A new report has laid bare the staggering human and systemic costs of Australia’s experiment with prepaid electricity — a system that’s leaving tens of thousands of First Nations households regularly disconnected from power, sometimes dozens of times a year.
Produced by First Nations-led organisation Original Power, with funding from Energy Consumers Australia, The Right to Power – Keeping First Nations Communities on Prepayment Connected is the first national investigation into how prepayment energy supply is undermining health, wellbeing and economic participation.
Based on hundreds of interviews, detailed analysis of smart-meter data across the Northern Territory, Western Australia, Far North Queensland and South Australia, and interviews with retailers, the study exposes what’s really happening behind the prepaid meter.
And it’s shocking.
Across northern Australia, the report uncovered 440,000 disconnection events affecting 8,878 households in just twelve months. In the Northern Territory alone, households were cut off an average of 49 times a year. In Western Australia, 40. In South Australia, 14. In Far North Queensland, we don’t know because the main electricity supplier, Ergon, declined to participate in the study.
“The impacts are harrowing and wide ranging,” Lauren Mellor, co-author of the report and co-Director of Original Power’s Clean Energy Communities Program, told the SwitchedOn Australia podcast.
“Disconnections create big problems keeping homes safe. Having fridges turned off means that food spoils and medicines go bad,” says Vanessa Napaltjari Davis, a senior researcher at Tangentyere Aboriginal Corporation and long-time prepaid customer in Alice Springs.
“We saw and heard many cases of people being sent home for palliative care arrangements in community that were not supported with coordinated approaches with the retailer to make sure that household didn’t experience disconnections,” says Mellor.
“It’s really hard, to apply targeted support if a customer has particular life saving equipment that relies on electricity in the home, for instance, or other health needs.”
Unlike other Australians on post pay arrangements where disconnection is a last resort used by retailers, Mellor says “it’s an almost daily or weekly occurrence for prepayment customers to deal with running out of essential electricity.”
The researchers also found that extreme heat worsens energy insecurity and disconnections more than double on days over 40 degrees, when more devices are used and air-conditioners need to run for longer.
A system built to shift risk
For most Australians, electricity arrives with a bill every few months and some breathing room to pay. But for an estimated 15,000 First Nations households – 65,000 people – it’s the opposite: you pay upfront or the power simply stops.
Prepayment works like a prepaid phone — households top up their meter with credit, often by physically travelling to a store. In the NT, there’s no app – when the credit hits zero, the supply cuts automatically, often without warning.
“Prepayment has always been used in low-income communities where it’s convenient for retailers to flip the risk of non-payment of energy bills onto the customer,” says Mellor.
“There is a racialized component to the [prepaid] rollout, in which almost exclusively First Nations communities across the north of Australia and now parts of South Australia, where prepayment is the default, or even mandated supply arrangement for First Nations energy customers.”
Prepayment has been in place in Northern Territory communities for over 20 years and is the only supply arrangement that many adults have ever experienced.
“It has largely been introduced without consultation or consent,” says Mellor, who argues that prepayment systems are associated with greater energy insecurity, greater disconnections and less access to consumer protections and support.
No access to hardship protections
The report highlighted a lack of support and an inability for prepaid customers to access hardship provisions that are available for people facing payment difficulties on post pay arrangements. That’s because many of the retailers aren’t aware of who their vulnerable customers are.
“We are aware that there are some retailers who probably don’t have any customer information,” Dr Tom Longden, the project’s lead research partner at Western Sydney University, told SwitchedOn. “If there’s no customer record then it’s really hard to apply any of these things that people take for granted in the rest of the country.”
“One of the retailers was very upfront in saying that they don’t have customer data and they don’t know who the customer is … They [only] see the meter number, the card number.”
As a result, only a fraction, as low as 5–15%, of eligible prepaid customers in the NT receive the concessions they qualify for.
“Retailers are avoiding responsibility to this class of customers,” Mellor says. “We see that in the lack of concessions being applied to low-income customers, and we’re seeing that in the lack of hardship protections in general and consumer protections for prepayment customers.”
This is despite the fact prepaid smart meters now being installed have the ability to capture and report on customer usage data in ways old card operated meters didn’t. But retailers aren’t using this information to identify their most vulnerable customers who need hardship concessions.
“We actually do, and should have, through the functions of the meter good access to customer data, to see how often and the duration that people are disconnecting,” says Mellor.
A better way
Smart meters can also be programmed to prevent disconnections in response to forecast high temperatures.
With temperatures of over 40 now sometimes lasting for days, if not weeks, in the Northern Territory and Kimberley, The Right to Power report, which will be launched in Parliament House in Canberra today, calls on governments and retailers to support a disconnection exemption during extreme weather events.
“There needs to be support from the federal government in terms of climate adaptation, especially since the energy burden on these households are so great, and the housing quality has poor energy efficiency,” says Longden.
“There’s a cost to people and to government budgets of not acting and allowing people to present at health clinics and to in some cases, be medevaced out of communities due to ongoing heat exposure,” says Mellor.
The researchers also want hardship concessions automatically applied to all prepayment accounts, as happens in South Australia, where prepaid customers also pay a lower tariff of around 10 c/kWh.
“[South Australia] have assumed eligibility across the board for prepayment customers on the basis of healthcare needs, aged care or disability status,” Mellor says. “And it works. You see fewer disconnections, less hardship and a lower energy price.”
By contrast, in the NT — where households often travel to a store just to top up power credit — people are being disconnected more than once a week.
The researchers also point to solutions already emerging — micro-grids, solar and battery systems, and programs like South Australia’s Remote Area Energy Supply (RAES), which supplies remote communities with subsidised electricity and is shifting from diesel to renewables.
“They’re driving down the government cost of generation in those communities through switching from diesel to solar and battery,” Mellor says, “but they’re also sharing the benefits of that with prepayment customers, locking in that lower 10 cent tariff.”
The right to power
Original Power’s report calls for a basic reset: treat prepayment customers as full energy consumers with equal rights, protections and access to clean, affordable energy.
With 73% of households surveyed for the report saying access to solar would help, the pathway forward is obvious, even if the political will might be lacking.
“Governments have relied on prepayment supply arrangements to avoid holding debt for low-income customers, but at the cost of people’s health and well-being,” Mellor says.
“I don’t think you’d find too many Australians embracing the idea of prepayment for electricity,” Mellor says. “If this was introduced more broadly to mainstream communities, I don’t think many people would put up with the disruption to daily life that regular disconnections from energy present.”
You can hear the full interview with Lauren Mellor and Tom Longden on the SwitchedOn Australia podcast when it is released on Wednesday 5 November.
