The Australian Energy Regulator (AER) has published a new Consumer Engagement Guideline for network service providers, aimed “to guide service providers in returning consumer interests to the center of Australia's energy sector.”

This follows a consultation with consumer groups and service providers, which showed that while some consumer engagement occurs, consumers are often unaware whether their input has any impact on service providers' decision making. Further, the consumer groups indicated that the guideline should provide a framework for service providers to adopt when developing consumer engagement strategies and processes.

The new guideline is based on four best practice principles – clear, accurate and timely communication, accessible and inclusive, transparent, and measurable – and sets out four components that service providers can follow:

  • Priorities – the need to identify issues and set priorities for engagement with consumers, recognizing that consumers may have diverse interests
  • Delivery – the activities that service providers would be expected to undertake to engage effectively with consumers, once the priorities have been set
  • Results – an articulation of the outcomes with a focus on the impact of consumer input on service provider decision making
  • Evaluation and review – a process to evaluate and review the effectiveness of consumer engagement processes.

The effect of this new guideline – which is not prescriptive, but is expected to be used by all network service providers – is that the providers will need to demonstrate they have considered the needs and interests of their consumers when putting up spending proposals. Charges for the networks make up about one half of household energy bills and in the eastern and southern states these charges are approved by the AER.

“Our new consumer engagement guideline will help ensure that the needs and interests of consumers are considered in the process of planning future spending on energy networks,” commented AER chairman, Andrew Reeves. “Improving the engagement between energy networks and their consumers is a vital part of promoting accountability for spending decisions so that consumers are paying no more than necessary for services they value.”

The guideline is part of the AER’s Better Regulation program developed over the past 12 months. This followed changes to the energy network regulation rules in late 2012. The AER can now explicitly consider the consultation between network businesses and their consumers as part of coming to a decision on the overall expenditure allowances.

The AER has also published a stakeholder engagement framework. This commits the AER to the same principles as those being applied to electricity and gas network businesses, i.e. that its engagement and communication should be timely and clear, accessible and inclusive, transparent and measurable.