People in the energy sector know that politics is pervasive in energy policy and regulatory debates – we are currently seeing this play out in the realm of wholesale energy policy. Politicians are in the mode of being seen to ‘do something’, which would be good except that the actual nature of ‘doing something’ tends to not be about solving challenging and interconnected policy matters but about addressing short-term and localised problems for politicians.
Here we take a closer look at a matter of detail within the politics of energy, which is how retailers and other stakeholders make their cases to policymakers (including regulators and special inquiries) in times of regulatory reform. This is when the need for the policymaker to ‘do something’ is at its height; they are either looking for new problems to solve or neat solutions to existing problems. How the case is presented then can be critical to the outcome and below we consider the role of the case study, particularly in energy affordability and hardship debates.
Case studies report on particular cases, sometimes in great detail. In policy debates case studies are most used for illustrative purposes; they tell stories to demonstrate the practical experience of the points being made. In retail energy policy they tend to be used by consumer advocates and others to tell stories about poor customer experiences. They are most used for stories of vulnerable customer disconnection, where customers experiencing hardship are deprived of their basic right to an essential service, often due to retailer mistakes or breaches of the regulations. Case studies have been used to great effect in this way; they contextualise and humanise a situation, turning a dry argument about debt and missed payments into a real person with a backstory and rights to an essential service. These case studies draw the reader in; they create empathy.
Case studies have played a role in consumer advocate reports and submissions for many years. They receive political attention. The policy focus then becomes one of concern that the bad thing that happened in a particular case happened at all. Thus the argument is made by the writers of case studies that more regulation is required to stop it happening again.
Energy retailers take a very different approach to the consumer advocates in their public policy submissions. Retailer submissions tend to be dry and fact-based, only focussing on the good things that retailers do at an overall programme level. The facts provided include the numbers of customers being assisted, the dollars spent on assistance, and the retailer’s productive collaboration with welfare agencies. This approach is considered good practice by retailers; it is appropriately corporate and fits within retailers’ communications comfort zone. In theory, a person reading this kind of submission should be comforted by the materiality of the assistance, of the good intentions of the retailer, and of the retailer’s maturity in recognising its social role.
But is this how it works in practice? My own years involved in hardship debates have led me to believe that the dry, bureaucratic language of retailers appears to miss the point from the political perspective. The size of assistance programmes and the good intentions of a retailer pale in comparison to a story of a family experiencing financial difficulty trying to cope without electricity or gas. The obvious and easy conclusion for someone reading both a case study and a retailer explanation of its assistance is ‘well, whatever you are doing, it isn’t enough’. If that someone is a policymaker in ‘doing something’ mode, more regulation will result.
From an energy retailer perspective, what gets lost in the debates that focus on negative case studies is that these cases may be exceptions; that retailers with millions of customers will inevitably fail in customer management at times. Call centres with staff expected to manage complex process and regulatory requirements will have a degree of failure. If zero failure is the desired outcome, then policymakers and others need to consider the cost of achieving this (as well as its impossibility given the inevitability of human error), and customer willingness to pay. However, retailers rarely make this argument in public submissions; it is possibly considered too risky in light of retailers trying to present an image of programme success.
So what is to be done?
First, we need to recognise that issues such as consumer hardship will always be fraught with negative messaging from various parties about energy retailers, and specifically that retailers are not doing enough. The fact of energy being considered an essential service and retailers’ ability to disconnect this essential service makes this unavoidable. It possibly doesn’t actually matter what additional assistance retailers provide as long as there are disconnections and as long as mistakes are made. (Note that I am not arguing against assistance, but the point is still relevant.) This means that retailers will never convince policymakers (at least not publicly) that they are ‘right’ or as socially responsible as might be expected. In fact, we have seen expectations of retailers continue to rise over the years regardless (or maybe even because of) the assistance provided. In this context, admitting to mistakes or limitations may not be as risky as some might think, as long as a retailer doing this can genuinely demonstrate concerted effort to meet its compliance obligations.
Second, retailers need to consider their arguments on these issues and address the communication gap between their corporate-speak on numbers and the distressing case studies of customers’ actual experiences. They should find a way to tell their own stories of assistance, both through the numbers and through their own experiences of assisting customers, with both good and bad outcomes. Importantly, retailer case studies of customer assistance that do not end well should not be about criticising the customer but about showing the complexity of some cases. Customer advocates’ case studies tend to tell stories of failure where the customer wanted to pay but the retailer did not do what it was supposed to. These are point-in-time stories that lead one to think that the situation would be changed if only the retailer had tried harder (and this is not to say it shouldn’t have). However, this is not the whole picture. Retailers have stories to tell that show customer patterns of engagement/disengagement over years, multiple offers of assistance made by retailers, and debts waived that nonetheless ended with customer disconnection. These are the stories that help complete the overall picture for policymakers.
To be clear, the point being made here is not for retailers to appear combative on consumer advocates’ case studies. Not only does this look defensive but some of the retailers’ behaviours in the consumer advocates’ case studies are objectively indefensible. Retailers also cannot really argue about problematic customer behaviour in the same tone as that used by the consumer advocates: one retailer’s efforts to do this via case studies over a decade ago was not received well and is still talked about to this day as an exception. That retailer was not wrong, but the political circumstances were not conducive to the conversation it was trying to start.
This then suggests a delicate balancing act is required. Retailers will never be seen as the good guys while they continue to charge money for an essential service and disconnect those who cannot pay. But perhaps this means that retailers can be more confident to engage with the politics on these issues and to tell their own stories on their own terms. These are the stories of difficult and complex customer cases, of successes, and potentially also the story of the necessary commercial trade-offs to provide what the community as a whole is prepared to pay for. Improved retailer storytelling will not eliminate the politics of ‘doing something’ but it will enrich the understanding of policymakers genuinely seeking to solve problems and create responsive policy. Ideally it should make it a little harder to defend knee-jerk political fixes based on simple case studies of retailer failure.
At the end of November each year, the AER and ESC publish their assessments of the performance of the retail market for the previous financial year.
The ongoing challenges of COVID-19 - and most recently the hard lock down in Melbourne and restrictions more broadly in Victoria - have brought the economic stress on households to the fore.
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