Case Study Four

The development of Gas Access Arrangement (AA) information for 2016-21 provided an important opportunity for Distributor Z to test the effectiveness of its recently developed Consumer Engagement Strategy. The Consumer Engagement Strategy established a framework within which the consumer engagement associated with the AA was delivered. This framework provided:

  • Access to the Distributor’s energy consumer reference council (ECRC) which brings together a representative group of consumer advocacy organisations
  • Principles of engagement to guide the consumer program. These principles are:
    • Clear, accurate and timely information
    • Accessible and inclusive
    • Transparency
    • Measurable
    • Long term

Engagement

The objectives of the consumer engagement program were defined with reference to the IAP2 Engagement Spectrum and were defined as:

  • Inform, consult and involve gas consumers and other members of the community; and
  • Collaborate with the ECRC in the development of the access arrangement proposal.

These objectives were achieved with varying levels of success.

With respect to gas consumers and other members of the community, participants were certainly informed and consulted but engagement at the involved (meaningful discussion) level was limited. The number of participants across the engagement program was also low, thereby limiting the range of views and input.

With respect to the ECRC, collaboration was achieved in the sense that the ECRC became true partners in discussion of a number of decisions made prior to finalising the AA. However, due to the tight timeframe of the consultation, there were broader areas that were unable to be explored during the engagement process that may have benefited from the considered input of the members of the ECRC.

The key features of the AA Consumer Engagement program included:

  • Active presentation and discussion with the ECRC over six meetings
  • Issue of a consultation paper that outlined the broad AA objectives and principles supported by an addendum that provided further detail as a preferred price path and proposed tariff structures were developed
  • Business and community workshops
  • Online survey of customers attracting 200 participants
  • One-on-one meetings with major customers
  • Retailer discussions on an individual basis
  • Regular reporting and feedback to consumers through direct email and a targeted consumer engagement area of the website
  • Publishing a final consultation report which outlined feedback from consumers and how Distributor Z responded to that feedback

The ECRC played two distinct roles in the consumer engagement program:

  • Input and guidance to the consumer engagement program itself, including reviewing draft consultation papers and distributing information to their constituents
  • Collaborating with Distributor Z on key areas and priorities for the AA proposal
  • Consumer engagement KPIs were established as part of the program development phase and monitored throughout implementation, including a KPI workshop with ECRC members as part of measuring success and identifying areas for improvement.

Outcomes

In keeping with the objectives of the consumer engagement program, more collaborative based discussions and feedback was received from the ECRC. Feedback from the ECRC related to a wide range of areas of the AA proposal including the price determination process; price path, tariff structures and services; operational expenditure; capital expenditure program; WACC; and consumer engagement.

General consumers and community members provided broader feedback on the AA information. Views of general consumers are broadly summarised as follows:

  • Confusion about the respective roles of distribution and retail businesses
  • Value safety and reliability
  • Want price stability and certainty
  • Want to support vulnerable customers
  • Are interested in what the long term energy infrastructure looks like for the state
  • Are keen to be involved in future energy discussions

One-on-one meetings with large customers and retailers provided direct feedback, particularly on services, the tariff structure and tariff-assignment processes.

The contribution of the ECRC to the quality and content of published materials and format of consumer engagement activities strengthened the consumer engagement program and ensured stakeholder groups were not overlooked.

The outcomes of the consumer engagement program helped to inform the AA proposal by providing a direct ‘voice’ into senior management meetings as the proposal was developed. This was then able to be further reflected through the proposal to the AER and the Consumer Challenge Panel.

Information provided back to all participants at the conclusion of the consumer engagement program included a table of feedback received with clear information on how Distributor Z addressed each area of feedback.

Lessons learned

There were a number of strengths to the consumer engagement program that will be adapted and built on in future consumer engagement projects. These include:

  • Ensuring high level executive buy-in at the ECRC and other consumer forums. This allows senior members of the executive to listen directly to consumers and stakeholders and understand the drivers behind consumer opinion.
  • An independent chairperson for the ECRC ensured a level of independence in the discussions by the group and allowed subject matter experts and representatives of Distributor Z to focus on their roles and information, rather than facilitating the meeting. The independent chairperson was supported by a facilitator as required. The use of an independent chairperson was welcomed by the regulator.
  • The consultation paper provided a good resource to start the engagement conversations, but needed to be supported by presentations and discussions.
  • One-on-one sessions with key stakeholders such as large customers and retailers were well received and provided a good opportunity to explore specific issues and better understand the views of different stakeholder groups.
  • Engaging with the ECRC on the development of content and implementation of the consumer engagement program established buy-in which prompted members of the ECRC to encourage other groups and members to participate in the program.
  • Over the course of the engagement program the ECRC developed into a well-informed, robust contributor which will be a valuable resource for future regulatory consumer engagement programs.

Although Distributor Z was able to demonstrate to the regulator a strong level of consumer engagement throughout the development of the AA proposal, there were a number of areas where better outcomes could have been achieved.

  • The ECRC provided strong advice that the consumer engagement program relied too heavily on PowerPoint presentations given at meetings, whereas pre-meeting papers may have helped members to be better prepared to contribute to discussions.
  • Although the consumer engagement program extended over six months, this timeframe was still too short in terms of the amount of information to be shared and complexity of issues to be discussed. A longer period of time to allow many conversations that build understanding across all participants would allow greater engagement on more complex issues.
  • There was considerable misunderstanding by all participants about the nature of the Distributor’s business. This required an investment of time at all sessions to explain the energy distribution network and market.
  • Participation in the program by the general community was low and longer lead time to allow more promotion of consumer forums may have attracted greater attendance.

Benefits to the Distributor

The consumer engagement program delivered clear benefits for Distributor Z including:

  • Developing a robust AA and five year plan for gas that reflects customers’ values and expectations.
  • Adopting a price-path and tariff structure that addresses consumer needs for stability and certainty.
  • Better understanding consumer expectations around the sustainability of gas infrastructure as emerging technologies deliver greater environmental outcomes.
  • Demonstrating to our consumers a willingness to engage with and understand customer experiences and needs, and creating a framework for continued conversations.
  • Demonstrating to the regulator how community input informed the development of the AA proposal.
  • Fostering an internal realisation that consumer engagement can benefit the organisation in a number of areas.