Achieving better outcomes for energy consumers
I joined senior representatives from across the energy sector at Energy Consumers Australia’s Annual Foresighting Forum in Sydney on 28 February 2018. The theme of this flagship event was Take charge: shifting power to consumers in the using, making and trading of energy.
As part of the forum, I sat on a panel with Gerard Brody (Consumer Action Law Centre), Ian Jarratt (Queensland Consumers Association), Lauren Solomon (Consumer Policy Research Centre) and Alan Kirkland (CHOICE). Together we explored changes to the retail energy market and consumer protections that would achieve better outcomes for residential and small business customers.
It was great to have the opportunity to highlight two issues that I believe really need to be tackled – the language used in energy offers and approaches to managing hardship.
Comparing energy offers
EWON frequently hears from customers who say that inconsistent language and conditions makes comparing energy offers very difficult. This is not only an issue for consumers experiencing vulnerability and facing affordability challenges. And it is not just an issue my office is focused on.
Alan Kirkland noted that customers are overwhelmed by the language and tactics used by providers when they try to find a better energy offer. He pointed out that the resulting confusion can lead to consumers opting to stay with their current contract and still not getting the best deal available. Gerard Brody noted that offering discounts for direct debit and paying on time effectively makes energy more expensive for those who can least afford it, and therefore for vulnerable consumers, it could be described as imposing a late payment fee. Ian Jarratt shared his concerns about the misleading nature of energy offer advertising and discounts that lead to poor consumer outcomes because the consumer was not aware that the discount may have been applied to a more expensive offer overall. Lauren Solomon added that customers need to be able to find deals and switch quickly; faster than occurs now so that they can compare on a timely basis, what they got with what they expected. One reason for this is because a price increase may have occurred between the sign up date and when the first bill is received!
EWON supports streamlining offers to make comparison easy for energy consumers and has called for this in submissions to the Australian Consumer and Competition Commission and the Australian Energy Regulator (AER). The AER’s work in improving the Energy Price Fact Sheets that energy retailers must make available for consumers to make direct comparisons between competing offers is a first step. We are also looking forward to the outcome of the ACCC’s Electricity Supply and Prices Inquiry due for release by June 2018.
A new approach to managing energy affordability
Billing is the single biggest issue customers complain to EWON about – it featured in 57% of our complaints in 2016/2017- and high bills is consistently the main billing issue they raise. Credit, including difficulty paying bills, debt collection and disconnection, is our third biggest issue and factored in 21% of all complaints in 2016/2017. Yet despite the ongoing evidence that consumers are having trouble managing their energy bills, the industry’s response to financial hardship continues to be mostly reactive with a one size fits all approach. This doesn’t have to be the case.
Technology – part of the energy affordability solution
Technology provides an opportunity to take a proactive approach to hardship. For instance, with the retailer led Power of Choice roll out of digital meters, retailers could give NSW customers who are having difficulties managing their bills access to digital meters, with advice, tools or apps which enable them to reduce their usage – and thus, their bill.
Another option; collaborate with social/community housing providers and introduce solar for consumers who are unable to self-invest. This would lead to lower usage, lower bills, and lower call on post debt retailer hardship programs. And with the opportunity for excess energy to be fed back into the grid, or stored in a retailer-sponsored energy storage system, the benefits are greater for all parties.
Customer engagement brings great results for one energy provider
Retailers can also achieve great outcomes from engaging directly with their customers, as our work in regional Aboriginal communities with Origin Energy shows. Last year we invited Origin Energy, as the largest energy provider in NSW rural and remote communities, to take part in Bring Your Bills days we organised in partnership with the Aboriginal Housing Office funded Tenant Support and Education Project.
Between April and June 2017 we visited 13 communities across NSW and saw firsthand how taking the time to understand the underlying causes of hardship and coming up with tailored affordability solutions for individual customers, helps to address financial hardship at its core.
Origin Energy found that the customers it met with face to face were much more likely to make regular payments towards their energy use and arrears – in fact, 91% of the customers who signed up to Origin’s ‘Power On’ hardship program during these visits maintained their payment arrangement. They were also more willing to reach out when they experienced difficulty paying their bills. A significant number of customers also signed up for energy efficiency visits, with 80% reducing their energy bills as a result and saving on average $770 a year.
In its submission to the AER’s Customer Price Information Review, Origin Energy said:
“EWON’s ‘Bring your bill’ days, where customers present their bills to the Ombudsman and participating retailers, to get an understanding of their energy costs, obtain hardship assistance and find better offers, has proven to be a useful community outreach program and is a good way of engaging customers without access to the internet”.
EWON is encouraged by the investment some retailers are now making, including leveraging their Reconciliation Action Plans and, family violence policies to proactively identify and address affordability issues, rather than waiting for customers to self-identify once their debt has reached unmanageable proportions.
Thanks very much to Energy Consumers Australia for providing the opportunity for industry representatives to exchange ideas and identify ways to bring about improvements for energy consumers. Of course, actions speak louder than words!
Janine Young, Energy & Water Ombudsman NSW