Will the Energy Charter help regain consumer trust?

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Established in February 2018, The Energy Charter is a whole of energy sector initiative established to progress the culture and solutions required to deliver a more affordable, reliable and sustainable energy system for all Australians. In a climate where trust in the energy industry has never been lower, the Energy Charter could just be the solution the industry so desperately needs to turn its reputation around.

Wnsuring that the community has confidence in energy businesses is critical to making sure that Australia has the energy system it needs for the future. This requires the collective efforts of government, regulators and the energy industry, and the energy industry acknowledges the significant role it must play.

As a result, early in 2018, 15 CEOs from across the gas and electricity supply chains committed to developing a consumer charter to progress the culture and solutions required to deliver energy in line with community expectations.

The Energy Charter will be a principles-based disclosure regime that can be applied to all businesses across the gas and electricity supply chains. Those who commit to The Energy Charter will agree to publicly identify how they are delivering against the Charter Principles and providing positive outcomes for customers.

It is critical that energy businesses are transparent and accountable for their statements. An independent accountability panel is proposed to review disclosures and produce an annual evaluation report on them.

The 15 businesses that have so far signed on to be a part of The Energy Charter are AGL, APA Group, Aurora Energy, AusNet Services, Australian Gas Infrastructure Group, CS Energy, Energy Queensland Limited including Ergon Energy Network, Energex, Yurika and Ergon Energy Retail, EnergyAustralia, Essential Energy, Jemena, Meridian Energy Australia & Powershop Australia, Origin Energy, Powerlink Queensland, Stanwell and TransGrid.

As the foundation supporters of The Energy Charter, these businesses recognise the important role they play in providing energy; and they commit to placing customers foremost within their businesses so that customers can feel confident about their choices and that the energy sector is working in their interests.

How will it work?

The Energy Charter is focused on embedding customer-centric culture and conduct in energy businesses to create real improvements in price and service delivery, through commitment to five key principles:

  1. We will put customers at the centre of our business and the energy system
  2. We will improve energy affordability for customers
  3. We will provide energy reliably, safely and sustainably
  4. We will improve the customer experience
  5. We will support customers in vulnerable circumstances

These principles are also highlighted in Figure 1.

Figure 1 The five guiding principles of The Energy Charter

Figure 1 The five guiding principles of The Energy Charter

To ensure The Energy Charter has the right focus on the customer, the participating businesses partnered with Energy Consumers Australia to play a role in the development of the charter and the accountability framework. This national consumer advocate is providing guidance based on customer and community consumer expectations of the initiative.

Energy Consumers Australia CEO, Rosemary Sinclair said, “Rebuilding trust with consumers who have faced significant affordability challenges in recent years will take time and must come from the top. There appears to be a new willingness to change the culture of the industry and The Energy Charter is an important and positive sign of that.

“Leadership and a commitment from industry to lower bills, to clear up choices and to make the most of opportunities in a transforming system is the starting place for rebuilding consumer trust and confidence in the energy market.”

In September 2018, feedback on the five guiding principles, and other elements of the charter, were sought with the release of The Energy Charter Draft for Consultation. The project team behind the development of the charter is currently working through the feedback provided through formal submissions and a number of engagement forums, with a view to releasing the final Energy Charter
in December 2018.

Adoption of The Energy Charter is voluntary, but all energy businesses are encouraged to join, regardless of where they fit in the supply chain. Commitment to The Energy Charter will be managed under the Governance arrangements now being developed.

Expressions of Interest from energy businesses wishing to commit to The Energy Charter from 1 January 2019 are now invited.

Commitment will involve:

  • A letter of commitment to The Energy Charter and its Principles
  • Agreement to resource administrative arrangements and accountability process

Jemena’s General Manager of Corporate Affairs, Ian Israelsohn, says consumer trust in the energy industry is at an all time low, and he and Jemena believe The Energy Charter will play a key role to start rebuilding that trust.

Jemena is one of 15 energy businesses whose CEOs have committed to The Energy Charter.

Mr Israelsohn has nearly 30 years’ experience in the energy industry across a number of countries, and believes he has never seen consumer trust as low as it is today.

“We are seeing increased consumer complaints, escalating disputes, negative media coverage, and a range of uncoordinated policy activity and inactivity by different governments,” Mr Israelsohn said.

“All of this uncertainty further erodes consumer trust and the social license of our sector. It also makes our lenders and shareholders uncertain, increasing our financing costs and feeding back into higher prices, which makes the situation even worse.

“In short: no one is happy. And without leadership there is no end in sight.”

The 2018 Edelman Trust Barometer report for Australia reported that the energy industry is the least trusted out of the 15 industries reported. It has both the lowest proportion of people who trust the industry (39 per cent), and the biggest fall in proportion since 2017 (-11 per cent).

“Into this environment slides The Energy Charter. The Energy Charter is an industry initiative that aims to deliver improved customer outcomes by driving collaboration across the energy sector,” Mr Israelsohn said.

“The Charter will do this by outlining a series of high-level principles that signatories will apply across their businesses to put customers and customer outcomes at the core of their business.

“Those companies who commit to The Energy Charter will agree to publicly report on how they are delivering against these principles and providing positive outcomes for customers.

This will be evaluated by an independent accountability panel, and an annual report that will be made available to the public. If signatories do not implement measures consistent with the principles, they will explain why under an “if not, why not” regime.

“This is a significant step forward for the industry, and I am proud that Jemena has seen fit to be one of the foundation members leading on putting customers at the heart of our business and the energy system,” Mr Israelsohn said.

“But this will not be easy, and there are fundamental changes that will need to occur.

“To the businesses that are already involved in The Energy Charter: dig deep. We have an opportunity to show our customers that we take this seriously, and the stakes have never been higher.

“To those businesses that are not (yet) involved: I encourage you to find out more about The Energy Charter and what it is going to mean for you.”

For more information about The Energy Charter, or to discuss how you can get involved, please contact Project Director, Emma Watts at [email protected].

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