The AER’s 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.
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.
It has become clear that there are systemic challenges in supporting consumers experiencing vulnerability. The incentives on consumer-facing energy businesses are not fully aligned to the goal of improving outcomes for those consumers who are experiencing vulnerability. In addition, the capability of these businesses to effectively support consumers is highly variable across the sector. As a result, outcomes for consumers experiencing vulnerability have not improved, despite meaningful efforts to address this issue.
Our vision is to create a fund that pools resourcing dedicated to supporting vulnerability to deliver a more equitable and efficient sharing of costs and risks across the sector and create the opportunity for more concerted action on this important issue.
There is 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.
Through stakeholder workshops with sector participants, we are working together to design a ‘game changer’ solution. In 2023 we hope a broad collaboration of the sector will advocate for this reform.
Agreeing on the case for change and design approach
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.
These findings were discussed by senior stakeholders across the sector in March 2022.
Building on these findings, we facilitated workshops for consumer and industry stakeholders in July 2022. In these workshops, stakeholders discussed some preliminary ideas and a proposed approach for collaborating on a solution.
A more detailed collaboration strategy was discussed by the leadership group in September 2022. In this workshop, senior stakeholders from across the sector endorsed the proposed human-centred design approach to developing a game-changing initiative for the energy sector. The leadership group also agreed on the need for a dedicated design group and the broad scope of this group’s work.
Designing the game changer
The design group is made up of representatives from energy businesses, consumer groups, researchers, government and market bodies. Each representative brings diverse and relevant skills, expertise and perspectives to the table. Under the guidance of an independent expert facilitator, the group is using a human-centred design process to develop a solution concept.
The AER is supporting this process in a secretariat capacity, but the process is owned by everyone involved. A leadership group of senior stakeholders from across the sector is providing much-needed direction and input at key stages of the design process. The goal is for all stakeholders to take the opportunity to contribute as much as they are able.