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From the CEO
Where has the year gone? 2020 really has been one for the books, and as we start to prepare for the summer break I have been reflecting on a big year for me personally, for all of us at Energy Consumers Australia, and of course across the country and internationally.
Engagement with governments on improving outcomes for consumers
We have increased our direct engagement with Governments over the past year, and were delighted to have Dan van Holst Pellekaan, the South Australian Minister for Energy and Mining and our shareholder member, present at our virtual Annual General Meeting during November. It is evident that our Energy Ministers are working towards a future energy system that meets consumers’ needs for reliability, affordability, flexibility, and clean energy. However, each jurisdiction does have their own particular set of challenges and starting points. We are finding ways to work constructively with governments to find the right balance for households and businesses in each state, to make the transition as smooth as possible for consumers.
There have been quite a few significant policy announcements by governments in the energy space over the past month, starting with the release of the Electricity Infrastructure Roadmap by the New South Wales Government. We see this roadmap as an important step forward as we plan for the fundamental transformation of the energy system, which is being driven by technology and changing consumer demands. We did note that the Roadmap deals primarily with the issue of larger scale energy supply. In that context there are challenging issues for consumers in the scale, timing, costs and allocation of the risks of the transmission investment that is contemplated in the Integrated System Plan 2020. What we must remember, when developing these strategies, is that energy is fundamental to people’s lives and livelihoods. Therefore, when making changes to something which has such major implications, we must always keep consumers central to decision making to ensure the right options are delivered at lowest possible cost.
As part of the larger Victorian budget, there were a number of very positive announcements in relation to energy. A massive $1.6 billion is to be invested in the energy system to support households and reduce energy bills. Mandating minimum standards for rental properties, upgrading 35,000 social housing properties, helping low-income households replace inefficient heaters and providing a one-off payment of $250 to concession card holders are just some of the benefits outlined. Giving rebates for smarter appliances and the expansion of the Solar Homes program will also make owning Distributed Energy Resources more accessible for everyone, including small businesses who have also had a very tough year. Not only this, Minister for Energy, Environment and Climate Change, Lily D’Ambrosio also announced that they would be building one of the world’s largest lithium-ion batteries to bolster the reliability of the grid. Most importantly, from our perspective, the decisions announced were people focused and designed with a range of consumers across different demographics in mind. For those who may not have caught it, here is a not to be missed tweet from Minister D’Ambrosio on the announcements.
Lowering energy bills and more informed consumers
Victoria also released their final decision and price determination on the Victorian Default Offer (VDO) last week, announcing that average annual bills will fall by 10 per cent for residential customers and 14 per cent for small business customers (when compared with the prices for the 2020 Victorian Default Offer). In other jurisdictions, where it applies, the Default Market Offer (DMO) plays an important role as a maximum price that a retailer can charge consumers on standing offers. In our submission to the AER on the third DMO we acknowledge the positive market impacts that have occurred including lower standing offer prices, fewer conditional discounts on market offers, and the removal of many market offers that were priced above the DMO. We hope that the DMO and VDO price determinations offer an opportunity to build on this foundation and continue to build consumer trust and confidence in the retail electricity market. We are also looking forward to the Australian Energy Market Commission’s Draft Determination on the better bill rule change initiated by Minister Taylor, which we expect on 17 December 2020.
The opportunity to unlock flexibility in energy use and generation, at scale
We are on the cusp of exploring the potential for homes and businesses to be flexible in their energy use and generation at scale in Australia. Achieving this will make a significant contribution to a cheap, abundant, and clean energy future. This is the challenge we are setting ourselves at Energy Consumers Australia to take further forward in 2021 and beyond.
With this in mind we continue to work extensively with the Energy Security Board (ESB) across the Post 2025 Market Design package of initiatives with a particular focus on the consumer perspective on two-sided markets and the Distributed Energy Resources (DER) integration proposals. You can read our last submission to the Post 2025 Market Design Response Consultation Paper here. Importantly, our submission is very focussed on how Governments can empower households and small businesses and give them a real stake in the energy transition. We believe we need practical programs to equip consumers to manage their own energy use and generation. Home energy storage – whether that is smart hot water systems now, or electric vehicles, plug and play or other batteries in the future – can play a role in managing maximum and minimum demand as well as rewarding consumers through lower energy bills. While we focus a lot of our work on the barriers, whether they be the business models, regulatory frameworks, technology or rate (pricing) design, principally we are concerned with designing for social practice and consumer values, expectations and needs. We are working in partnership with Professor Cameron Tonkinwise, head of the Design Innovation Research Centre at the University of Technology Sydney, on how to ensure consumers are front and centre of the Post 2025 Market Design package. From a different framing – using behavioural science – you may also be interested in this series – It’s all just a bunch of BS – and a recent episode called Energy Use Made Smart.
We have also been working with the ESB and advocates on how data is fundamental to better consumer outcomes in the future energy system. We see it as critical that the ESB’s Data Strategy is fully integrated with, and linked to, practical outcomes throughout the Post 2025 Market Design package. We have been watching international developments in the governance and use of data closely, particularly those in the UK where the Energy Data Taskforce had a very clear approach to unlocking innovation in the energy system and in the US where the work of Mission Data is instrumental in unlocking value for consumers. Our submission to the ESB’s Data Strategy Consultation Paper will be publicly released within the next week.
We do recognise that as Australians take up new energy technology there is a significant opportunity for the energy sector to ensure the benefits of these new technologies are shared, while also posing challenges to the market operator and the system. We have initiated a project on social licence for control of DER technologies and will publish a report on the issues in the next few weeks. Related to this project, is our Community Listening video series where we talk to ordinary people with new energy technology in their homes. The aim is to showcase how consumers are using DER to manage their energy usage and bills and how they might allow their Solar PV to be managed in order to mitigate the risk of system security issues. Watch our latest video with Nat from Eden Hills, South Australia here.
The future of gas – electrification or decarbonisation?
I was really pleased to be asked by the Grattan Institute and Melbourne Energy Institute to be part of their panel on their webinar Burning Gas in a Net-Zero World last week. There was much food for thought and areas where the path forward remains uncertain, but it was very positive that the focus was very much on people, their choices, and affordability. Last week the Australian Energy Regulator (AER) released its Draft Decision on the AGN SA and Evoenergy gas distribution access arrangement proposals for 2021-26, which sets out the draft revenue allowances for the next five years. There is still opportunity to engage in this process, with submissions on the draft decision and distributors’ revised proposals due on 17 February 2021.
In Energy Charter news, the Independent Accountability Panel (IAP) is now finalising its review of the Signatories annual disclosures for 2020, after meeting with the Signatories CEOs, conducting stakeholder forums and reviewing public submissions. As we have in previous years, as Chair of the End-Users Consultative Group (EUCG), we supported consumer organisations engagement with the review process. Together we met with the IAP and reinforced the need for a concrete plan by Signatories to manage the challenges customers are facing, particularly during COVID-19. As the EUCG we emphasised that now is the time for Signatories to rise to the challenge posed by the global pandemic and demonstrate how they are putting the customer at the heart of their business. The IAP report is due for release on 4 December 2020.
Better value for money infrastructure, and revolution not evolution in pricing
During November we continued to work with other advocates and the Victorian distribution networks on their revised proposals for the 2021-26 regulated revenue period. As part of this process, together with Mick Fell from Energeia, we presented our electric vehicle tariff at the AER workshop. The slides from which can be found on the AER’s Network Tariff Reform webpage here. Submissions on the AER’s draft decisions for the electricity businesses and the revised proposals are due 8 January 2021.
The AER has also initiated an important review of their Electricity Distribution Ring-fencing Guideline, with submissions due on 21 December 2020. This is an important opportunity to consider how the guideline could be adapted to better reflect the changing nature of services offered by distribution businesses, including via the use of new technology such as stand-alone power systems and storage devices. We will share our thoughts on this issue in an upcoming newsletter.
Outcomes, evidence, and research
Though the holiday season approaches, we still have a really busy few weeks ahead with the release of our bi-annual reports, the SME Retail Tariff Tracker and Energy Consumer Sentiment Survey. The purpose of these projects is to gain insights into the lived experience of residential and small business energy consumers to inform policy, regulation and business practice. This is of particular importance in the current context of COVID-19 and the upcoming energy transition. We will be sharing our findings with consumer advocates, policy makers, regulators and energy companies as well as our stakeholders, so keep an eye on our digital channels for updates.
The latest data from the Consumer Policy Research Centre (CPRC) which has tracked the consumer experience for the past six months is summarised in their report COVID-19 and Consumers: from crisis to recovery. Drowning in Debt?. The CPRC says that young people are suffering the most as a result of COVID-19 with 1 in 5 young people reported borrowing from family and friends to manage basic household expenses in October, a significant increase from 1 in 8 in May 2020. As well as this a significant jump in young people missing basic household bill payments such as energy, telco, insurance, credit, and rent was recorded in October, and at rates two to three times the general population. As well as this the AER’s Annual Retail Markets Report 2019-20 reveals thousands of households and small businesses are in energy debt, struggling to pay bills during the COVID-19 pandemic. Showcasing a sharp rise in energy debt since March this year, the report outlines that debt owed by small businesses grew from $35 million in March 2020 to $45 million in June 2020. Further, COVID-19 data supplied by retailers to the AER during the pandemic shows long-term residential electricity debt increased by 21 per cent between 31 March and 2 November to $124.5 million, and almost 60,000 households took advantage of retailer offers to defer paying energy bills. Should you know of anyone struggling with their energy bills, we do have a Consumer Resources section here, which has some helpful information about how to reach out to your retailer.
As we close out the year, we are looking forward to the release of the ESB’s Health of the NEM and the ESB Directions Paper for the Post 2025 Market Design package.
There have been some significant governance changes in the energy space of late. We have passed on our congratulations to the Hon. Mick de Brenni MP on his appointment as the Minister for Energy, Renewables and Hydrogen in the re-elected Queensland Labour Government. We are also pleased to see the reappointment of Shane Rattenbury MLA as the Minister for Climate Change and Sustainability, following the recent ACT Government election. We look forward to working with Anna Collyer, the incoming Chair of the Australian Energy Market Commission from February 2021 and thank Merryn York for her engagement and valuable collaboration with us through her role as the Acting Chair. Last but not least, we look forward to working with Nino Ficca as the Interim CEO of the Australian Energy Market Operator, following the departure of Audrey Zibelman. We want to again acknowledge Audrey’s valued contribution over the past few years, in navigating and responding to some very unique challenges and opportunities in the Australian energy system.
2020 drawing to a close
Looking back over the year I am very proud of my team for pulling together exceptionally well in a more difficult environment as we switched to working remotely. Our team including our experts and technical advisers have continued to thrive working and collaborating across different locations. We have people based in Canberra, Perth, regional Western Australia, Davis (California), the UK and Ireland as well as at our home base in the Greater Sydney region. Our Board members and Reference Committee come from all around the nation, with the Board still meeting every month and in the case of the Reference Committee, meeting four times this year. And now, with the announcement that our flagship event, the Foresighting Forum, will now be taking place digitally throughout 2021, we have proved our ability to adapt and thrive as we continue to contribute to the transition to a modern, flexible and resilient future energy system.
A personal achievement for me this year came in the form of the inclusion of a contribution from my colleague Elisabeth Ross and I to an important international volume called ‘Variable Generation, Flexible Demand’. Supported with case studies, the book examines practical ways that demand flexibility can play a constructive role as more systems move towards higher levels of renewable generation in their electricity mix.
We will be gathering for a staff Christmas party soon, which I am very excited about. Many of us have not been physically in the same place since early March so I am really looking forward to catching up over a friendly lawn bowls tournament and an outdoor lunch ahead of the break. To all my readers and friends, enjoy the run up to the holiday season and I hope you can all take some well-deserved rest! I look forward to catching up again in the New Year.
Wishing you all the best for a relaxing summer and time with family and friends.
Chief Executive Officer (Interim)
The bECAuse Blog: Focussing on a consumer-led energy future.
In the first of our bECAuse blog series, where our thought leaders discuss their projects and priorities, Research Consultant Elisabeth Ross talks to her work in understanding how consumers use energy in order to design a fit-for-purpose future energy system. Read the full blog here.
- Foresighting Forum 2021 to be digital due to impacts of COVID-19
- Reflecting and looking forward: Our Annual Report and Business Plan
- NSW Electricity Infrastructure Roadmap to drive down power prices
- Four research and advocacy projects receive Energy Consumers Australia Grants Program funding
- Energy Consumers Australia: Annual Report 2019-20
Submission to the AER on the third Default Market Offer
In this current climate the role that the Default Market Offer plays is more important than ever as we look to support energy consumers managing their bills. Read our submission here.
- Energy Consumers Australia Energy Charter 2020 Public Submission
- Setting the DMO3 – AER Consultation on 2021-22 Default Market Offer determination
Energy Consumers Australia Great Grant of the month
The lived experience of older Australians is crucial for the conversation around energy, health and wellbeing. Learn how our grants funding enabled Robyn Robinson from Council on the Ageing to host a 1.5-day face-to-face workshop to empower passionate volunteers to speak up for older consumers in the energy market.