Our Towards energy equity – a strategy for an inclusive energy market sets out clear objectives and actions to deliver improvements for consumers. One of these actions is to advocate for sector-wide ‘game changer’ reforms.
What are the game changer reforms?
The AER has worked in collaboration with stakeholders from across the energy sector to design a package of solutions that will drive systemic change, better balance cost and risk within the sector and provide better outcomes for consumers experiencing vulnerability.
This package of reforms was presented to Energy Ministers for consideration at the Energy and Climate Change Ministerial Council (ECMC) meeting on 24 November 2023. The Game Changer Report presented to Ministers outlines the key proposals in the package.
The key proposals are to:
- improve concession and rebate systems to ensure more consumers receive the concessions and rebates to which they are entitled
- require retailers to automatically place consumers in hardship programs on a better offer, if it is available
- improve access to financial counselling support by building on the existing Financial Counselling Industry Funding Model by the Department of Social Services
- provide retailers demonstrating best-practice support for customers access to co-funding from a shared funding pool to deliver increased debt relief and improved access to energy efficiency improvements for consumers in financial hardship.
Taken together, these proposed measures provide a comprehensive and novel approach to addressing energy hardship. They complement existing government initiatives, retain retailers’ relationships with their customers, and align with the National Energy Transformation Partnership established by Ministers in 2022.
On 24 November 2023, Energy Ministers agreed that the Commonwealth will lead other jurisdictional officials in the further consideration and development of the game changer ideas. They will propose an implementation plan for feasible reforms to Ministers in mid-2024. This endorsement is a significant step forward for the energy sector so that we can collectively change the game on energy consumer vulnerability.
Why do we need a game changer?
The energy sector should be inclusive of all consumers. However, the outcomes for consumers experiencing vulnerability have been consistently poor over a long period. This is particularly concerning given that energy is an essential service and consumers are facing increasing cost-of-living pressures.
In early 2022 we identified $645 million in quantifiable financial costs driven by vulnerability each year. However, there are also the intrinsically non-quantifiable costs, like impacts on population health and wellbeing. Governments also invest significant funds and resources in concession and rebate programs, and have undertaken extensive research and analysis to identify opportunities to improve consumer outcomes.
It has become clear that there are systemic challenges in supporting consumers experiencing vulnerability. As a result, outcomes for consumers experiencing vulnerability have not improved, despite meaningful efforts to address this issue.
These findings were discussed by senior stakeholders across the sector in March 2022.
How were the game changer reform proposals developed?
We identified a significant opportunity to work in collaboration with sector stakeholders to drive systemic change and advocate for an energy system and market that is inclusive of a broader range of consumers, and which provides better outcomes for consumers experiencing vulnerability. Acting on this opportunity, we worked with stakeholders from industry, government, market bodies, ombudsman schemes and consumer advocates to design a suite of ‘game changer’ solutions.
A Leadership Group of senior stakeholders began meeting in early 2022, and agreed to the proposed collaborative approach in September 2022. The AER supported this process in a secretariat capacity, but the process was owned by everyone involved.
Presentations and outcomes from Leadership Group sessions are linked below.
As part of the collaborative approach agreed by the Leadership Group, a dedicated Design Group was established in late 2022 to develop potential reform ideas. The Design Group was made up of representatives from energy businesses and peak bodies, consumer groups, researchers, government and market bodies. Each representative brought diverse and relevant skills, expertise and perspectives to the table.
The broad scope of the Design Group was agreed to by the Leadership Group as outlined in the terms of reference. The Design Group’s aim was to co-develop possible game changer solutions and implementation options, assess how well the options met the design challenge and principles set out for the game changer, and propose potential approaches for the Leadership Group’s consideration. The Design Group’s work was informed by feedback from consumers with lived experience in consumer exploration workshops conducted by Uniting.
The Game Changer Design Report consolidating the Design Group’s work for the Leadership Group is linked below.
The Design Group’s terms of reference and session outcomes are linked below.