Better Regulation Program

1. Better Regulation Program Service Provider Consumer Engagement Guideline Consumer Forum March 2013

2. Service Provider Consumer Engagement Guideline Overview • Introduction • Why this guideline? • The survey of service providers • AER’s views on this guideline? • Case studies • Where to from here? 1

3. Purpose of consumer forum • Seeking input on 3 items: • AER’s process and approach to development of this guideline • Objective/nature of the guideline • Issues to be addressed in the guideline 2

4. Why this guideline? • AEMC rule change puts focus on consumers • Specific requirements on service providers to engage with consumers • AER guide to compliance 3

5. The IAP2 community engagement spectrum IAP2 – International Association for Public Participation: www.iap2.org.au 4

6. Current engagement • Currently, the level of engagement is not balanced • Engagement tends to be between AER and NSPs 5

7. ‘Survey’ of consumer engagement • Little or no consultation on regulatory proposals • It is unclear how input from Consumer Council members is used in decision making processes • All service providers inform consumers. Minimal ‘conversations’ with consumers. Business focussed/led research 6

8. What’s good? • Generally, the businesses are undertaking a large range of activities including: • Newsletters • Customer councils • Social media/website initiatives • Project or community specific forums • Surveys • Brand recognition programs • Businesses are positive about consumer engagement including new requirements 7

9. What’s not so good? • Generally, engagement is not systematic • Ad hoc • Reactive • Not consistent (between businesses or over time) • Misses some consumer groups • Sits to the left of the IAP2 spectrum 8

10. ‘Survey’ – Challenges identified by service providers • Building trust • Explaining energy market, economic and regulatory concepts • Increase knowledge of consumers • Consumer buy-in for genuine engagement 9

11. Greater consumer input needed • Price verses reliability tradeoffs • Tariff setting and tariff design • time of use and critical peak tariffs • Setting reliability targets/standards • Network renewal/upgrade • Demand hot spots • Alternatives to capital investment 10

12. What does effective consumer engagement look like? 11

13. Case Studies • Identified several businesses that have developed consumer engagement strategies • Yarra Valley Water • Hunter Water Corporation • Port Macquarie Council 12

14. Yarra Valley Water • Driver for consumer engagement came from the highest level in the organisation • Fundamental challenge - move from a water proposal that complied with the rules to something the community easily understands • Commitment to be the customer’s best service provider (even though a monopoly) 13

15. UNDERSTANDING CUSTOMER TYPES …… I need to know I am doing the right thing, what do I do next with my water use? I value being, and being seen to be, a good community member I need to concentrate on whether I have enough for this month’s rent, water is not a priority I value being thought of, too often I am just ignored I need to know that the water I use is as sustainably and ethically sourced as possible I value the environment and community, I want good water to be available for future generations I need to understand how my water use affects causes I care about I value water safety and environmental sustainability, but I am not going to go and protest about it I need my water provider to do a better job of the basics before I trust them more. I value the fundamentals, I want good quality water piped to my house. I need to be informed about water in a way that doesn’t completely bore me or eat up my time I value my time, I don’t care a lot about water, you’ll have to work hard to reach me at the moment 14

16. Yarra Valley Water • Forms of consultation included community forums (‘citizens juries’), business forums, surveys, on-line portal for customs to access all relevant information, as questions and provide feedback on proposal. • Reconstituted the Community Advisory Group with a fresh scope, structure and style of deliberation • Proposed change from price cap to revenue cap 15

17. Hunter Water Corporation • Consultation embedded in all regulatory processes. • Conducts research and consultation on: • Willingness to pay including information on overall impact on customers’ bills for certain projects • Service rebates • Location of new developments 16

18. Port Macquarie-Hastings Council • Training of staff so consumer engagement embedded in culture • Tools used to consult included a Community Reference Group • Budget allocator and web forum • Council clearly identified community’s priorities rather than planning based on assumptions 17

19. Recap • Prescriptive versus aspirational • Resourcing constraints given demands on consumer groups • Realistic expectations for NSPs given the need for culture change • Finding the keys to success 18

20. Where to from here? Thank you for your contribution. Further comments are welcome & you may register for updates by emailing consumerengagement@aer.gov.au 19