Power bill arrears reach five-year high as prices soar

The Australian Energy Regulator has reported that almost 3 per cent of residential electricity customers are more than 90 days in arrears on their power bill while those claiming hardship has jumped to 1.4 per cent - both readings at their highest point in five years.

The surge in financial distress has coincided with a sharp jump in charges.

Residential electricity prices surged by up to 28 per cent in the year to June, according to the AER, while gas charges increased by up to 14 per cent.

More recent data shows that energy prices have continued to climb since.

In the past three months, electricity prices have been growing at an average annual pace of 13.6 per cent and gas prices an average of 12.8 per cent.

The energy regulator said that low income households were spending up to 5.4 per cent of their earnings on electricity and energy affordability "has decreased in most jurisdictions".

Rising energy costs are helping to hold up inflation, which increased by 4.9 per cent in the year to October - down from 5.6 per cent in September but still well above the Reserve Bank of Australia's 2 to 3 per cent target band.

The federal government has provided targeted energy bill relief which the Australian Bureau of Statistics said had limited the rise in electricity bills since June to 8.4 per cent, instead of 18.8 per cent without the support.

The Organisation for Economic Cooperation and Development said the measure would lop 0.75 of a percentage point off inflation by the June quarter of 2024.

AER chair Clare Savage urged energy consumers to shop around for a better deal.

"We recognise that now is a difficult time as Australians face multiple cost-of-living pressures and that many will need continued support," Ms Savage said. "We strongly advise consumers to regularly compare available offers."

According to the regulator, electricity customers can save up to 11 per cent on their power bill by switching from a standard to a market contract.

It said that although being on a market contract did not guarantee the lowest possible prices, "customers typically will have a better price on a market contract than on a standard retail contract".

While more households are falling behind on their bills, the average debt owed by those on hardship programs has eased to $1193 and rates of disconnections have declined, by 11 per cent for electricity services and 5 per cent for gas.

Despite this, 35,000 were disconnected last financial year and the regulator said struggling households needed more support, noting that the number successfully exiting hardship programs was falling.