To ensure network plans align with consumer’s long-term needs, AusNet undertook a groundbreaking study to quantify the value customers place on a range of benefits.
Twenty years ago, it may have been hard to believe that we could power our cars using a standard power-point in our home garage, or use smart technology to automatically warm our homes before we arrive home on a cold winter evening.
People are engaging with the energy system in new ways, such as electric vehicles, solar and smart technologies. The journey toward net zero emissions and electrification also means many in our community are facing a greater reliance on electricity, while at the same time we are experiencing the impact of climate change through severe weather events and cost-of-living challenges.
Amid these and other challenges, electricity distribution networks need to ensure that plans for their networks align to customers’ preferences, needs and long-term interests.
Every five years, distribution networks in the National Energy Market (NEM) engage extensively with their customers to formulate plans that determine the service levels customers will receive and the prices they will be charged.
In addition, network investments across the NEM are subject to rigorous economic tests, to numerically check that the customer benefits of the investments are higher than their costs. The customer benefits have traditionally focused on reducing short outages.
This worked well in a stable operating environment, where the focus is on maintaining the status quo. In these circumstances, traditional economic tests are very useful for keeping costs down for customers.
However, we are in the midst of a once-in-a-generation energy transition and customers are interacting with the network in new ways. The benefits delivered by network investment are much broader than in the past and can be qualitative, intangible and hard to quantify.
To bridge this gap, AusNet saw an opportunity to extend existing research about what electricity distribution customers value – to help better connect network investment plans with customers’ needs and preferences amid a key time in the energy transition.
Measuring what customers value
AusNet undertook a study to quantify the value customers place on a range of benefits. These benefits include how much value customers place on reliability, enabling electric vehicle charging, ensuring rooftop solar is not ‘wasted’ and for the electricity distribution network to better cope with increasingly frequent extreme weather events.
Importantly, AusNet considered not only how much customers value certain benefits, but what service changes they’d also be willing to accept. For example, whether customers would accept a lower level of service for cost savings and adjustments for overall affordability.
This enabled AusNet to consider the value customers place on individual benefits, and their overall willingness to accept changes to their electricity bills.
In turn, these insights help AusNet better understand which investments in services customers find most valuable.
This groundbreaking study is believed to be the largest of its type in the NEM and is the first time AusNet customers’ values have been quantified at scale.
The study included more than 3,500 residential and small business customers on AusNet’s distribution network in the north and east of Victoria.
Collaborating for customer outcomes
The study was initiated in early 2023 and began with extensive engagement with customer advocates on the design, and a program of qualitative research before collecting quantitative data between November 2023 and January 2024.
The participation of customer advocates in the study’s design was a major part of the process. A sub-set of AusNet’s Electricity Distribution Price Review (EDPR) 2026–31 customer panel members formed a working group and together collaborated on all key aspects of the study, including the scope, selection of research partners, values to be quantified (e.g. reliability, resilience, exporting solar and EV charging flexibility), wording, and recruitment strategies.
Striking agreement on the design was not straightforward and passionate customer advocates on the working group brought different perspectives to this debate.
Given the importance of this study to customer outcomes, it needed to be robust and subject to appropriate scrutiny.
This process helped ensure that customers, government, regulators and AusNet could trust the study and its insights.
The design that was ultimately adopted comprised of:
- A qualitative phase involving 12 in-depth interviews
- A total of five customer workshops with approximately 120 customers
- A quantitative phase that involved an online survey of 3,178 residential and 349 business customers. Cognitive interviews were also used to pre-test the questionnaire to ensure that customers understood the questions.
The study also combined the research data with actual network data on customer usage and outage probabilities to calculate an overall network value of customer reliability, suitable for use in network planning decisions.
A deeper understanding
The results validated findings from other sources of research and customer engagement: that customers are concerned about cost-of-living pressures or place the highest value on resilience are two examples of this.
However, beyond the validation of existing themes lie rich, quantified, and at times surprising insights into what customers value and would be prepared to pay for, or forgo. The study verified that:
Resilience is valued above all
- Households and small businesses placed the highest value of all tested benefits on resilience to long outages.
Electricity needs to be affordable, but customers want value
- Customers are concerned about affordability but still see the value of investment in the network.
- Residential customers were about half as willing to pay for a total bundle of values (e.g. flexibility in EV charging, plus enabling more solar exports and improving reliability for those with poorest supply) than paying for each value individually. This suggests that while customers are concerned about overall affordability, they still see value in investment.
Customers are thinking of others (as well as themselves)
- Customer segments are willing to fund investments that benefit others even if they themselves will not directly benefit. Qualitative research suggests that this is coming from a strong desire for equity (supply improvements for customers with the poorest reliability) and an aversion to waste (solar), and the “beneficiary” not always being clear (in the case of solar exports, a household sharing their excess and a household receiving cleaner electricity may both be beneficiaries of an investment). Households and businesses customers would pay more to improve reliability for those with poorest supply.
Customers want to minimise solar wastage
- Customers place a high value on ensuring that both their own and others’ solar exports are not “wasted”.
- Household and businesses customers also both attach a positive value to investing to enable more solar exports – they would pay more to enable the more solar to be exported.
An expectation that EV charging is flexible and convenient
- Convenience is highly valued, including flexibility around when they choose to charge EVs.
- Both household and business customers attach a positive value to having flexibility in their EV charging. In other words, they indicated they would pay more to have more flexibility in when they can charge their EV.
Insights such as these will play a key role in AusNet’s decision-making about future investments in its electricity distribution network. These planned investments will be outlined in the EDPR 2026–31 proposal it submits to the AER for assessment, the draft of which will be published in late September. Research outputs will inform decisions on topics such as network resilience and reliability, improving reliability for those with poorest service, EV charging, and solar exports.
As collaboration was key to the study’s development, so too will it inform the application of the study’s findings. AusNet’s Coordination Group is now discussing how best to apply the insights to AusNet’s EDPR 2026-31 proposal. Others in the industry are also looking closely at this study and its insights – more than 100 industry stakeholders attended a recent webinar on the study as part of a research seminar series.
Beyond numbers
A study of the scale and complexity of Quantifying Customer Vaues is not a small or straightforward undertaking. Utility businesses that do so, however will be rewarded with richer insights into their customers, and plans that can be more closely aligned with customer needs and preferences.
Among the many learnings, there are four that AusNet call out:
- Allow plenty of time to engage on research design. Investing in this earlier stage of the process will build confidence and trust in the results.
- Electrification is highlighting equity issues between customers who have very reliable electricity, and those who don’t. Customers with a reliable service are aware of this.
- Customers do have affordability concerns – however given their evolving needs and expectations of the network, they see investing in the network as value-for-money.
- Both qualitative and quantitative research have valuable roles to play. In this case quantitative research results closely match with findings from the earlier qualitative stage and AusNet’s other customer engagement, building an understanding of customers’ thinking that sits behind the numbers revealed in the QCV study.
Customers are changing their interactions with energy – be it plugging in their EVs to charge from the comfort of their (remotely-heated) home or setting smart appliances to make the most of solar energy. Networks have an opportunity to investigate and apply new approaches to ensure rigorous, up-to-date customer insights inform planning, decisions and, ultimately, the services customers receive.
The QCV study:
- Attaches hard numbers to things customers value that otherwise would be hard to quantify, building more holistic, customer-centric business plans
- Provides robust customer data stakeholders can trust
- Shows customers’ priorities across investment drivers
- Captures value-of-service improvements and degradations to support cost-benefit assessments and trade-off discussions
- Complements qualitative engagement
The results:
- Apply to residential and small business customers on AusNet’s electricity distribution network
- Connect to and validate relevant insights from other customer research, for example know that customers hate it when solar energy is ‘wasted’
- Offer relevant insights to stakeholders who are involved in the price reset process e.g. regulators, customer advocates, industry groups, government agencies and other distribution businesses.
Image credit: Es sarawuth/shutterstock.com
