Consumer Vulnerability Strategy

Segment: 
Status: 
Date initiated: 
20 December 2021
Contact: 
General enquiries - Consumer policy, General enquiries - Consumer policy Consumerpolicy@aer.gov.au

Overview

The AER is prioritising protecting consumers experiencing vulnerability, while enabling consumers to participate in energy markets – as outlined in the AER 2020–2025 Strategic Plan. We are currently developing our first Consumer Vulnerability Strategy which will inform work across the AER and how we consider consumer issues.

Our Strategy envisages 4 overarching outcomes for the energy market:

  1. Barriers to consumers engaging in the market are reduced and consumers can access the products and services that best meet their needs.
  2. Consumers facing payment difficulty receive effective, tailored assistance.
  3. The transitioning and future energy market meets the needs of consumers.
  4. Energy affordability is improved, including by reducing the cost to serve where possible.

We have devised a pathway of 5 key objectives showing the steps we will take to achieve these outcomes. These are informed by consumer research and data, stakeholder views and insights, leading international work and lessons from other sectors. They are to:

  1. improve identification of vulnerability
  2. reduce complexity and enhance accessibility for energy consumers
  3. strengthen protections for consumers facing payment difficulty
  4. use the consumer voice and lived experience to inform regulatory design and change
  5. balance affordability and consumer protections by minimising the overall cost to serve.

Have your say

Consultation on our draft Consumer Vulnerability Strategy is now open. We invite your feedback and input on this draft Consumer Vulnerability Strategy by close of business on 28 February 2022.


Background

Anyone can experience vulnerability at any point in their lives. Circumstances can change quickly when people are impacted by life events or the wider economy. Further, the challenges that many Australians live with, such as not having literacy and numeracy skills to navigate everyday life, can make it difficult to engage with the energy market, access help or obtain the best offer. The ways in which markets operate can also directly influence consumer outcomes. When markets are complex, or not inclusively and universally designed, this can cause new vulnerabilities or compound existing challenges.

Energy businesses also face challenges, risks and costs in supporting consumers experiencing vulnerability, and these risks are not spread evenly across the sector. These challenges include difficulties in both identifying and assisting customers experiencing vulnerability, particularly because vulnerabilities can be diverse and complex.

Our vision is to see consumers experiencing vulnerability offered timely and effective supports that work for both consumers and energy businesses, improving energy affordability, helping consumers stay connected and reducing energy businesses’ cost to serve.

In February 2020, we launched research conducted for us by the Consumer Policy Research Centre (CPRC): Exploring regulatory approaches to consumer vulnerability - A report for the Australian Energy Regulator. This report shines light on contemporary, lived consumer experiences of vulnerability. It has helped us to understand that experiences of vulnerability are diverse, transient or permanent, and multi-faceted. It also highlights work done by regulators domestically and internationally, demonstrating a consumer vulnerability strategy can address these issues, delivering comprehensive market change and improving consumer outcomes.

The CPRC recommended the AER develop a Consumer Vulnerability Strategy which could outline our concept of consumer vulnerability, our plans for understanding and responding to vulnerability across our regulatory functions, and how these measures will be evaluated.

During 2021, we worked collaboratively with a broad range of stakeholders to ensure we understand existing actions underway to improve consumer outcomes, and to identify where the AER would be best placed to contribute. We facilitated a series of collaborative workshops during March and April 2021, enabling us to hear from and engage with over 70 organisations from across the energy system. These workshops identified many potential actions the AER could take forward or support as part of our Strategy. During 2021, we have engaged further, refined and assessed the potential actions we have included for consultation in our draft Consumer Vulnerability Strategy.