Australian Energy Consumers
Current and Future
Expectations Presentation to Australian Power
Institute
23 February 2016
David Havyatt
Senior Economist
Energy Consumers Australia
22/02/2016
Energy Consumers Australia
Who are “consumers”
• Possible distinctions
– Business/consumer 
– Consumer/customer/end-user ?
– Producer/consumer 
• Relationships
Citizens
Consumer
s
Customers
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Commercial Policy
Potential
Consumer
Citizen
Actual
Customer
Client
Energy Consumers Australia
Long Term Interests of
Consumers
• Australia Energy Market Agreement
The objectives of this agreement are:
(a) the promotion of the long term interests of consumers with
regard to the price, quality and reliability of electricity and gas
services; and
(b) the establishment of a framework for further reform to (six sub
clauses)
• Various Energy Laws (e.g. the NEA)
The National Electricity Objective
The objective of this Law is to promote efficient investment in, and
efficient operation and use of, electricity services for the long term
interests of consumers of electricity with respect
(a) to price, quality, safety, reliability, and security of supply of
electricity; and
(b) the reliability, safety and security of the national electricity
system.
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Energy Consumers Australia
“Market of Consumers”
Active
EMPOWERED
ENGAGED
Passive
POLICY
LEVERS
POLICY
CONTEXT
Innovation
Competition
LONG TERM INTEREST OF CONSUMERS
Efficient investment in, operation and use of electricity
services
“ON THE
EDGE”
ESSENTIAL
Safety Net
Households and Industry
Essential
LONG TERM INTERESTS OF CONSUMERS
Sufficient
INCOME
Efficient
Solar
PV/battery
INVESTMENT
Poles & Wires
Life Supports
SAFETY
Workplace
Cost of Living
WACC
Debt & Equity
Sufficient
RELIABILITY
Efficient
Two-way
OPERATION
One-way
Control
USE
Information
XXX
QUALITY
XXX
NO-ONE EVER GOES WITHOUT ENERGY
Economics
INDUSTRY
HOUSEHOL
D
Economics
Essential
Change over next 40 years
POPULATI
ON AGED
65 AND
OVER
DOUBLES
PROPORTIO
N OF 15:65+
LIFE
EXPECTAN
CY
FEMALE
EMPLOYME
NT RISES TO
70%
POPULATIO
N GROWTH
1.3%
95.1 MEN
96.6
WOMEN
PARTICIPATI
ON RATE
62.4%
PRODUCTIVI
TY
2.7
THE INTERGENERATIONAL
REPORT
The changing business
environment
ECONOMIC
OPPORTUNI
TY IN THE
ASIAPACIFIC
REGION
OPEN
MARKETS
AND FREE
TRADE
AGREEMENT
S
CHANGING
RELATIONSH
IP BETWEEN
CONSUMER
S AND
BUSINESSES
THE WAY CONSUMERS AND BUSINESSES INTERACT IS CHANGING
CONSUMERS ARE BECOMING MORE POWERFUL
COMPANIES ARE FINDING NEW WAYS TO BUILD THEIR COMPETITIVE
ADVANTAGE
GROWTH OF
ONLINE
SERVICES
GLOBALISATION
DISRUPTIVE
TECHNOLOGI
ES
THE INTERGENERATIONAL
REPORT
Electricity - a Market in
Disruption
• Moment of Schumpeterian ‘creative destruction’
– “process of industrial mutation that incessantly
revolutionizes the economic structure from within,
incessantly destroying the old one, incessantly
creating a new one”
• Drivers – changing consumer sentiment
–Prices
–Technologies
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Energy Consumers Australia
Prices
• Incomprehensible price increases (no clear
value for money)
• Boring market - what’s to pick except price?
• Deregulation => consumer protection risks eg.
– firm bad behaviour (misleading conduct, churning, etc),
– regulatory failure (eg. gold-plating),
– safety net failure (significant disconnections)
Companies ‘not on my side’
22/02/2016
Energy Consumers Australia
Incomprehensible price
increases
AER STATE OF THE MARKET 2014
Prices
• Incomprehensible price increases (no clear
value for money)
• Boring market - what’s to pick except price?
• Deregulation => consumer protection risks eg.
– firm bad behaviour (misleading conduct, churning, etc),
– regulatory failure (eg. gold-plating),
– safety net failure (significant disconnections)
Companies ‘not on my side’
22/02/2016
Energy Consumers Australia
Technologies
• Exciting new technologies to be part of
(new appliances, new products – home
automation)
• Solar preference - clean, ‘moral contribution’
(this is beyond a price/value equation)
• Savings potential for the household or business
Control - consumer exercising agency
real choice about how to be involved in the
market and how to use energy
Behaviourally important
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Energy Consumers Australia
The future of energy use
Soneter is an innovative,
non-invasive meter which
tracks your water flow,
reducing costs for
building owners and
tenants alike. The tracker
also provides detailed
consumption analysis,
usage history and hazard
predictions.
Stack is the first truly
responsive light bulb.
These lights adapt to
maintain ideal lighting
levels without wasting
excess energy, turn
themselves off when
there’s no one home, and
learn your usage routines
to save you money and
time.
Keen Home smart vents
were designed to
increase comfort and
reduce energy costs by
working with a connected
thermostat to close vents
and regulate your home’s
temperature, room-byroom.
Strategic Trends
Individualised
Shoes of Prey
Collaborative
Economy
CONSUMER
EXPECTATIO
NS
Mass
Passive
Interactive
TECHNOLOGY
Enablers
This is a very different cultural and business
orientation than current market participants
Energy White Paper Vision
Energy Consumers Australia
(ECA)
• Established by COAG Energy Ministers
–“strengthen the voice of energy consumers in
Australia particularly for residential consumers
and small business”
• Enhance Consumer Advocacy
– on National Energy market matters
– of Strategic Importance or Material Consequence for
energy consumers…
– in particular residential and small business
consumers
• Focus on research, policy and capacity building
(inherit the CAP grants-making function)
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Energy Consumers Australia
ECA Strategic Priorities
• New technologies and their disruptive effect
on traditional business and impact on
consumers
• Effectiveness of competition across the
whole supply chain, and the ability of
consumers to drive competition
• Reasonableness and affordability of energy
prices, including how understandable pricing
structures are to consumers
• Contributing to the review of governance
arrangements for the market bodies, and the
impact of those on consumers
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Energy Consumers Australia
Concluding Comments
• Serving the long term interests of consumers
– encouraging innovation in energy services
– providing stability through network transition and
climate policy
– Increased demand side participation
(consumers having information and tools to make
good choices in competitive markets.)
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Energy Consumers Australia