The way Australian residential and small business consumers are buying energy services is changing. These changes in the opportunities for consumers, and the expectations placed on them, create a fundamentally different energy marketplace.
Australia has undertaken a process of energy market reform with the objective of promoting the long-term interests of consumers. The reform has included the clear separation of monopoly services from potentially competitive markets and the creation of three market bodies to develop, operate and regulate the component sectors.
Where competition is viable, the long-term interests of consumers will only be promoted if competition, where it is introduced, is effective (Energy Consumers Australia, 2016). For competition to be effective, consumers need to be confident in the market and actively engaged with it.
A consumer protection framework provides consumers with this confidence and the tools with which to participate. The value of this activity extends beyond the immediate return to the affected consumer; efficient markets promote economy wide benefits.
In the words of the OECD Consumer Policy Toolkit (OECD, 2010):
When they are empowered, consumers can improve economic performance by helping to drive competition and business innovation. This, however, requires an effective consumer policy regime in which consumers are protected from unfair marketplace practices, are in a position to make well-informed decisions and both business and consumers are aware of their rights and responsibilities.
Distributed energy resources (DER) (for example, solar PV and battery storage systems) provide some consumers with energy. These investments also create the opportunity to increase efficiency in the rest of the energy system (for example, by using storage to reduce peak demand).
Consumer decision making about grid connected electricity and investing in their own resources isn’t occurring in two markets, there is only one market. The framework of protections available to consumers does not reflect this new reality of one market with multiple technologies.
When they are empowered, consumers can improve economic performance by helping to drive competition and business innovation.
This paper provides a framework to consider reform to consumer protection frameworks.