The development of the Tariff Structure Statement required distributors to engage with customers and to consider customer impacts. These obligations were aligned with Distributor X’s core values and provided an opportunity to test engagement practices within a meaningful program.
Throughout the development phase of tariffs up to 2020, Distributor X worked to create open, transparent and meaningful relationships with customers, representative groups and other stakeholders, such as retailers and government, as part of the tariff reform program.
Initially, the engagement process was documented in a detailed engagement plan with key activities aligned to relevant International Association of Public Participation (IAP2) levels of engagement. Various stages of engagement were outlined in the plan and the plan was approved by the relevant internal subject matter experts to gain internal buy-in and provide subject matter oversight.
Stage one aimed to deliver a program that met the ‘inform’ and ‘consult’ levels of the IAP2 framework through the publication of a discussion paper and the hosting of a four customer workshops.
The discussion paper provided information on demand based tariffs to prepare customers for the workshops. The workshops were open to all customers. Their aim was to gain customer feedback on the tariff principles and achieve customer consensus on the proposed design.
At the second workshop the engagement process struggled as competing stakeholder interests surfaced, causing some participants to express disengagement in the process and as a result outcomes weren’t met.
From this experience it became apparent that not all participants were of the same understanding of the need for tariff reform. This suggested that the process had moved too quickly into the ‘consult’ step within the IAP2 framework and insufficient time had been spent explaining a complex concept. The structured approach of the workshops also limited the subject matter experts’ options which led to internal expectations not being met.
It was apparent that:
- Engagement wasn’t effectively addressing customers’ needs, concerns or expectations, even though it aligned to the IAP2 framework.
- The feedback collected through the engagement wasn’t meeting the needs or expectations of internal subject matter experts.
- The goal of customer consensus was unrealistic and wasn’t best practice engagement.
- Running ‘all-in’ workshops might be easier from an organising perspective as it is less resource intensive, but it wasn’t providing an opportunity for divergent views to be appropriately discussed and considered. Therefore, it wasn’t appropriate to have all customer types and stakeholders in the same workshop.
- The majority of time at workshops was spent informing customers with little time devoted to consulting or collaborating with customers.
From a customer perspective, feedback was received that:
- The workshops wasted customers’ time.
- The interests of different stakeholders weren’t being discussed and there was a perception that ‘whoever shouts the loudest wins’.
- There were concerns that the decision to use demand tariffs was not clearly explained and that any attempt to discuss the design of the tariffs was an attempt to cover up the decision.
- Transparency was becoming an issue as there wasn’t trust between stakeholders and Distributor X.
Prior to workshop three, out of session engagement occurred. Key stakeholders were approached and the issues from the previous workshops were raised. This provided stakeholders with an opportunity to provide frank feedback on the engagement process outside of the workshop environment and a commitment was given that the feedback would be used to design the remaining workshops.
From this feedback it was decided that workshop three would be spent providing the necessary background information for tariff decisions and a comprehensive yet simple education program on demand tariffs and existing tariffs. Participants were strongly encouraged to attend the remaining
two workshops for continuity. The aims of the workshop were communicated to all who had participated in previous workshops so that there were realistic expectations of what the workshop would deliver.
Following workshop three, participants were contacted to discuss the outcomes of the workshop and whether they felt concerns regarding the engagement process were being addressed. In these informal discussions participants expressed more confidence in the process and an eagerness to continue engaging with Distributor X.
To meet stakeholder expectations around collaboration, workshop four introduced the concept of customer co-design. The facilitation style was changed from previous workshops to a style that promoted collaboration and supported creativity among participants. This resulted in quality customer and stakeholder input into the design of the residential and small business demand tariffs and demonstrated our commitment to working with customers and stakeholders to deliver reform.
Key engagement lessons
Many customers and stakeholders felt that the individual needs of their constituents or groups weren’t able to be addressed using what was perceived to be a ‘one size fits all’ approach to engagement. Internally it was felt that the IAP2 framework, while a good guide to engagement, did limit the adaptability and responsiveness of engagement approaches. Subject matter experts wanted to consider the results of customer engagement processes but the initial approach did not provide quality feedback and left subject matter experts with little useable information to consider.
Using the IAP2 public participation spectrum and the AER’s Consumer Engagement Guideline for Network Service Providers as a framework/ guide, the engagement practice was modified to a more tailored approach to engagement that emphasised partnerships. To support the establishment and furthering of productive partnerships the Victorian Health Partnership Model Partnership Practice Guide from the Victorian Council of Social Service was combined with the IAP2 framework. This allowed flexibility in approach rather than adherence at any given point in time to the discrete steps within the IAP2 framework.
Another limitation of the initial process was the ability to reach all customers. For previous engagement processes, surveys were used to reach the mass market of residential and business customers and insights were used to inform key decisions. Feedback was received from customer advocacy groups that surveys were being relied on too heavily for engagement and that good practice engagement required distributors to work more with advocacy groups and to rely on advocate networks for broader engagement.
Considerable time was spent analysing the results of the workshops and the feedback on tariffs received as part of the process to redesign the tariffs. The Customer Engagement Team focused on understanding what worked and what didn’t work from stage one to ensure improvement in engagement practice.
Ongoing engagement focused on understanding and meeting the needs and expectations of stakeholders. One-on-one meetings with customer advocacy groups were organised, with the engagement team calling a few days ahead to clarify the purpose of the meeting and to ascertain if any specific information was required.
This meant those subject matter experts were able to tailor the information to the needs of the stakeholders, leading to informed discussions.
There were other key elements of this engagement that enabled a tailored approach:
- Meetings were offered at the stakeholders’ location.
- Subject matter experts were included in the meetings to hear and discuss first-hand the issues raised.
- Presentations were provided before meetings wherever possible.
- Meetings were followed up with phone calls and emails to ascertain if further information/ clarification was required.
These meetings provided stakeholders with opportunities to ask questions specific to their representative group and constituents, and also allowed the testing of ideas with specific groups before broadly consulting on those ideas.
Results from the engagement process
The changes to the engagement process resulted in widespread understanding among customer advocacy groups of why tariff reform was required, support for the majority of tariff elements and mutual acceptance that there was an agreement to disagree.
The benefits for the internal subject matter experts were:
- The development of tariffs that addressed the needs of customers.
- A greater understanding of the remaining concerns of customer advocacy groups.
- Confidence from key decision-makers and regulators that tariff decisions had been informed by customers.
- A better product that considered market factors, not just tariffs.
A clear benefit for the organisation was the establishment of relationships with customer groups based on trust which benefited both Distributor X and the customer groups. These relationships have continued beyond the tariff development program and are being utilised to develop joint work in community benefit programs for vulnerable customers and to devise strategic initiatives. It’s hoped that by continuing to approach engagement within the modified framework of IAP2 and the continuum of joint effort that these relationships will continue to grow and deliver beneficial outcomes for customers into the future.