The complex nature of the competitive retail electricity market can be difficult for consumers with language and cultural barriers, low literacy and numeracy, disability and/or limited access to trusted advice and support. QCOSS and Endeavour Foundation said that these consumers can lack the confidence to compare offers or negotiate with retailers because they:
are generally less able to understand the relevant facts and seek out information to acquire the requisite knowledge to make informed decisions;
find the information confusing or overwhelming, do not understand the terminology or conditions in contracts, find it difficult to navigate the jargon; and
may not understand the types of conditions offered under market contracts (and the penalties for not meeting them) or what is available under a prospective retailer’s hardship policy.302
295 David Warner, sub. 8, p. 4; Origin, sub. 21, pp. 16–17; Powerlink, sub. 40, pp. 14, 29; Energex, sub. 43, p. 26; Ergon Energy, sub. 44, pp. 20–21; AGL, sub. 47, p. 12.
296 OWN Mackay, sub. 7, p. 3; David Warner, sub. 8, p. 3; National Seniors 2015, p. 7; Kemp et al 2014, p. 10; QCOSS 2014c, p. 2.
297 OWN Mackay, sub. 7, p. 2; David Warner, sub. 8, p. 3; QFF, sub. 20, pp. 6, 9; QEnergy, sub. 23, p. 4; QCOSS, sub. 25, pp. 5, 7, 15, 16, 42; Stanwell Corporation Limited, sub. 33, p. 25; Energex Limited, sub. 43, pp. 26–27; Ergon Energy, sub. 44, pp. 20–21;
Boughen et al 2013, p. 20.
298 Energex Limited, sub. no 43, p. 27; CSIRO 2013, p. 32.
299 QFF, sub. 20, pp. 9–10; CCIQ, sub. 24, p. 11; AI Group, Brisbane Public Hearing, 5 November 2015, p. 55.
300 OWN Mackay, sub. 7, p. 3; David Warner, sub. 8, p. 2; EWOQ, sub. 12, p. 1; Energex Limited, sub. 43, p. 26; LGAQ, sub. 42, p. 3;
QCOSS, sub. 25, pp. 16, 18–19; The Customer Advocate, sub. 29, pp. 3, 21; Endeavour Foundation, sub. 37, p. 4; Stanwell Corporation Limited, sub. 33, p. 25.
301 EWOQ sub. 12, p. 1, QCOSS sub. 25, pp. 19-20, Consumer Roundtable, 27 October; St Vincent de Paul Society 2014b, p.31.
302 QCOSS sub. 25, pp. 5, 16, 19–20; Endeavour Foundation, sub. 37, p. 5.
Some low income and disadvantaged consumers face additional challenges if they want to participate in the market, including not having the financial capacity to have direct credit or access to the internet.303 Also, as new technologies can be costly, low income houses often end up using appliances that have low up-front costs but are expensive to run (like old refrigerators or cheap but inefficient heaters).
QCOSS indicated concerns that in these cases customers may not shop around, even if better deals are available. As a result, they are unlikely to realise the potential benefits and opportunities for cost savings from the evolving market and may, in fact, be exposed to higher costs — and potentially disconnection and debt.304
6.3 Roles in influencing consumer behaviour
Retailers and other service providers, NGOs and the Queensland Government could do more to support consumers' decision-making. For example, they could provide better information about the products and services available and increase awareness of and support for participating in the market.
6.3.1 Market participants
As with other evolving markets,305 electricity retailers and other providers need to focus on finding ways to both win and keep customers — such as developing new products and services and building customer confidence in their offerings. Effective customer engagement, including providing information in a way that improves customer decision-making, will underpin business success.
On this, Origin said:
… once retail activity increases, retailers must be proactive to ensure that they maintain their market share. This is largely attained through increased consumer participation, which is achieved when customer are more knowledgeable about their service and have the confidence to enter the market.306
AGL also said that retail businesses are heavily incentivised to increase consumer awareness of products and their benefits.307
In some cases, however, customers may be suspicious that information provided by a business seeks to only to satisfy the business's interests, not their requirements.308 It appears that even when consumers might be generally happy with their individual retailer, they can distrust the sector more broadly.
The AEMC found that suspicion about the trustworthiness of some energy companies is an important underlying barrier to consumers in SEQ who are investigating different energy companies and plans with a view to switching offers.309 QCOSS pointed to a general distrust of the
303 QCOSS, sub. 25, pp. 5, 16, 18, 37; National Seniors 2015, p. 7; Kemp et al 2015, p. 10.
304 QCOSS, sub. 25, p. 5.
305 We note that innovative businesses in other technology-centred markets (such telecommunications and media (particularly newspapers)) have responded to changing market dynamics – improving product quality, developing new products, finding new markets and reducing their cost of doing business.
306 Origin, sub. 21, p. 16.
307 AGL, sub. 47, pp. 9, 12.
308 SRG Roundtable, 26 October 2015.
309 Vercoe et al 2014, p. 173.
energy industry, noting vulnerable customers can be hesitant to interact with their retailer and were concerned about the reliability or trustworthiness of information presented to them.310 This highlights the importance for consumers to have access to clear and easy-to-understand information from trusted sources, including government and community-based organisations.
Reflecting this, we have proposed that the Queensland Government implement the currently planned customer engagement campaign to encourage more active consumer engagement in the SEQ market should retail price deregulation in SEQ proceed (Draft recommendation 22, Chapter 8).
6.3.2 NGO sector
Some consumer groups and other NGOs are focusing on providing help to consumers, including specific target groups, to engage in the market and provide support for customers in financial hardship.311 QCOSS said that community services are an important intermediary to assist customers at risk of disconnection to engage in the market:
The value of the role community services play in the energy market cannot be underestimated. For people who are disadvantaged and vulnerable, it is important that they have access to someone they can trust to provide them with information and advice, or guide them through the process of contacting their retailer and negotiating a payment plan.312
Submissions and other feedback to this inquiry suggest the work NGOs are doing to improve energy literacy to enable consumers to make better consumption decisions has been useful.313 However, stakeholder feedback also indicated that a lack of funding for financial counselling and the limited number of industry-community partnerships in Queensland compared to other states are barriers to assisting those most in need.314
6.3.3 Role of government
Governments are seeking to empower consumers to participate in the market by providing the information, support and tools to aid more informed decision-making directly. The Queensland Government recently announced its Electricity Consumer Engagement Program to:
educate and equip consumers to better understand their own needs, rights, responsibilities and options;
motivate consumers to shop around for better electricity deals more often; and
support vulnerable groups to enable the benefits of being an active consumer.315
The $3.3 million program, developed in consultation with energy businesses and consumer and industry groups, is based around a mass-marketing campaign to be delivered in 2016 to promote customer awareness about the retail electricity market and complement deregulation of electricity in SEQ.
We do not anticipate general information and engagement programs are required on an ongoing basis. There is a risk that government programs could crowd out energy businesses' programs and
310 QCOSS, sub. 25, pp. 17, 32, 34, 36.
311 OWN Mackay, sub. 7, p. 3; QCOSS sub. 25, pp. 30–38; Queensland Consumers Association, sub. 26, p. 2; Consumer Roundtable, 27 October 2015.
312 QCOSS, sub. 25, p. 32.
313 OWN Mackay, sub. 7, p. 2; QCOSS, sub. 25, pp. 31– 40; Consumer Roundtable, 27 October 2015.
314 QCOSS, sub. 25, pp. 14–15, 30, 32; Queensland Consumers Association, sub. 26, p. 5; Consumer Roundtable, 27 October 2015.
315 Queensland Government, sub. 55, p. 3; DEWS 2015a, p. 9.
initiatives. We consider that government involvement should be limited to points of significant change in the market where the trust and credibility governments have with consumers are critical.
More sustainable, ongoing support is likely to be required, however, for consumers with particular higher-level needs, such as those with functional literacy and language barriers. We consider there is a role for government in providing ongoing targeted support for vulnerable consumers, including through partnerships with the community sector.
We note the Queensland Government is investing in targeted programs to build capacity among specific consumer groups, and has worked in partnership with business and community organisations to deliver a range of programs. Examples include:
the Low Income Advocacy Agreement (for energy and water);316
the Residential and Small Business Agreement (with QCOSS and CCIQ);317,318
the Irrigators Energy Savers Project/Energy Savers Plus (with Ergon Energy and QFF);319 and
ecoBiz (with CCIQ).320
Ongoing evaluations should provide further evidence on whether these programs have resulted in favourable outcomes and opportunities for improvement.
At a national level, the AER maintains a price comparator website, Energy Made Easy, to assist residential and small business customers to find their best energy offer. The Queensland Government's Switch and Save Electricity Price Calculator321 is a similar tool, targeted at small customers on farming and irrigation tariffs. These are practical examples of platforms for improving information available to consumers to make good decisions. They can reduce search costs by simplifying the shopping process and reducing the time and effort in decision-making.322