fairness, misbehaving and trust in the energy...
TRANSCRIPT
Fairness, misbehaving and trust in the energy marketRosemary SinclairCEO Energy Consumers AustraliaOctober 2017
What I’ll cover
1. What consumers are telling us. 2. Misbehaving and trust.3. From Finkel to fairness.4. Going live: winning and maintaining trust to innovate.5. Take-aways.
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Our objective: the LTIC
To promote the long term interests of consumers of energy with respect to the price, quality, safety, reliability and security of supply of energy services by providing and enabling strong, coordinated, collegiate evidence-based consumer advocacy on National Market matters of strategic importance or material consequence for Energy Consumers, in particular Residential Customers and Small Business Customers.
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Australian Energy Update, Figure 3.6 http://www.environment.gov.au/en
ergy/publications/australian-
energy-update-2017
Now…household energy price index
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Energy Consumer Sentiment Survey
(June 2017), Figure 8
http://energyconsumersaustralia.com.au/wp-
content/uploads/Energy-Consumer-Sentiment-Survey-
Key-Findings-June2017.pdf
Now…electricity and gas trailing other markets on value for money
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48
63 6166
49
6763
39
30 30 28
41
2730
127 8 6
106
0
10
20
30
40
50
60
70
80
Electricity Gas Internet Mobilephone
Insurance Banking Water
Value for money for household services
Positive Neutral Negative
ECA Solar and Battery Research (May 2016)
Manage my costs and give me control – solar
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60
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34
27
26
17
6
3
24
30
28
27
24
22
11
5
8
20
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0 10 20 30 40 50 60 70 80 90 100
Reducing household energy bills
Becoming less dependent on mains electricity
Being able to get a feed-in-tariff for feeding …
Government grant schemes for installing…
Protecting the environment
Adding to the house's resale value
Recommendation by a friend or family
The fact that your neighbours had it
How much have the following factors contributed to your decision to install a solar electricity system?
Strongly agree Mostly agree Mildly agree
ECA Solar and Battery Research (May 2016)
Manage my costs and give me control – batteries
9
41
43
39
29
25
18
11
7
6
21
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14
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01020304050607080
Becoming less dependent on mains electricity
Reducing household electricity costs
More efficient use of my solar panels
Don't get a high enough feed-in tariff
Protectng the environment
Adding to the houses's resale value
Being an early adopter of new technology
Recommendation by a friend or family member
The fact that your neighbours had it
Factors contributing to you considering installing battery storage
Strongly agree Mostly agree Mildly agree
Tech forward Western Australians…
0 10 20 30 40 50 60 70 80
NSWVIC
QLDSA
TASACTWA
SE QLDBus.
Rooftop solar panels
Already have Considering
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Energy Consumer Sentiment Survey
(June 2017), p 25
http://energyconsumersaustralia.com.
au/wp-content/uploads/Energy-
Consumer-Sentiment-Survey-
June2017.pdf
Satisfaction with VFM stable in Tasmania, but down significantly in NSW, VIC, WA and ACT.
34 32
41
29
46 43
3438
4641 41 40 39
4339 42 39 42
25 27
19
32
1118
25 23
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05
101520253035404550
NSW VIC QLD WA SA TAS ACT SE QLD Business(All)
Value for money – electricity
Positive (7-10) Neutral (4-6) Negative (0-3)
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Energy Consumer Sentiment Survey, November 2017 –not yet released
Electricity and gas continues to trail other markets on value for money
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59 6473
67 72
57
3829 29
23 28 2332
2612 7 4 5 4
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01020304050607080
Electricity Gas Internet MobilePhone
Insurance Banking Water
Satisfaction with utilities – Tasmania
Positive Neutral Negative
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Energy Consumer Sentiment Survey, November 2017 –not yet released
“I would prefer my six cents of power, sorry my units of power, which aren’t six cents, to go into my community. I get six cents from [energy retailer], but if I get 25 cents because I gave it to you because you have fallen on hard times, well I’m delighted.”
Attendee, ECA Regional Listening Tour April-June 2016
I want to trade, share, gift…
Thaler, anomalies and misbehaving
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• Information ≠ action.• More tariffs ≠ real choice.• Smart meter data ≠ information • Potential saving ≠ switching. • Price signal ≠ behaviour change. • Cost/pay-back periods ≠ barrier to
solar and battery investment.• Big potential saving ≠ switching
rates. • Switching ≠ discipline market. • Rules ≠ compliance and outcomes. • Efficiency ≠ LTIC.• Big and expensive ≠ secure. • High wholesale prices ≠ new
investment.
What is fair? The Snow Shovel Experiment.
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A hardware store has been selling snow shovels for $15. The morning after a large snowstorm, the store raises the price to $20.
Rate this action as: ‘acceptable’ or ‘unfair’.
Goals of the 1997 Telecommunications ActTo promote:• the LTIE of end-users of carriage or
content services• the efficiency and international
competiveness of the industry• the availability of accessible and
affordable carriage services that enhance the welfare of Australians
Re-setting retail: from pass-through to outcomes
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“Now, with the retailers, we know that millions of Australian families are paying more than they need for their electricity. They are on plans that have run out, discounted plans that have run out and they are now on a standard offer and paying too much for their electricity. They have got people that are on the wrong plans.”
Prime Minister, 9 August 2017
Its complicated...
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1. Better regulation, transparency and markets.
2. Strengthening reliability. 3. New technology and
innovation.
“…this brave new world of a radically changing energy
mix, disruptive technology and the empowerment of
consumers who are no longer at the end of the supply
chain but rather in the middle that the Turnbull
Government is implementing its plan”
Josh Frydenberg, AFR Energy Summit
The Labor view
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• Open to deal on CET. • Activate ADGSM + introduce
National Interest Test. • Modernise energy rules.• New interconnection and
renewable energy zones.• Lower CEFC hurdle rate.
Finkel Blueprint: from coordinating and rewarding a SMALL number of BIG things to a BIG number of SMALL things…
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We need to innovate in unexpected places…
40Source: Phil Wilkinson, AIRAH
Mould growth on air supply fan Dust and debris on cooling coil
Three take-aways
1. Consumers are moving. They have ‘jumped the fence’ in search of ‘cost and control’ and are not going back to their seats in the grandstand.
2. How do we win the trust and confidence of consumers to design and build a market that allows consumers to get the energy services they need, derive value their investments AND optimises the system as a whole.
3. Design, test and refine to transform…meeting consumers where they are.
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Next…design, test and refine
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ARENA A-LAB ‘Innovation Frames’ https://arena.gov.au/a-lab-energy-system-innovation/