability is limited by the extent to which different variables are measurable and by the availability of data. A review of relevant reports reveals that a range of indicators is currently being utilised to gain a better understanding of the socioeconomic impact of electricity, price rises in South Australia. Table 2 provides a summary of the indicators that are currently in use.
Issues relevant to electricity affordability currently monitored in South Australia.
It is not surprising that current indicators illustrate a decrease in the affordability of electricity. The sharp January 2003 price increase appears to be affecting consumption and access to this essential service, relative to household income. To provide insight into the question of how much electricity affordability has decreased since 2003, it is necessary to consider the key findings that can be ascertained from analysing the ad hoc collection of relevant indicators of electricity affordability.
Proportion of income spent on fuel for the lowest five deciles of disposable income. The data on expenditure on domestic fuel and power as outlined in Table 2 have been derived from the ABS HES, and provide a useful benchmark to monitor hardship over time. Issues that have been identified with this indicator should be noted, however: the South Australian sample size is small and data is reliant on updates from the ABS five year update cycle, and hence no data is yet available that incorporates the 2003 price increase (NILS 2002: 32).
Even in the absence of evidence of the effects of the 2003 price rise, the data illustrate that the percentage of income spent by the lowest of the five deciles of disposable income on domestic fuel and power has increased from 4.4% in 1993/94 to 8.2% in 1998/99 in South Australia. This represents a growth of 86%. Moreover, the data on expenditure do not always reflect the actual need of the household, and not all households can afford to heat or cool their home to a comfortable level.
Unable to heat their home due to shortage of money. Households not being able to heat or cool homes due to a shortage of money illustrates the issue of unmet need due to the cost of the product or service. This is an important indicator, as it captures those households that restrict electricity usage to inadequate levels. Such consumers may spend disproportionately less income on electricity, in their efforts to accommodate the cost. These households would, therefore, probably not be captured in the proposed headline indicator--percentage of income spent on electricity--as expenditure may not actually meet the required electricity need of the household.
Changes in the price of fuel compared to with changes in income distribution. With Commonwealth government pensions and payments determined at a national level, there is growing concern over the fact that the price of essential services like electricity, and gas are determined at state or territory level. Average electricity, prices, in particular for South Australia, are increasing at a rate greater than increases in Commonwealth government allowances, which are approximately 75% of low income households' principle source of income (ABS 2003).
This trend is illustrated in Figure 2 which indicates that average electricity prices have been rising at a much faster rate than government payments since mid 1999 (ESCoSA 2003b: 19). The consequence of this disjuncture between price and income is logically a redistribution in consumption patterns or increased household debt. The extent to which essential goods or services are being sacrificed is unknown, however, and the impact of these sacrifices are also undetermined, for example, any related health effects.
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Welfare agencies contribution to electricity bills. Surveys conducted by SACOSS and emergency relief agencies have shown that SA agencies paid out an estimated $800,000 in 2004 to households in need of debt relief due to costs associated with essential services. The impact of the payment of such a large sum of money by emergency relief agencies means that it is essential that a survey of this sort be conducted on an annual basis to monitor the consequences on the agencies of increasing electricity prices. Increasing numbers of clients experiencing difficulties with the costs of accessing and maintaining electricity supply will have a significant flow on effect on the budgets and activities of the agencies attempting to assist them.
Number of extended payment arrangements made for residential customers. The impact of increasing hardship from rising electricity prices was well illustrated with nearly 30% of extended payment arrangements relating to arrears. Moreover, a rising number of disconnection notices were issued in the June 2003 quarter. With an increasing trend illuminated in Figure 3, it is of concern that the data was not updated until the ESCoSA Annual Performance Report 2003/04 released in November 2004. Data from this report indicated a 26.4% increase from 2002/03 (see Figure 3). Data to monitor impact of increasing electricity prices needs to be repotted on more regular basis to remove this time lag.
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Disconnection, reconnections and uptake of retailer's hardship plan. The dramatic increase in the number of disconnections in 2003/04 is of concern, up 167% from the previous financial year (see Figure 4). South Australian residential disconnections are consistently higher than the rates recorded in Victoria. In fact, the percentage of disconnections carried out in relation to the total residential customer base in South Australia were double that of Victoria for 2004 (ESCoSA 2004: 46). This disparity, between the states is a reflection of the higher electricity, costs in South Australia.
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With disconnection figures rising, the gap between those being disconnected and not then being reconnected is also of concern. The percentage of disconnections reconnected for residential and small business customers fell in 2003/04 to 47% from around 60% in both 2001/02 and 2002/03. The figure was as low as 40% in 2000/01, and Figure 4 illustrates this gap. While the recent gap may be narrower than that of 2000/01, it is still significant and indicates that households that are disconnecting are failing to reconnect with either their original or a new retailer, meaning that an increasing number of households are going without electricity (ESCoSA 2004: 46).
While it is noted that some households may reconnect in a different name, even when they do, they experience a period of time with no electricity. Research is needed into the flow on impacts of disconnection, i.e. impacts on health and psychological effects of both the fear of been disconnected, and the impact of having no electricity for a period of time. With the development of a retailer's hardship plan, it would be prudent to monitor the occurrence of disconnections on a quarterly basis to further analyse the effectiveness of these plans in contributing to equitable access to electricity.
In summary, while the ad hoc grouping of issues that are relevant to electricity affordability identifies hardship surrounding the affordability of electricity, it is difficult to make an assessment of the decrease in electricity affordability. This is because the issues do not fit within a defined conceptual framework, resulting mad hoc indicator selection, no clear direction of benchmarks, nor acceptable targets for indicators. This lack of conceptual framework demonstrates the importance of making indicator selection part of a wider picture, which also ensures indicators are selected that address specific criteria in order to ensure the concept, in this case electricity affordability, is accurately monitored. An assessment of the indicators in relation to the key elements to monitor electricity affordability (Figure 1) identifies gaps and issues related to the current indicators.
Assessment of current available indicators relevant to electricity affordability in South Australia
All of the indicators discussed are potentially useful in constructing a framework for monitoring electricity affordability in SA. It is worthwhile, therefore, to examine their relevance and their strengths and weaknesses in terms of the South Australian context, and compare the key elements of these indicators with the rudimentary conceptual framework for monitoring electricity affordability suggested by the elements identified in Figure 1.
The main limitations of the current list of indicators in an attempt to monitor electricity affordability, identified in Table 3, are that usage is not adequately represented; the indicators do not adequately incorporate relative income; and there is data time lag. It is also essential that monitoring and reporting occur on a wider number of the factors influencing electricity affordability. This will enable better insight into, and understanding of, the affordability of electricity supply for customers experiencing financial disadvantage.
Potential indicators to include in an electricity affordability framework
Adequately incorporating relative income. While retailers do not collect information on household incomes, collected data could be disaggregated to the postcode level. Data disaggregated at the postcode level then could be overlayed with data available from the Australian Taxation Office, average income by postcode. Incorporating income data into the framework would then enable an assessment of electricity, affordability by relating price and consumption relative to household income.
Report on a wider number of factors influencing electricity affordability. To develop a comprehensive measure of electricity affordability, not only is data required at the postcode level, but also accessibility to further data from retailers needs pursuing. As identified in Table 2, the requirement for retailer data legislated through the Retail Code is limited. This collected data is publicly reported within ESCoSA Annual Performance Report. More comprehensive data from electricity retailers would inform income and usage factors of electricity affordability.
A more precise picture of income related to electricity, costs, for example, would be available if data could be obtained revealing the:
* number of households participating in the retailers hardship program by post code
* disconnection figures by post code
* reconnection figures by post code
* number of households with an electricity debt by post code
* average debt by postcode
* number of cases that are referred to third party debt recovery, agencies by post code
* percentage of bills paid by credit card by post code. (It has been anecdotally suggested that due to shortage of money the credit card is been used to pay for electricity bills, to ensure that a debt is not incurred with the retailer.)
Such data would provide a greater understanding of the potential impact of electricity price rises on low-income households because this suggested data list disaggregates to the post code level, which can then be overlaid with average income that is also available at the post code level.
Data sets that might better inform usage as a factor of electricity affordability include:
* average residential consumption by postcode
* average usage of concession recipients by postcode
* average usage of households on a debt re-payment plan by postcode.
The importance of requesting data on the average consumption of different groups is to enable specific areas of need to be identified. For example, concession recipients may spend more time at home because they are retired or have a disability; therefore these households have a different need for electricity, than households whose occupants work full-time. Data on average usage of households on a debt re-payment plan by postcode might also help to identify the extent that the need for electricity, has not been addressed. Households may not be able to reduce consumption to compensate for the increase of price as they are already using electricity in an efficient manner, and may have specific requirements, such as households that need to maintain a constant temperature for health reasons, resulting in an electricity debt or furthering of this debt.
Usage. The element of electricity, affordability, usage, was in particular identified as not being adequately reflected within the current available indicators that are relevant to electricity affordability in South Australia. The data to be requested from retailers, as previously detailed, will help to provide insight into usage patterns.
Time lag. Currently retailers report against Code obligations yearly. However, this results in a time lag that leaves problems with affordability unaddressed at what may be critical times, such as mid-winter or summer. A more regular reporting requirement, either quarterly or every six months, is necessary to monitor the impact of price increases on vulnerable groups.
Current indicators for electricity, affordability are being used in SA in an ad hoc manner. The indicators are being reported on by a range of different entities in an unsystematic manner. A more coherent framework of indicators is needed if the SA government is to consistently and correctly measure the impact of the rise in prices of this essential service on the citizens of the state.
In order to provide a framework, three main steps are required:
1. Retailers must provide more data and in a timelier manner. This is essential. Lack of access to such data impedes the development of a framework to monitor electricity, affordability by distorting the information provided by the current and potential indicators.
2. Research is required to develop the supporting indicators to the headline indicator. Targets need to be developed for each indicator.
3. A study on changes in low income households' consumption patterns is required. This will enable a greater understanding of the level of hardship that is being experienced due to the substantial increase in electricity prices in South Australia.
Determining electricity affordability is a complex task and requires the development of a framework to capture the key elements of the concept: usage, income and price. Currently there is no framework in South Australia able to accurately monitor electricity affordability, making it difficult to accurately assess the decrease in electricity affordability in South Australia since the privatisation of this essential service.
There are no clear benchmarks or acceptable targets for the key factors that influence electricity affordability. Current impediments to the monitoring of electricity affordability, such as a lack of clear understanding of household electricity usage, need to be removed before a framework consisting of a headline indicator and then supplementary indicators can be developed and used as reliable guides to the affordability of electricity of South Australia.
Australian Bureau of Statistics (2003) Household Income & Income Distribution, Australia, 2000-01, Catalogue 6523.0.
Davidson, K. (2004) Integrating Sustainability Indicators, New Zealand and Australian Ecological Economic Conference, Newcastle December 2004.
Essential Service Commission of South Australia (ESCoSA) (2004) 5th Annual Performance Report: Performance of Regulated Electricity Businesses in South Australia 2003-2004.
Essential Service Commission of South Australia (ESCoSA)(2003a) 4th Annual Performance Report: Performance of Regulated Electricity Businesses in South Australia 2002-2003.
Essential Service Commission of South Australia (ESCoSA)(2003b) Monitoring the Development of Electricity Retail Competition in South Australia : Statistical Report, November 2003.
Meodows, D. (1998) Indicators and Information Systems for Sustainable Development, prepared for the Balaton Group.
National Institute of Labour Studies (NILS) (2004) Household Energy Expenditure: Measures of Hardship & Changes in Income, commissioned by ESCOSA, February 2004.
National Institute of Labour Studies (NILS) 2002, Fuel Poverty: A Concept With Power in South Australia? commissioned by ESCOSA, October, 2002.
Organisation of Economic Cooperation and Development (OECD) (2000) Towards Sustainable Development: Indicators to Measure Progress, Rome Conference.
UK Department of Trade and Industry (2004) UK Fuel poverty Strategy Second Annual Progress Report 2004.
UN Commission on Sustainable Development (2001) Indicators of Sustainable Development: Framework and Methodologies: Background Paper No. 3, prepared by Division for Sustainable Development, Commission on Sustainable Development Ninth Session, 16-27 April 2001, New York.
Kathryn Davidson (B.Ec & Mcom) is a Research Scholar at the University of Adelaide where she is undertaking her PhD as a part of an Australian Research Council Linkage project, support by SACOSS Kathryn is an economist, with Masters qualifications in environmental economics. Kathryn has conducted research and analytical studies for a variety of sectors, including local government, non-government organisations, academia, private and corporate.
Table 1 Indicators of fuel poverty Indicator No. Title type Headline 1 Number of households living in fuel poverty Income 2 Low income-the proportions of children, working age adults and pensioners living in households with low incomes in an absolute sense. 3 Winter fuel payments 4 Cold weather payments 5 Overall levels of income support & gains for families with children and pensioners Fuel 6 Expenditure on fuel (as a percentage prices of total income) of the lowest 30% income groups 7 Fuel prices 8 Number of customers on prepayment meters 9 Level of fuel debt 10 Number of disconnection due to fuel debt 11 Number on Fuel Direct 12 Customers switching supplier Housing 13 Energy efficiency (SAP rating) of the housing stock of the lowest 30% income group 14 Temperature within dwellings 15 Occupancy levels 16 Excess winter deaths 17 Number of households helped through and expenditure on warm front 18 Expenditure and energy savings through the Energy Efficiency Commitment (formerly EESOPs) 19 Local authority housing investment on energy efficiency improvements Source: UK Department of Trade and Industry, 2004. Table 2 Summary of electricity affordability indicators Indicator Proportion of 58.7 percent of low-income income spent on fuel households in South Australia spent 4 for the lowest percent or more of their income on five deciles of domestic fuel and power, compared to 45.6 disposable income. percent for Australia (NILS 2004: 4). Low income households who are spending 10 percent of more of their income on fuel increased from 4.4 percent in 1993/94 to 8.2 percent in 1998/99 (ESCoSA 2003a: 17, and NILS 2002: 35). This represents a growth of 86 percent. It is important to note, this growth has resulted without the sharp price increase that was experienced in 2003. Unfortunately the ABS data that will include this price rise will not be available until 2005. Unable to heat 5 percent of the lowest 20 percent their home due to of the household income distribution shortage of money. indicated that they could not afford to heat their home due to shortage of money, compared with the overall Australian average of 2.2 percent (based on the 1998/99 HES) (NILS 2002: 6). Changes in the Average electricity prices have been price of fuel rising at a faster rate than compared to government payments since mid with changes in 1999 (ESCoSA 2003b: 19). income distribution. No. of 264,148 extended payment extended payment arrangements resulted in 2003/04, with arrangements made 90.3% related to management of arrears. for residential This is an increase of 26.4 customers. percent from 2002/03 (ESCoSA 2004: 43), a substantially higher increase of 11 percent from 2002/03 to 2002/01. However the figures for the June 2002/03 quarter showed the first signs of this increasing trend. Extended payment arrangements represented nearly 30 percent of arrears for that financial year (ESCoSA 2003a: 38.) Uptake of In January 2003 AGL SA's staying retailers Connected plan commenced. hardship plans. From commencement until the end of June 2003, 1,735 plans had been taken out (ESCoSA 2003a: 39). Demand for the program has been reflected in 2003/04 figures, as at June 2004, 4,453 households are in the program (ESCoSA 2004: 43). Disconnections Significant increase in the number of retail code of disconnections occurred within 2003/04, customers-- 13,719 (ESCoSA 2004: 40). This increase residential. represents a growth of 167 percent. The 2002/03 figures are not reflective of the total year because no disconnections resulted between September to December due to AGL conducting billing system refinements. However, consistent with the experience of extended payments arrangements, nearly 30 percent of disconnection notices were issued in the June 2003 quarter (ESCoSA 2003a: 39) indicating the first signs of this increasing trend in the data. Reconnection The gap between disconnection after and not reconnecting is of disconnection concern. It is unknown the --residential. circumstances of those households not reconnecting. Data indicates that this gap has slightly reduced, however it is difficult to ascertain if disconnected customers are achieving reconnection with another retailer, as opposed to going without electricity (ESCoSA 2004,: 46). Welfare Emergency relief agencies are organisations contributing to electricity bills contribution directly and in indirect ways, like to fund with food vouchers or parcels. This electricity 'frees up' the client's food money bills to pay the electricity bill, or the client has paid bill and no money is left for food. The contribution from emergency relief agencies to electricity bills has been estimated at $800,000 for 2004. Table 3. Assessment of the current identified indicators Indicator Indicator reflects Limitations of the which variable current indicator within electricity affordability framework Proportion of Price and Does not income spent on disposable income address usage. fuel for the lowest five deciles of disposable income Unable to heat Usage and Does not provide their home due to disposable an indication of shortage of money income amount of need foregoing, and additional scarifies this causes i.e. health related effects. Changes in Price and Does not the price of fuel disposable address usage. compared to income with changes in income distribution No. of Price and Does not identify extended payment disposable vulnerable (low arrangements income income households). made for residential customers Uptake of Price and Does not provide retailer's disposable information on hardship income details of plans households on plan, i.e. usage and disposable income. Disconnections Price and Does not identify of retail code disposable vulnerable (low customers-- income income households). residential Reconnection Price and Does not identify after disposable vulnerable (low disconnection income income households). --residential Welfare Price and Total contribution organisations disposable by welfare contribution income organisations to to fund electricity bills electricity difficult to ascertain. bills
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|Publication:||Australian Journal of Social Issues|
|Date:||Mar 22, 2005|
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