Deliberative Democracy: an Opportunity for Consumer Engagement in the Energy Sector
For many years UnitingCare Australia has advocated for affordable energy for low income and vulnerable households. UnitingCare Australia’s principal interest arises because energy is an essential service with rising costs that are putting inordinate financial pressure on a growing number of households in Australia.
UnitingCare Australia is exploring the potential for embedding long lasting changes that can result in improved outcomes for household and small business consumers, particularly for low socioeconomic groups. This supports changes within the energy sector which have seen a growing recognition of the need for consumer engagement.
In recent years a renewed emphasis in ensuring that the long term interests of consumers are considered within decision making in the energy sector has resulted in:
- Consumer Engagement Guidelines for Network Service Providers (November 2013)
- a new consumer advocacy body: Energy Consumers Australia
- changes to the National Electricity Rules (NER) that now require service providers to describe how they have engaged with consumers, and how they have sought to address any relevant concerns identified as a result of that engagement.
Despite the growing impetus for change; the methods of consumer engagement commonly used in the energy sector continue to be dominated by focus groups, surveys and willingness to pay studies. UnitingCare is keen to see new methods of engagement that better reflect consumer interests and protect the rights of vulnerable consumers, particularly as existing processes have not always delivered the best outcomes for customers.
In December 2014 UnitingCare released a discussion paper titled ‘A deliberative approach to consumer engagement in the energy sector’. This considered alternative methods of consumer engagement inspired by deliberative democracy and recognises that deliberative processes provide an opportunity to include unengaged voices in energy policy and regulation issues.
Reasons that deliberative processes are ideally suited to the energy sector include:
- Addresses information asymmetry – the energy sector is a complex and changing environment, where it is difficult for consumers to interpret information and contribute meaningfully.
- Widens the pool of people participating in engagement, by allowing individual consumers a space “at the table”.
- Provide participants with adequate time, information and space to consider issues that are presented in a balanced manner.
- Can give consumers greater confidence in the process by seeing their recommendations implemented.
There are a few examples where deliberative processes have been used by utilities. These include electricity network Transend (now TasNetworks), which used one day deliberative workshops in Launceston and Hobart. These would be best described as micro deliberative processes due to the shorter timeframes for deliberation, compared to a ‘macro’ or full-scale deliberative process. Yarra Valley Water also used deliberative processes to support its five year forward-planning.
Benefits for energy sector businesses in undertaking more in-depth engagement processes include that they:
- Encourage greater public confidence in decision making, by gathering more representative views on important and often complex issues.
- Address information asymmetry and provide participants with adequate time, information and space to consider issues that are presented in a balanced manner.
- Reduce conflict and increase the likelihood (and speed) of gaining approvals such as in regulatory determination processes.
Other reasons for energy sector businesses to consider utilising deliberative engagement include that it can:
- Ensure that minimum regulatory and policy requirements are met such as the Consumer Engagement Guideline for Network Service Providers.
- Increase probability of consumer support because results are more likely to reflect actual community views.
- Assist to determine consumer preference in trade-offs on where investment is incurred such as between reliability and affordability.
We are also aware that external stakeholders, including regulatory bodies, are requiring increasing evidence that consumer engagement is encouraged and supported within individual businesses.
We hope that greater deliberation will ensure that consumers (both individually and collectively) have an opportunity to participate in decisions that impact on their long-term interests.
UnitingCare welcome comments on the discussion paper about deliberative engagement in the energy sector. We have also just released a roadmap for tariff reform, Changing the DNA of network tariff setting in Australia, which identifies a role for deliberative engagement in new tariff-determining regulatory processes. The roadmap will guide future lobbying efforts in this area, and we welcome comments on it as well.
The two discussion papers are available as follows:
- A deliberative approach to consumer engagement in the energy sector: http://www.unitingcare.org.au/images/stories/publications/2014/140912_pub_dis_deliberative_democracy_discussion_paper.pdf
- Changing the DNA of network tariff setting in Australia: http://www.unitingcare.org.au/images/stories/publications/2015/150601_pub_Changing_the_DNA_of_network_tariff_setting_in_Australia_1-0.pdf
If you would like to comment on these papers please contact UnitingCare Australia at: firstname.lastname@example.org