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Newsletter: October 2020

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From the CEO

Dear Readers,

It seems the closer we get to the end of 2020, the more news we have to share! I also want to take this opportunity to congratulate and thank Victorians for all the difficult things they’ve had to experience to get to zero community transmission.

This past month saw the continuation of the work on our priorities and activities with our Board of Directors reviewing our Strategic Plan. We are a relatively new organisation, established in January 2015, and even in that short space of time the incredible changes in the energy market means that refreshing our vision and priorities both short and long term is vital to maximising our effectiveness in a sector in transition. Our external review by KPMG in 2019 outlined that our stakeholders value us sharing our priority areas of work in advance and so we will begin consultation on our strategy and work program with stakeholders early next year.

In mid-November we will be holding our Annual General Meeting where, amongst other things, we will be discussing the contents of our 2019-20 Annual ReportThe Annual Report comprehensively covers all our work and impacts in the areas of bringing prices down, consumer agency, building consumer trust, tackling the big question of transition, amplifying consumer voices and the important governance work we are undertaking. Much of the report’s content addresses observations and findings of the KPMG 2019 review. In addition, this year we released a Grant Supplement to the Annual Report outlining the high-quality analysis, policy advice and activities undertaken by a diverse group of advocates and researchers as well as trends across the life of the program. In ensuring transparency, we have included a list of all applications, with further details on those who were successful.

On the continued effects of the pandemic, the Australian Energy Regulator (AER) released an update to their Statement of Expectations of energy businesses outlining some key changes to their principles to support customers and the market until March 31 2021 and beyond. We are encouraged to see the expectation that retailers will help their customers with payment plans and hardship arrangements by taking into account their capacity to pay, and making sure they are on the tariff and plan most likely to minimise their energy costs. The statement includes a continuation to the policy of no debt referrals and no disconnections for residential customers in financial stress who are in contact in relation to their debt and small businesses who are adhering to a payment plan, which is also very positive to see.

The Australian Competition and Consumer Commission (ACCC) also released a report in October on the consequences of COVID-19 on electricity use and affordability and the response of the industry as part of their electricity markets reporting. As expected COVID-19 has driven a substantial increase in residential electricity usage, however new billing data shows customers are now paying lower prices. In their analysis of the bills of over 1.5 million customers of 11 electricity retailers, the ACCC discovered there are now more customers on market offers, and fewer on the default standing offers, which we believe has contributed to the downward pressure on electricity bills. Our A/Director, Advocacy and Communications, Jacqueline Crawshaw spoke to this at the AER’s online forum for the Determination of the 2021-22 Default Market Offer (DMO) prices on October 29. We are keen to engage with the 2021-22 DMO as we see it as an important opportunity to lock in the downward trends in prices as well as providing a safety net for customers who are unwilling or unable to engage in the energy market. The Essential Services Commission of Victoria has commenced its review of the Victorian Default Offer prices to apply for twelve months from 1 January 2021.

The ACCC report also found that consumers with solar energy systems were paying 24% lower effective prices for electricity from the grid than non-solar customers in 2019. This trend towards Distributed Energy Resources (DER) was echoed in the Australian Energy Market Operator’s Quarterly Energy Dynamics (QED) report which announced that new minimum electricity demand records have been set in Victoria, South Australia and Western Australia, driven by growth in rooftop solar PV, while declining wholesale electricity and gas market prices continued. In fact, in a global first, on the 11th of October for just over an hour, South Australia reported that 100% of their energy demand was met by solar.

Considering 77% of that generation came from consumer rooftop solar systems, it is more apparent than ever that Australia is at the forefront of the transition to a distributed, decentralised energy system. We have begun some interesting and important work on how in a world of distributed generation and flexibility in energy use, enabled by technology, we can understand what social licence is needed for third parties to exercise control over appliances, generation and storage in our homes and businesses. We are also talking to consumers about this, to get their perspective. As part of our commitment to Community Listening, we recently video interviewed David Whaley from Flagstaff Hill in South Australia. We asked him what he and other households might consider to be a fair trade off for cooperating in programs that aims to combat overarching system stability challenges. 

An important October milestone for us was our Submission to the Post 2025 Market Design Consultation Paper. Within our submission, while we have something to contribute on all elements of the package, given our unique understanding of consumers and their social practices and needs we focused on the two-sided markets and DER Integration workstreams. Given the associated risks with household and small business participation in two-sided markets, we are strongly in favor of a voluntary, carefully staged approach. This would not only be focused on delivering value and choice for consumers, but also help with leaning into associated system security challenges. We are proposing the design of a proactive Flexibility Plan as part of a wider ESB Roadmap with a clear destination and staging. This gives consumers the information, tools, technology and support to gain control over their own energy outcomes, and if they choose to do so, contribute to a flexible demand side of the energy system to reduce costs for everyone. Consumer protection will also be a major focus of ours in the next phase. Our view is that we should ensure the New Energy Technology Consumer Code (NETCC) is implemented as soon as possible, with greater resources provided to track consumer experience with new energy services. The Post 2025 Roadmap should set a direction of travel to a principles-based future. To facilitate all of this we identified seven specific actions for the ESB in their development of the Post 2025 program.

It is important to note that in addition to making our own contributions, we have been facilitating a Post 2025 consumer working group as well coordinating a number of workshops over the coming weeks. The aim being to enable engagement between the ESB and other stakeholders and to support the work of the ESB to embed the values and expectations of consumers in the detailed designs. Our team are working extremely hard to support the transition to a future energy system that works for household and small business consumers and I am very proud of the strides we have made so far. If you have questions or comments on our submission, please reach out to Chris Alexander.

October also saw us making a key submission to the Australian Energy Market Commission (AEMC) on the Better Bills proposal, agreeing with the need for a better approach to billing that delivers simpler and more understandable bills. Our own evidence shows that a large number of consumers think there is room for improvement in the communications they receive from their energy company. Nearly one third of respondents to our June 2020 Energy Consumer Sentiment Survey did not positively rate their satisfaction with billing and account options (such as the option of monthly billing, or online accounts) from their retailer. In our view, transitioning away from the prescriptive rules to a principles-based approach can deliver better consumer outcomes.

The ongoing research project by the Consumer Policy Research Centre (CPRC) in their Consumers & COVID-19 snapshot for September, revealed that renters are more concerned about their ability to afford basic household costs than mortgagors. In the case of energy bills 47% of renters said they had concerns about costs as opposed to 29% of mortgagors. More renters sought payment assistance than mortgagors from energy providers in September (8% v 5%) and 9% of renters (v 3% of mortgagors) missed a payment to their energy provider. This stark contrast brings to light the discrepancies in the Australian housing market but also the importance of individualised planning by policymakers to build better-targeted, more effective energy management services and programs for everyone, as outlined in our Power Shift program and supporting frameworks.

While energy prices have been falling in the past twelve months, it is clear from the CPRC and other research that many people are still struggling. If you, or someone you know is doing it tough, has lost income as a result of COVID-19 and/or is being confronted with high bills, there is help available (see our consumer resources page and our Find Help guide for information). If you know householders or small business owners willing to share their story, please feel free to direct them to our Share Your Story page as a way of getting their perspective heard by the sector.

Shelley Ashe, our Associate Director, Advocacy and Communications presented her Insights on the Victorian Electricity Network Distributor Revenue Proposals and Australian Energy Regulator Draft Determination last month. The AER’s Draft Determination included indicative bill impacts, which shows potential savings for consumers across all networks from $6 to $75 depending on the network area. We used this forum to emphasise the importance of delivering affordable services in a time when the impact of the pandemic on consumers (on health, employment and financial resilience) may reach beyond the next 12 months. While we support incentive-based regulation, we welcome the AER’s suggestion of a review of incentive schemes. Greater transparency around these schemes will help build consumer trust that they are not paying twice for the same projects. We continue to engage with the Victorian network businesses as they develop their revised proposals for the end of year.

Our congratulations go out to the Australian Gas Infrastructure Group (AGIG), the winners of the 2020 Energy Network Industry Consumer Engagement Award for their future planning for the South Australian Gas Distribution Network. Demonstrating clear leadership around consumer engagement as well the potential for transferability to other businesses, AGIG delivered a well-executed plan which listened to consumers and followed through with action. Competition for the award was tough and the standard and rate of improvement demonstrated by all applicants was high. Notably, each of the engagement projects nominated involved thinking outside of the box and using initiative which we love to see. Everyone who submitted a nomination can be very proud. We also send our congratulations to Endeavour Energy Deputy Chief Executive Officer Rod Howard who picked up the Energy Networks Australia Industry Contribution Award for 2020. 

In staff news, we said farewell to our dear colleague Elizabeth Lawler who began her well-deserved retirement in October. Elizabeth was one of the stalwarts of Energy Consumers Australia, present from our inception, setting us on the path to success. It is fair to say she continued that process right up to the day she finished. We all wish her the very best in her next more relaxing life chapter. As mentioned in our last newsletter we welcomed Katrina Porteus to the team as our new Director, Strategy and Corporate. Katrina will be providing leadership in setting the strategic direction of the organisation and supporting myself and the Board as company secretariat.

Like you, my mind is already turning to the opportunity for relaxation and much needed family time over the holiday season. Until next month, stay safe and well.

Best wishes,

Lynne Gallagher
Chief Executive Officer (Interim)

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News

VIDEO: Solar smart households should be equal partners in grid oversupply solutions

With the right conditions, consumers can partner with industry to deliver the services needed to both mitigate the risk of system security issues while also benefiting consumers through lower bills. Read more.

More news


Publications

Post 2025 Market Design Response to Consultation Paper

In this major submission to the Energy security Board (ESB) on the Post 2025 Market Design work program, we comment on the design issues most directly relevant to the experience of household and small business energy consumers in the future energy system through the lens of the framework discussed in our first submission. Read our full submission here.

More submissions


Grants

Energy Consumers Australia Great Grant of the month

Following in the newsletter theme of consumer flexibility and Distributed Energy Resources, our Great Grant of the Month for October is the DER Export Management Advocacy Project. With this Renew aimed to demonstrate the value of a consumer voice in network decision-making, and how it adds systemic value by ensuring consumers are at the heart of regulatory and program development.

Watch the video interview with Dean Lombard and read more here.

More from Grants

Our Board of Directors met on October 22 to consider the latest round of applications for our Grants Program. We are delighted to announce that three exciting new grants were approved:

  • Etrog Consulting; who will support Queensland advocates on the retail electricity prices and the needs of small consumers, especially in regional areas of the State;
  • Better Renting; who are heading a national effort by consumer advocates to ensure strong outcomes for residential consumers from a cross-government initiative to improve home energy efficiency;
  • Total Environment Centre; who are receiving further funding to continue their strong work on the integration of solar panels and batteries as well as other ‘distributed energy’ to make electricity supply more focused on consumers’ needs.

The Board also approved a third year of funding for ACOSS’ Energy Transition Advocacy project which has been doing great work with advocates and decision-makers to ensure that low-income consumers can benefit from the coming changes to the electricity system. Congratulations to all recipients, we look forward to working with you.

In addition to our 2019-20 Annual Report we also released a supplementary Grants Report to give our work in this space greater focus as well as providing full transparency to stakeholders on the projects we engaged with in the past year and over the course of the program.

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