NSW CONSUMERS MISSING OUT ON ENERGY BILL SAVINGS
The AEMC today released new research on how NSW consumers could save on their energy bills if they switched to a different energy plan or retailer.
The AEMC study shows that NSW consumers are worried about their electricity bills going up – but while most people are taking advantage of savings from competitive market offers there are still significant numbers paying more because they are not shopping around.
Consumer surveys undertaken for the AEMC show that although most people know they can choose their retailer, they are less likely to know they could save money by switching providers or changing their energy plan with their existing retailer.
The findings are contained in a report to the NSW Government that recommends a major consumer information campaign about how easy it is to switch energy providers and save money.
AEMC chairman John Pierce said the recommendation for a consumer information campaign follows the AEMC’s recent finding that retail competition was progressing well and its recommendation that regulated prices for households and small to medium businesses should be phased out.
“We now have a mature market. Around 40% of NSW electricity consumers and 30% of gas consumers who have stuck to their original energy plan may be paying more than they need to. There are many others who have already switched who could potentially be on a cheaper plan.
“Our study, conducted by Newgate Research, showed that some 76% of people said they would switch their energy provider if they knew they could save money.”
The report shows that barriers to switching and savings include:
- a misconception that all market-based energy plans offered by retailers are much the same, with no real choice on offer – in fact there is a big variety of offers available to suit different needs.
- a misconception that it is hard to switch and that switching retailers might change the reliability of their electricity supply.
- the complicated and confusing nature of the consumer information available – with many people finding it hard to understand their bills and compare prices.
“There is a high degree of reluctance about shopping around because of these deep-seated beliefs,” Mr Pierce said.
“While consumers we surveyed complained about retailer marketing activities, the main reason they had switched was because they had been personally approached by a retailer and offered an alternative. There is a clear demand for a simple clear communications campaign on this issue that tells people where they can go to get independent comparative information.”
The AEMC has recommended:
- a simple advertising campaign to let consumers know they may be able to save by switching and to direct people to the Australian Energy Regulator’s energymadeeasy.com.au website for independent comparative information;
reassurance about the consumer protections that are in place;
fine-tuning of energymadeeasy.com.au website in line with AER plans already underway to make it even easier for people to compare and save with provision of an option for people to get advice by telephone; and
information for front-line community groups to help energy consumers who need special assistance including people from non-English speaking backgrounds; retirees and those with disabilities.
“We are recommending that consumer information is improved so people are encouraged to shop around and get a deal that suits them,” Mr Pierce said. “Our message here is that it is all about consumers exercising choice. “If you want to save money, the opportunity is there – consumers just need to know where to find the information and tools to go out and get a deal that suits them. Getting better information in the hands of consumers is critical to enabling this to happen,” Mr Pierce said.
About the Research
The AEMC’s Consumer and Stakeholder Research Report is published as part of the Commission’s Review of Competition in the Retail Electricity and Natural Gas Markets in New South Wales. It is published today with the review’s Supplementary Report: Increasing Consumer Engagement.
To inform this study Newgate Research conducted focus groups and deliberative style-forums with 65 participants and a quantitative study amongst 1,200 residential customers (main/joint decision makers for choosing energy companies) across NSW, with 50% by telephone and 50% online. The full report is available on our website.
For information contact:
AEMC Chairman, John Pierce (02) 8296 7800
AEMC Chief Executive, Paul Smith (02) 8296 7800
Media: Communication Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817
31 October 2013