'A two-tier economy': the Australians left behind by the green transition

Advances in heating, cooking and hot water technology have helped many Australians beat crippling increases in energy costs over the past five years.

But a huge number haven't been able to adapt.

This group - mostly pensioners, people on low incomes, and renters - has been left to endure the rising prices despite being the least able to afford it.

It has left many rationing their gas and electricity usage in sometimes dangerous ways to have enough money for essentials like food and housing costs.

Wholesale electricity prices are still coming down from a surge in 2022 triggered by international coal and gas prices and coal power plants going offline.

But many customers are still seeing their bills go up.

This is partly because retailers want to make their margins back from 2022, but also because prices are swinging wildly as the network moves away from its ageing coal-fired plants.

Gas prices have been trending upward for the past decade. Energy consultant Tim Forcey said this started when Australia ramped up its gas exports.

"I used to work for the multinationals in the gas industry and the government pretty much allowed us to do whatever we wanted," he said.

Mr Forcey said since 2015 the proportion of Australian gas heading overseas had skyrocketed.

"Funnily enough that's resulted in very high prices for Australians because 80 per cent of Australia's gas is exported and so we've got to pay international prices now," he said.

Mr Forcey said it was possible to avoid most of today's high energy costs by using reverse cycle air conditioning for heating, induction stovetops for cooking, and heat pumps for hot water.

But Uniting Vic.Tas. energy and financial literacy program manager Matt Cairns said many people didn't have this option.

"Getting left behind is definitely a concern for our client group," Mr Cairns said.

"They're generally renters or if they do own their home, they're they're on a pretty low income or on a pension, so don't have the means to sort of move from gas and just solely be on electric.

"It's obviously a fairly costly exercise to to replace your own gas supplies especially if you've got heating and hot water."

The state and federal governments have offered generous subsidies for equipment like solar panels and heat pumps over the past decade.

But these programs have usually still involved out-of-pocket costs, so middle-income households have gained the biggest benefits from them.

Mr Cairns said there was a real danger of a two-tier energy economy emerging where middle Australia avoided most of the higher energy prices while lower-income people bore the brunt.

"They're the ones that we are most concerned about because they're the ones who will be left behind when the majority of people transition to all electric homes, and they'll be paying a higher daily supply charge and obviously the higher cost per unit," he said.

Dozens of Victorians approached ACM with stories of rationing their gas and electricity usage because they were afraid of what their bill would look like at the end of winter.

"Our gas bill last winter cost $3000," Jake Whitburn-Weber said.

"We'll have it paid off just in time for this winter. Ouch!"

Chris Murray said he wouldn't be using his heating at all over winter.

"Rent and food comes first if I can afford that," he said.

"Last winter I had ice on the inside of my windows. Pneumonia was the result."

Mr Forcey said there were three key steps to reducing your heating bill:

Many houses have a reverse cycle air conditioner that sits dormant in the cooler months.

Mr Forcey said it was three times cheaper to heat your house using the air conditioner than even the more modern gas heaters, and four or five times cheaper than electric radiators.

"Insulation is the second big one," he said.

"Having a nice thick, uninterrupted layer of insulation in your roof is critical to keeping cool in summer and warm in winter."

He said it was also a much cheaper way to save on energy bills than upgrading appliances.

Sealing up a draughty home was the third key step.

"The houses in Australia are really leaky," Mr Forcey said.

Evidence suggests at least 8 million Australian homes are well below international efficiency standards.

RMIT University design expert Professor Ralph Horne said research 20 years ago showed European and North American houses were 55 per cent more efficient than their Australian equivalent.

"The average energy efficiency rating of all the overseas comparison homes [in 2005] was over seven stars, and we have yet to implement seven stars here in Australia almost 20 years later," Professor Horne said.

Renters have much less power to change their houses than homeowners, but many don't realise the rights they do have.

The Victorian government announced it would tighten its minimum rental standards in June 2024, with energy efficiency a key part of the change.

Properties will have to meet thresholds for ceiling insulation, draught proofing, and energy-efficient hot water and heating systems.

The government said the changes could save renters $800 per year on their energy bills.

It also launched a rental complaint form to make it easier for renters to flag dodgy landlords refusing to upgrade appliances.

Renters and landlords can also access the Victorian Energy Upgrades which is offering discounts to upgrade old gas appliances to more efficient electric appliances.

The government introduced 14 strict minimum standards in 2021 including that landlords provide fixed heating in the main living area of a property, energy efficient shower heads in the bathroom and modern electrical switchboards with circuit breakers.

The rules in NSW are much more vague, with seven minimum standards, but no heating requirement, energy efficiency rules, or electrical safety guidelines.

There is a range of help available for people worried about their energy bills.

The federal government announced an Energy Bill Relief Fund to provide $300 to households struggling to pay their bills in 2024-25.

In Victoria there are also energy concessions and hardship payments for eligible people on concession cards.

Energy subsidies include annual concessions, special concessions for people whose bill spikes unexpectedly, medical cooling concessions and winter gas concessions.

The Utility Relief Grant Scheme also offers a maximum $650 grant on each eligible utility and can be applied for every two years.

The NSW government offers similar subsidies for low-income, medically vulnerable and elderly households. Its Energy Accounts Payments Assistance offers up to $600 per year for eligible people facing financial crisis.

Both the Victorian government and organisations like Uniting Vic.Tas also offer financial and energy counselling services to help people better understand, manage and save on their energy bills.