New research shines new light on how consumers understand electricity offers

The AER and Australian Competition and Consumer Commission (ACCC) today published Testing Comprehension of the Reference Price, research we jointly commissioned from the Behavioural Insights Team (BIT). This research provides new insights about the ways consumers understand electricity offers and the AER and the ACCC will use these insights to consider how the presentation of electricity offers could be improved.

We commissioned the research to understand if different explanations and presentations of energy price comparison information would improve consumer comprehension of retail offers. The key findings of the research are that improvements in comprehension can be made by:

  • focusing on clear, simple language
  • using full sentences rather than compact technical sounding formulations which are hard for non-experts to understand
  • using descriptive language such as referring to the reference price as the ‘benchmark price set by the government’.

The research will inform the AER’s revision of its Retail Pricing Information Guidelines (RPIG) and the ACCC’s work enforcing the Electricity Retail Code (the Code). The RPIG and the Code each require retailers to present energy price information to customers in a clear and easily understood way, helping them to make better choices about energy offers.

In March 2020, we noted in our Statement of Expectations of energy businesses: Protecting consumers and the energy market during COVID-19 that our actions to update the RPIG are currently paused in light of the global COVID-19 pandemic and its impact on energy businesses and consumers.

We encourage you to subscribe to AER updates to stay informed about further AER work in this area.

Sector: 
Issued date: 
26 June 2020
AER reference: 
AC 92/20