Feb 02 2023

Engagement: We’re all in this together

Over recent months as energy prices have spiked around the world and governments have intervened in and capped fuel markets locally, consumers perceptions of Australia’s energy market have changed. Consequently, energy prices have been front of mind for business, industry, government and consumers for an extended period of time. We take a look at recent research in the context of consumers’ expectations as we enter 2023.

What do we know about consumer attitudes?

In October 2022, the Australian Energy Council commissioned its own research seeking to better understand consumer needs as Australia progresses through the energy transition. At the same time, Energy Consumers Australia (ECA) published its bi-annual survey looking at energy consumer sentiment. Both pieces of research provide insights that can help the sector frame and respond to consumers with the information they need, in the way they would like to be responded to.

ECA found that “While consumers agree the transition is necessary and a good thing, some are concerned that this may cause disruptions to reliability and won’t necessarily deliver cheaper bills.” Rightly or wrongly, price increases have signalled to consumers that there are invisible issues causing havoc in the market. Confidence loves certainty, and uncertainty is putting a handbrake on confidence.

In ECA focus groups, a number of participants voiced anxiety relating to price increases:

Based only on media reports I have heard in recent months, the energy market is desperately in need of an overhaul. I have heard of spiralling energy bills to consumers and the outlook is not improving which will further add to inflation pressures. There will be a continuous challenge to keep energy costs stay low for a considerable time into the future and it will be an ongoing effort for governments both state and federal to intervene and ensure stable prices.

(Female, QLD, 30-39 years, General public)

“The energy markets don’t make sense to the average person. How is it that cost has gone up so much, when more and more people are using Solar. It’s like they are saying we are using more power than years ago, when a lot of people have solar. The energy market is a joke. We in Melb generally have one choice of distributor, it doesn't matter which retailer you go with, Power is Power from the same source. We pay various companies basically for it. These companies are created to create cost and jobs it seems. Can’t see any other reason, where there is more than one retailer, selling exactly the same thing as others, just for all confusing pricing.”

(Male, VIC, 40-49 years, Financially pressured consumer)

Consumers want information and meaningful engagement

In their research, ECA detected a sense of helplessness amongst consumers, with many unaware of what was changing or confused about the reason their bill had increased. A key indicator was a lack of clarity on how the market functions, as the Male 40-49 identified above.

Along with helplessness came a natural want for more control. A majority of energy consumers are interested in actively limiting their energy consumption to reduce their bill:

Providing a mobile app would be a great benefit to manage the household usage of energy and be able to keep an eye on costs.

(Female, NSW, 60-69 years, General public)

Having more information on real-time usage could be of benefit as it could help you to assess where and how you are using your energy […]whether it be through smart appliances or mobile apps with real-time information.

(Female, VIC, 30-39 years, Business owner)

Overall, ECA found that customers and business are looking for tailored or individualised advice to help reduce their usage. Pleasingly, many energy retailers are already proactively providing these solutions for customers. Some offer devices to monitor their usage and some provide incentives to reduce usage at peak periods. Many others have their own direct or referrals to solar panel offers that encourage consumers to install the technology on unused roof space and modify their energy consumption patterns to take advantage of generating their own electricity during the day.

What is the delivery challenge?

The outputs of the AEC’s research were reinforced by Essential, which found that consumer trust in government and energy providers dipped in 2022 as the cost of energy rose as an issue of concern. Unfortunately, a perception exists among consumers that energy providers are mainly focused on their stakeholders, and maximising profits. Similarly, there is a perception that governments focus primarily on winning elections, with benefits to consumers a secondary consideration. Overcoming these perceptions remains the delivery challenge both for private companies and government entities operating in the sector.

Reliability and strong customer support were identified by consumers as ways that their energy companies build loyalty with them. As William S. Burroughs wrote in The Western Lands, “You can’t fake quality any more than you can fake a good meal.” Consumers want to genuinely engage with companies who are willing to provide quality, meaningful service. The unprecedented level of support the energy sector provided to customers through the COVID-19 lockdowns, as well as discounts and other loyalty rewards in market offers represent the sorts of engagements that make consumers feel valued and listened to:

My provider offers the pay on time discount which helps a lot.

(Male, SA, 30-39 years, General public)

Reliability (quality) and consistency are also noted:

My provider supplies me […]with a reliable product and most of the time it does not let me down i.e. I am not subjected to blackouts during periods of high usage.

(Female, NSW, 60-69 years, General public)

The energy sector works extremely hard every day to ensure that there is consistently enough generation to keep the lights on. Beyond this core function, the industry seeks to engage meaningfully with consumers as it works to transition the grid for everyone’s benefit. Energy companies are also working to navigate the global headwinds that have resulted in higher domestic prices and shield consumers from price volatility as much as practicable.

The medium- and long-term effects of government intervention capping coal and gas prices in Australia are difficult to anticipate with any accuracy, however the AEC looks forward to continuing to work with members and governments on the detail to the benefit of consumers. Whatever market changes come throughout 2023, it is certain that meaningful engagement will be front of mind with both consumers and industry.

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