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Power Transformed Update 3

Power Transformed Update 3

Meeting Topic: How far do essential service protections extend?

The Demand-side Energy Reference Group held its fifth meeting on 18 February 2016.

The meeting focused on:

  • the policy principles required across the energy market to unlock more effective competition through enabling confident participation of consumers in the new energy market; and
  • the extent that essential service and safety net provisions need to be extended to alternative energy services.

The outputs from this meeting will directly inform the development of the Power Transformed report, due for publication in June 2016.

  1. Policy Principles to Foster Trust and Good Outcomes

In its November 2015 meeting, the Reference Group workshopped strategies and measures that may be effective to maximise good consumer outcomes and build trust in an increasingly complex market. The strategies and measures proposed were aimed at addressing unnecessary detriments that consumers may experience in complex or transforming markets, which create barriers to confident consumer participation and therefore effective competition.

Following the November workshop, policy principles were developed that would provide more effective competition in the new energy market by enabling fair and confident consumer participation, and good consumer outcomes. In the current meeting, the Reference Group considered the draft policy principles and the importance of consumer trust (or lack of mistrust) in the energy market.

The policy principles—which cover issues such as working with people’s decision-making biases to unlock more effective competition, ensuring all consumers can access the new energy products and services, and providing a technology-neutral safety net across products and services—will form the recommendations of the Power Transformed report, due for publication in June 2016.

  1. The Extent of Essential Service Provisions

The importance of energy as an essential service has only increased with the digital age. Access to energy is now essential to health and wellbeing as well as economic and social participation. The safety net provided by energy consumer protection frameworks is therefore fundamental to confident consumer participation and effective competition. Safety nets are also critical where consumers are engaging with novel products and services.

New products and services will challenge the traditional consumer protection frameworks. The Reference Group considered hypothetical scenarios of people contracting alternative energy products and services, analysing the challenges they face and how existing safety nets may or may not apply.

Scenarios included:

  • A small family signing up to a 15 year solar lease from a door-knocking agent, complementing it with energy management software from a different company and then experiencing financial difficulty or disputing a bill.
  • A township being taken off-grid by their distribution network service provider, and the subsequent implications for retail competition and consumer protections.
  • A young couple buying and off-grid package deal, removing their connection to the grid and then either experiencing financial difficulty or seeking to sell their house.

The scenarios provided a useful basis for highlighting gaps in the consumer safety-net in a rapidly evolving market, and an opportunity to consider how the policy principles may be implemented across Australia’s energy market to enable good consumer outcomes, build trust and unlock effective competition.

The next meeting of the Reference Group will be held in April 2016 ahead of the release of the Power Transformed report in June 2016.

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