CitySmart’s research partner QUT has been interviewing consumers in households around Australia about electricity pricing reform, as part of our joint research project for Energy Consumers Australia (ECA). Here’s what we found.
The QUT team conducted face-to-face interviews in every Australian state and territory, gathering evidence around how different households make decisions, react to electricity pricing reform, and relate to technology that aids the acceptance and management of time-of-use electricity pricing.
This is the first study of its kind that combines qualitative and quantitative research for the purpose of understanding household preferences to the introduction of electricity pricing reform.
Why are we researching electricity pricing reform?
For residents across Australia there has been standard residential electricity pricing in place for many years. However, there is a move to electricity pricing reform. This is about having electricity prices that monitor time-of-use, allowing customers to benefit from lower ‘off-peak’ prices during evenings, for example, using appliances late at night.
As electricity prices continue to rise, consumers need a voice and advocacy for the electricity market to reform. It is important that consumers clearly understand how they can benefit from this pricing reform.
CitySmart is leading a consortium of industry partners including; ECA, Energex & Ergon (now Energy Queensland), Endeavour Energy (NSW), Essential Energy (NSW), Ausgrid (NSW), TasNetworks (TAS), and Western Power (WA) to “understand the changing needs of residential energy consumers in the information age and the implications for pricing plan reform”. The outcomes of the project will have national implications, further expanding CitySmart’s influence and expertise from its Brisbane base onto the national stage.
Customer interviews: some insights
People care about bill amount, not the electricity that was used
In general, people are not interested in how their electricity price is calculated, only the total amount and when it’s due. They feel generally uninformed and lack motivation to seek extra information unless a problem emerges (i.e. a larger than usual bill). In such an instance, they are most likely to go online – first using a search engine, then visiting their retailer’s website.
Households have different ways of reaching a decision.
Electricity buying decisions vary between households based on their decision-making style. These styles rarely vary within a household and the process they go through is similar when they buy internet, insurance and mobile plans. There are behaviours associated with styles, for example always go for lowest price or always research heavily.
Plain language is best
Consumer language used by electricity suppliers needs to be clear and concise and non-technical in nature. Consumers emphasised the need to use plain language with no jargon, focusing on the key benefits and actions required to lower costs rather than explaining the technical aspects of what the time-of-use pricing concept is.
Consumers don’t think they can control their electricity
Consumers feel a ‘lack of control’ because the bill relates to every day of the last 3 months and they don’t accurately recall their past behaviour. The bill is also aggregated for all family members and they don’t feel they know who did what. This shows the importance for a feedback loop that predicts the impact of continuing behaviour.
Busting some myths
Customers don’t challenge the status quo because they are confused by industry terminology and not motivated to improve their understanding because of their focus on bill size rather than usage (let alone emissions). Here are some things we found:
Myth #1: Age and income impact on tech savviness (False)
Age and income do not impact on tech savviness. The research indicates strong preference for the use of digital and high levels of digital skills throughout. Traditional views of low uptake and poor skills in low income and older aged demographics have proven untrue, as technology adoption has become ubiquitous.
Myth #2: Gamification is not a valuable learning tool (False)
The research indicates high levels of support from both young and older participants for the use of gamification (e.g. smartphone games, augmented reality and rewards points) as a learning tool. People want to interact with the concept to understand the mechanics of how to lower electricity prices by choosing when and how they use their equipment and they want to do it in a fun and functional way.
Humanising the audience
To better understand the audience, the research applied qualitative and quantitative techniques to the data gathered in the field. The research looks at personality types that exist in households rather than traditional demographics, focusing more on rich descriptions of people and family units rather than on stats. These household personality types are key to the buying decisions made and have informed the development of the model for the next stage of the project.
More about the project
CitySmart’s Electricity Pricing Reform Research Project for Energy Consumers Australia is a five-stage project, with the final report due later in 2017.
For some background on the project and its goals, read our article: Understanding digital consumers is key to electricity tariff reform.