Energy plays a key role in our everyday lives, but affordability is a growing concern among consumers.
With the huge success of the Paris Olympics, France has been even more in the spotlight than usual as ‘the place to be’ this year.
I’ve always tried to avoid being a bandwagon-jumper, but when it comes to summarising the new approach I believe the energy sector must take to consumers, I’ll steal a French phrase – vive la différence.
Energy should be for everyone. It is an essential service and an enabler of everything we all want and need in a contemporary society.
As a sector that exists to serve the fundamental needs of everyone living in Australia, we should all be working together to build a market that provides equitable access to such a basic need and ensures the cost structures required by the many different consumers in the country.
Energy Consumers Australia’s (ECA) research has revealed that some consumers are saying that the market is unintentionally making their lives even harder.
ECA surveys have found that affordability is consistently the number one priority for the energy system for households and small businesses since we started running them nearly ten years ago.
Over the last few years, however, our research is showing that the energy divide – the gap between consumers who can easily access efficient, reliable energy and those who cannot – is growing. This is being driven by three factors: affordability, being left behind by the energy transition, and complexity.
Complexity in particular cannot be underestimated, as it negatively impacts consumer beliefs.
At ECA, we are constantly advocating for an energy system that places consumers at the heart of the pricing process. Our research shows consumers need information at the right time, in the right place and from sources they trust in order to take the actions that we as a sector are assuming they will make during the energy transition.
But more than a third of consumers are unable to understand their energy prices, let alone make informed decisions about new technologies.
Consumers not understanding their bills can lead to a lack of trust in the system and consumers who are more inclined to disengage from it. A clear and transparent energy sector is needed to ensure the active and constructive participation of consumers in the energy transition.
The key is to have a market that understands the fact consumers have diverse preferences and behaviours and sees this as a strength.
Not all households and small businesses have the same means and opportunity to manage their energy use and, if left unaddressed, this could worsen the energy divide. Accommodating such diversity should be a key feature of the energy system if consumers are to be brought along for the journey.
ECA research has consistently shown that people have different motivations, opportunities and ability to take part in the energy market, or to participate in the transition to a net zero energy system. Our work has demonstrated the importance and incredible value of designing for that diversity, ensuring energy policies, programs, products and services are tailored to the needs of the people using them.
As I mentioned, energy is essential. What is the energy transition for, if not for improving lives and livelihoods and making the world a fairer and more equitable place to live? Energy has always been a civilising agent in human society – that’s why we use terms like ‘enlightenment’, ‘illumination’, ‘warm-hearted’ and ‘lucidity’.
As a sector, we cannot underestimate the importance of securing social licence; however, we can only achieve this social licence by ensuring consumers are placed at the heart of the energy transition and that we earn their trust.
At ECA, we are continuing to advocate for a system where consumers are enabled to choose a retail pricing structure that works for them. Choice must be accompanied by simple-to-use tools and information that allows people to easily identify the retail electricity pricing structure that best suits how they can integrate energy management into their lives and business processes.
That’s why we’re also continuing to work with other market bodies to propose changes to how distribution planning and expenditure reviews are conducted. There is opportunity to improve the regularity and scope of these so we get a true whole-of-system plan (i.e. a better view from transmission to consumer), including the contribution from consumers through their own energy assets – all supported by new smart meter data.
Such a plan would also more easily identify communities at risk of long-duration outages, as well as constraints in parts of the network that might be addressed by lower-cost solutions (such as community batteries), rather than network upgrades.
Bringing consumers along on the journey is crucial to building a system that works for everyone. In many ways, the success of the energy transition will hinge on whether consumers see themselves at the centre of it with an important role to play.
There have been some encouraging recent moves towards consumer-focused retail pricing reform.
At ECA, we will continue working with industry, policy-makers and regulators on every possible way we can think of to keep costs down for small businesses and households.
As the energy transition accelerates, we have a real opportunity to ensure consumers are in the driving seat and are fully invested in the process and outcomes.
To steal another French phrase, vouloir c’est pouvoir – where there’s a will, there’s a way.
It’s time for a sector-wide change in mindset to place consumers at the front of the decision-making process.
