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.
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.
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 to facilitate a suite of reforms which can assist in identifying consumers experiencing vulnerability early and get them the support they need to improve outcomes. The Game Changer project is fundamental to 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 a collaborative human-centred design approach, we are working with stakeholders from industry, government, market bodies, ombudsman schemes and consumer advocates to design a suite of ‘game changer’ solutions. In 2023 we hope the sector will collectively advocate for these reforms.
Agreeing on the case for change and design approach
A Leadership Group of senior stakeholders from industry, government, market bodies, ombudsman schemes and consumer advocates has been established, and members have been meeting since March 2022 to discuss the case for change and potential solutions to address this problem. The aim for the Leadership Group is to provide direction and input at key stages of the design process.
Building on the findings from the 'Case for change’ workshops, we facilitated further sessions with the Leadership Group in July 2022 to discuss 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 AER is supporting this process in a secretariat capacity, but the process is owned by everyone involved.
The Leadership Group also agreed on the need for a dedicated Design Group to develop potential reform ideas and options to implement them.
Presentations and outcomes from other Leadership Group workshops to date are as follows:
Designing Game Changer potential reforms
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 to develop a suite of solution concepts for Game Changer. The broad scope of the Design Group has been agreed to by the Leadership Group as outlined in the group’s terms of reference.
The Design Group’s aim is to co-develop possible Game Changer solutions and options to implement them, assess how well the options meet the design challenge and principles for Game Changer, and provide potential approaches for the Leadership Group’s consideration to further develop a package of potential Game Changer reforms for advocacy by the energy sector.
A Design Paper consolidating the Design Group’s work is intended to be shared with the Leadership Group in mid-2023.
The Design Group’s terms of reference and outcomes of relevant workshops which supported their development of potential ideas and options are as follows: