Energy Challenges Reflected in Consumer Sentiment

The most recent assessment of consumer sentiment shows a dip this year from the record levels of satisfaction with retailers recorded last year. Despite the 3 per cent drop in sentiment (to 80 per cent) it remains at one of the highest levels reported since the start of the surveys in 2016.

It is also likely to reflect the sharper focus on higher energy prices that has emerged since the end of last year, as well as the increased public discussion of cost-of-living pressures overall.

The impact of those pressures is reflected in a separate “Pulse” survey undertaken for Energy Consumers Australia (ECA) in June following the recent crisis which saw the Australian Energy Market Operator (AEMO) temporarily take control of the National Electricity Market (NEM). This survey shows that sentiment has continued to soften in the wake of the recent energy crisis and the accompanying media commentary around high wholesale prices, increases in the default market offer prices, retailer stress and supply availability.

The ECA is undertaking three Pulse surveys (June, July and August) to try and capture the attitudes towards the extraordinary set of circumstances confronting the energy sector in Australia and overseas.

It confirms that undoubtedly cost and affordability remain critical drivers in overall sentiment. Below we take a look at what the most recent sentiment surveys have found.

Satisfaction

The data in the June Energy Consumer Sentiment Survey released by the ECA is the latest in a series of six-monthly surveys it has commissioned from Essential Research that began tracking sentiment six years ago.

Overall consumer satisfaction with their electricity and gas services were both at 80 per cent. Western Australia reported the lowest overall satisfaction at 75 per cent for electricity  in the June Energy Consumer Sentiment Survey This is a drop of 5 per cent[i]. South Australia also reported a satisfaction rating for electricity that was 5 per cent lower at 80 per cent while Victorian satisfaction was 4 per cent lower, although still at 81 per cent.

It’s worth noting WA has had price increases for electricity each year since 2017[ii] except 2020 when the State Government introduced a freeze on household fees and charges in response to COVID-19[iii]. This year a 2.5 per cent increase in household electricity prices to an average of $1812, as well as a $400 household electricity credit were included in the state’s May budget measures, although neither would be reflected in the survey data which was collected in April. 

Figure 1: Household satisfaction with provision of electricity and gas services

Source: ECA June Consumer Sentiment Survey

The changes in the overall satisfaction with electricity and gas services for both households and businesses and by state is shown in figures 2 and 3 below.

Figure 2: Overall satisfaction with electricity services

Source: ECA June Consumer Sentiment Survey

Figure 3: Overall satisfaction with gas

Source: ECA June Consumer Sentiment Survey

Value for Money

When considering the consumer sentiment rating of the overall value for money of electricity the most recent Pulse survey shows a fall to 61 per cent down from 67 per cent in the June 2022 survey (the data collection for this occurred in April).

Figure 4: Overall value for money Pulse survey 

Source: ECA Pulse Survey

The June 2022 survey result for electricity was slightly down from the highest reported positive rating of 70 per cent for all surveys, which was recorded in June 2021. Despite the understandable fall in rating given recent stresses on the energy market and consequent discussion and movement of prices, it remains higher than the sentiment reported in December 2020 and well above the low point of 34 per cent recorded in December 2017.

Figure 5: Overall value for money 

Source: ECA June Consumer Sentiment Survey

The negative rating of 10 per cent in the Pulse survey was slightly above the 8 per cent recorded in the June 2022 survey. Victoria reported the biggest drop in sentiment on this rating in the Pulse survey of 10 per cent (down from 71 per cent in the June 2022 survey).

Comparison with other services

In comparison to other household services when assessed for vlaue for money, electricity is tracking at a similar level to insurance with a 67 per cent positive rating, while gas is at 70 per cent (see figure 6). The fall in positive sentiment is consistent with that for other services such as internet providers and insurance. The drop in sentiment is likely to reflect the inflationary and cost pressures being experienced more broadly for services.

Figure 6: Value for money of household services

Source: ECA June Consumer Sentiment Survey

After seeing prices fall over the past eight years, retail electricity prices have again moved higher, with wholesale prices likely to remain high for the rest of winter.

Satisfaction with the cost of electricity fell 3 per cent to 53 per cent in the June 2022 survey compared to the corresponding period, although a further 29 per cent of respondents were neutral and the negative rating was 2 per cent lower. The Pulse survey did not ask about the cost of electricity, but did ask for sentiment on affordability.

The Pulse survey found that 75 per cent of respondents are concerned that electricity and gas will become unaffordable for some people (up from 65 per cent in the June survey), while 57 per cent were concerned energy would become unaffordable for them, while another 32 per cent expressed moderate concerns about affordability.

The impact of recent events is seen in the assessment of households to question of how confident they were that the market was working in their long-term interests with 44 per cent positive (down from 46 per cent) and another 36 per cent of respondents neutral (see figure 7). Confidence levels by state are shown in figure 8. 

Figure 7: Confidence in the market

Source: ECA June Consumer Sentiment Survey

Figure 8: Confidence in the market by state

Source: ECA June Consumer Sentiment Survey

While those with confidence in the market fell 6 per cent between the June 2022 and Pulse surveys – reflecting the impact of recent events - it remains near the highest levels recorded over the past six years.

Figure 9: Confidence market working in long term interests (Pulse survey)

Source: ECA

Customer Service Rating

The customer service rating in the June 2022 survey for electricity was slightly lower than a year earlier, while satisfaction with customer service for gas continued to increase.

Last year saw historically high sentiment on the back of an extended period of downward pressure on prices. Events of 2022 - including higher fuel prices as a result of domestic and international factors, corresponding increased generation and wholesale costs and increased supply uncertainty culminating in market intervention by the market operator in June – have led to a decrease in sentiment, with consumers increasingly becoming less and less satisfied across all metrics and confirming cost and affordability as the critical drivers in overall views of the market.

[i] Western Australia’s Budget papers reported a 2.5 per cent price increase in electricity prices for 2022-23 to an average of $1812 per household.

[ii] The AEMC reported that in 2016-17, a representative Western Australian family, using 5198 kWh per year paid a total annual bill of $1412 exclusive of GST.

[iii] https://www.solarquotes.com.au/blog/wa-electricity-prices-mb2479/