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How many Australians struggle to pay electricity bills?

Electricity bills are rising 171 85990 0 14091214 300

Rising electricity prices are a fact of life for many Australian households and the latest research from Ernst & Young (EY) suggests they're becoming an increasing source of financial hardship.

The group's latest Customer Experience Series - Utilities highlights just how widespread the problem is and that it has become an even bigger burden over recent years.

Financial issues take their toll

A cross-section of electricity customers were asked what their main reason was for failing to pay their electricity bill on time, with many citing affordability. This is most prominent in regional areas, where 78 per cent of customers said they couldn't afford to make a payment, compared to 49 per cent in metropolitan parts of the country.

Not only this, 70 per cent of those polled said they were either often or occasionally concerned about being able to pay their electricity supplier.

It seems those who are not signed up for a direct debit with their supplier were the most as risk, as 31 per cent revealed they had paid a bill late on at least one occasion. Three or more payments had been missed by 12 per cent of people.

Helping customers make payments

The research showed how various incentives are being used to make it easier for customers to make payments on their electricity bill.

More than half (55 per cent) of consumers questioned said they'd like to take advantage of discount incentives on their bills, while 30 per cent would be interested in monthly billing.

Providers might also want to take a look at other methods such as enabling customers to choose a billing date, receive SMS reminders when payments are due and setting up direct debits.

There is still a large proportion of the country who hasn't yet signed up for direct debit with their energy supplier, as EY found just 29 per cent use this payment method. This compares to the remaining 71 per cent who make manual payments.

Turning to renewable alternatives

EY discovered that in a bid to make sure they can pay for their energy, Australians are opening themselves up to alternative methods of production.

Nine out of 10 Australians said they would think about making the switch to solar if it saved money on their electricity bills - and many have already taken that step. Around 10 years ago, there were around 1,000 solar installations made each year, but almost 200,000 were put in place in 2013, the Clean Energy Regulator reveals.

"Given the advances being made in solar and battery technology, uptake could increase further, impacting demand and adding to the pressure on traditional retailers," acknowledged EY Power and Utilities Advisory Leader Stuart Hartley.

Research from the Australian Bureau of Statistics (ABS) released earlier this year showed that while consumption of electricity is declining across the country, people are paying more for it.

Over the past four years, Australian households have used an average of 4 per cent less electricity, but its value has increased 43 per cent over the same period.

"Households and the manufacturing industry were the two largest domestic electricity users, with households using 24 per cent of all electricity and contributing 40 per cent of the total value of electricity use," explained Peter Williams from the ABS.

Investment in renewables could increase as a result of these findings, especially as consumers realise they're not being financially rewarded for using less electricity.

Making the switch

Of course, energy customers do have the option of switching suppliers if they are unhappy with the service they're receiving, or the price they are paying.

The EY research suggested there is a perception that changing suppliers is a difficult process, which could be putting some people off taking the plunge. This is despite over half (55 per cent) of respondents having recently switched or considered changing electricity suppliers in the past 12 months.

People revealed various motivations for deciding to move to another provider, with one of the biggest being when they received a particularly large bill from their existing supplier.

However, the most common barrier was cited by 20 per cent of respondents, who believe it's too difficult to find the information they would need to switch. This marks a rise from 15 per cent when the last survey was carried out.

Using a free and specialist switching service can make it much easier to carry out the transition quickly and smoothly, ensuring you're paying the lowest price for your energy as soon as possible.

Bear in mind that when you change provider, the actual supplier of energy to your home will stay the same. The only difference will be the company that you're making payments to - and you could find they're significantly reduced if you see what's currently available on the market.

Posted by Nikki Wilson-Everett