Independent Review into the Future Security of the National Electricity Market Blueprint for the Future, Jun 2017

6.3 Maximising choice and accessibility

A limited number of highly engaged consumers already spend time finding the best deals in the market. However, many consumers find the market confusing or do not want to actively engage. Consumers need more transparency and clarity regarding pricing. A greater number of options, such as DER orchestration, are also needed for less actively engaged consumers and low income consumers to access demand-side products without requiring significant time, expertise or money.

Work by Energy Networks Australia and CSIRO gives a sense of these challenges and opportunities.³¹¹ As demonstrated in Figure 6.1, their modelling shows that consumers and their agents will determine how more than $200 billion in system investment is spent by 2050, with millions of customer-owned generators supplying 30 to 45 per cent of Australia’s electricity consumption.

Figure 6.1: Forecast total expenditure in the electricity system to 2050³¹²

An emerging energy services sector is packaging benefits from DER into products and services for consumers. While it looks like many of these new businesses are selling batteries, distributed generation and energy management systems, what they are really doing is navigating the energy market and finding value to share with consumers. An active energy services sector will be important to support security and reliability in the NEM.

There is a debate about who is best placed to develop offerings to consumers using new technologies – the competitive retail sector or regulated network businesses. Service providers, whoever that may be, should have incentives and the ability to maximise revenue by finding opportunities along the whole supply chain in cooperation with consumers and other energy businesses.

An active and competitive energy services sector requires improved access to a broad range of data and information, robust consumer protections that apply to new technologies and business models, and measures to enable all consumers to share in the benefits of new technologies.

Access to data and information

Consumers require access to data, particularly their electricity consumption data, to help them make more informed decisions about retail offers, their investment choices (such as solar photovoltaic systems, batteries and energy efficient appliances) and fuel choices. The electricity retailer Powershop has noted that its experience indicates some consumers value information and will respond to it, even in the absence of cost savings. Some consumers will change their usage in response to information about other benefits of doing so, such as reducing emissions or helping the community avoid involuntary load shedding.³¹³

Service providers, including a range of new technology providers, require increased access to electricity consumption and other data, in order to assist consumers and find ways to help them save money. Improved data access can also assist governments, policy makers and others to better understand the market and the impacts of changes in the market.

Consumers should have access to their electricity consumption data in real time. They should also have control over who, if anyone, can access that data.

Box 6.1 – Case study – Easy access to energy consumption data under the Green Button initiative

Green Button is an industry-led initiative in the United States that allows electricity consumers easy access to their energy usage data in a consumer-friendly and computer-friendly format. Consumers can use the Green Button website to download their detailed usage data and share it with authorised service providers. Service providers can analyse the data for consumers or provide regular information on their usage. Energy companies offer apps so consumers can view the data, and third party developers can also build apps that consumers can use with their downloaded data.³¹⁴

The Green Button system may not necessarily be applicable to data access in the NEM, but it is a useful example of the type of systems that have been adopted in other markets.

Improving consumers’ access to data is an action under the COAG Energy Council’s (the Energy Council's) National Energy Productivity Plan. Currently, there are very limited data available for residential and small business consumers on their electricity consumption, other than in Victoria. This is due to most of these consumers having meters that only measure the electricity used between manual meter reads, which usually occur every three months.

An increased uptake of digital meters that can measure a consumer's electricity usage every five or 30 minutes is critical to achieving many of the benefits discussed in this chapter. As discussed in the Preliminary Report, Victoria already has digital meters following a government mandated deployment. The AEMC has new rules providing for competition in metering services, which will enable all consumers to receive new digital meters from 1 December 2017.

Large consumers are more likely to have good access to information about their own consumption, as they have digital meters that record detailed consumption information. There are also a number of service providers that can assist them to interpret and act on that information.

Under a recent change to the National Electricity Rules, consumers and their authorised representatives can obtain their consumption data from their electricity retailer or distributor free of charge up to four times a year. However, several practical barriers limit consumers’ ability to easily access and use this information. For example, they may face onerous requirements to verify their identity, may receive their data in a variety of formats, and may receive their data up to 10 days after making their request. This is a long way from an ideal in which data are available immediately in a form that suits the consumer, for example to input into an app or website. Ultimately, energy retailers, third party energy service providers and behind-the-meter automation software will play an important role in removing complexity for consumers.

Recommendation 6.3

By mid-2020, the COAG Energy Council should facilitate measures to remove complexities and improve consumers’ access to, and rights to share, their energy data.

There are also benefits available from improved access to data and information extending beyond electricity consumption. In particular, improved data on retail prices can help address the issues noted above about difficulties in assessing the effectiveness of the retail electricity market, resulting in better informed policy decisions.

The Energy Security Board should develop and implement a new data strategy for the NEM. One of the aims of the data strategy should be to enhance the availability of data that can support changes in the market, including data that can assist the use of DER to reduce overall system costs and improve reliability and security. This recommendation is set out in more detail in Chapter 7.

Appropriate consumer protections

Price rises over recent years have made electricity less affordable for all consumers and resulted in particular affordability problems for low income and other vulnerable consumers.

The National Energy Retail Law and National Energy Retail Rules contain a number of protections for electricity consumers. A key protection for vulnerable consumers is the requirement for retailers to develop and maintain a consumer hardship policy that sets out their approach to identifying and assisting consumers who are having difficulties in paying their electricity bills. Governments also offer a range of concession programs to assist consumers.

The AER monitors compliance with the National Energy Retail Law and Rules and also publishes an annual report on the performance of the retail energy market. The AER also publishes quarterly data collected from energy retailers on a range of indicators, including energy debt levels, consumers in hardship programs and disconnection levels.

The AER’s FY2016 annual retail energy market report observes that:³¹⁵

Electricity bills make up a significant proportion of income for low income households, with a typical low income household spending around 4 to 9 per cent of its disposable household income on electricity bills depending on jurisdiction (before government concessions).

The proportion of consumers in hardship programs ranges from less than 1 per cent in NSW, Queensland, the ACT and Tasmania, to 1.8 per cent in South Australia.

Disconnection levels increased in FY2016 in several jurisdictions, with the highest rate of disconnections being in South Australia where 1.4 per cent of electricity consumers were disconnected for non-payment.

Continued AER reporting of this information will be increasingly important as the market continues to transition. Further, as part of its annual Health of the NEM report discussed further in Chapter 7, the Energy Security Board should identify any emerging affordability issues for consumers.

Recommendation 6.4

The Energy Security Board’s annual Health of the NEM report to the COAG Energy Council should report on affordability issues and proactively identify emerging issues.

A number of stakeholders have raised concerns that the current energy sector consumer protections in the National Energy Retail Law and Rules do not adequately cover new technologies and new business models. When those documents were drafted, they assumed that consumers would be supplied by an authorised electricity retailer and would receive all of their electricity supply from the grid. Now, many consumers are receiving services from people other than authorised retailers who are selling rooftop solar photovoltaic or battery services to consumers as a full or partial substitute for grid-supplied electricity.

In addition to ensuring that consumers have the information and tools to engage in the new market, there is also a need to ensure they can do so with confidence that there is a comprehensive consumer protection regime to back them up when things go wrong. While consumers currently enjoy specific energy-market protections under the National Energy Customer Framework (NECF), these protections are based on the traditional energy market model, where consumers are grid connected and transact with an authorised retailer. This means that NECF protections, such as access to dispute resolution through an ombudsman scheme, do not extend to many new ‘behind the meter’ products and services that are emerging.

The changes that are underway in the market ultimately imply a need for a significant re-design of the [National Energy Customer Framework and the Australian Consumer Law] framework itself.³¹⁶
Energy Consumers Australia

The Energy Council’s Energy Market Transformation Project Team published a consultation paper in August 2016 on the extent to which energy-specific consumer protections should apply to new forms of electricity supply, including distributed generation.

It is also important that safety requirements are updated so that they remain appropriate for new technologies such as battery storage. In its recent report on policy and regulatory reforms to unlock the potential of energy storage in Australia, the Clean Energy Council notes that there is currently no legally enforceable Australian Standard for the safety of lithium ion batteries and no requirement that consumers use an accredited installer for the installation of battery storage devices.³¹⁷ The Clean Energy Council report makes a series of recommendations to address these issues.

Recommendation 6.5

By mid-2018, the COAG Energy Council should accelerate its work on applying consumer protections under the National Energy Retail Law and National Energy Retail Rules to new energy services, and also consider safety issues as part of that work.

Enabling all consumers to share in the benefits of new technologies

Investments in DER and improved energy efficiency can be expensive, but falling costs and payback periods mean that an increasing number of consumers along the income spectrum are making these investments.

Retailers or other service providers can provide simple and automated services that allow consumers to benefit with zero effort. However, retailers can present highly variable prices to consumers who want them, for example commercial and industrial consumers who want to be rewarded for brief periods of demand reduction.

However, low income or vulnerable consumers are unlikely to invest in energy efficiency and demand management due to high upfront costs and imprecise benefits. Other consumers have limited opportunities because they rent or occupy high-density buildings. It is important that these consumers are not excluded from the possible benefits of the energy transition.

One way to do this is to make sure that the distributed resources owned by other consumers are being used in a way that provides benefits not only to the owner but also to the whole electricity system. This would result in lower costs for all consumers as the total costs of building, operating and maintaining the electricity system reduces over time.

There are also targeted programs that support investment in distributed generation, energy efficiency and other demand-side services for low income consumers. For instance, in New South Wales, Queensland, and South Australia, governments and industry are involved in the installation of solar photovoltaic systems on public housing. The Victorian Government is also offering low interest loans to low income consumers for rooftop solar photovoltaic as well as other energy efficient appliances or improvements.

Other mechanisms could be considered by governments to ensure that low income consumers are not left behind.

Recommendation 6.6

The COAG Energy Council should engage with relevant portfolio areas including housing, and with state, territory and local governments, to identify:

Opportunities to accelerate the roll out of programs that improve access by low income households to distributed energy resources and improvements in energy efficiency.

Options for subsidised funding mechanisms for the supply of energy efficient appliances, rooftop solar photovoltaic and battery storage systems for low income consumers.