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Thursday, July 25, 2024

Water companies to charge interest on overdue accounts for Melbourne households

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MELBOURNE households face another cost-of-living sting, with water companies gaining crucial support to charge interest on overdue accounts.

Consumer groups have branded the move a blow for customers.

But water businesses are adamant the vulnerable will be protected.

The Essential Services Commission has recommended allowing metropolitan providers to charge interest on unrecovered money from next July.

They could also stake a claim if customers sell their house.

Both rules already apply in the bush.

A final decision is due in December.

St Vincent de Paul Society manager of policy and research Gavin Dufty said the move threatened to punish customers already doing it tough.

This was despite concession card holders and those in financial hardship being exempt.

“It’s a backwards step,” Mr Dufty said.

“People want to pay their bills. Water is an essential service. We should be providing ways to support people to do that, not just garnishing what meagre assets they have.”

City West Water, South East Water and Yarra Valley Water are banned from charging penalty interest under existing laws.

Under the changes they could charge interest up to a maximum compounding interest rate set each year. It would currently be 6.7 per cent.

Commission chief executive officer David Heeps said the system aimed to recover costs.

“Those people who choose not to pay – as distinct from can’t pay – have probably been given a free kick in the past and that cost has been borne by all consumers,” Mr Heeps said.

“Under this process the business won’t profit out of charging interest but will certainly have another tool at their disposal to get those ‘won’t payers’ to pay up.”

Victorian Water Industry Association chief executive officer Tony Wright said water corporations had hardship policies to protect vulnerable customers and helped them manage usage and payments.

The changes would provide consistency statewide and interest was generally only charged as a last resort, Mr Wright said.

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