The Electricity Brief: Episode 2 - Better Billing and Product Data Standards

In this episode, Carl speaks to Andrew Millar, General Manager of Retail and Consumer about the Electricity Authority Te Mana Hiko’s new Code amendments to improve consumer billing information and standardise product information. Together they delve into the decisions and what this means for consumers and retailers. 

We hope you’ve enjoyed listening. For more information, please visit ea.govt.nz 

The Electricity Brief is brought to you by the Electricity Authority Te Mana Hiko, an organisation responsible for the governance and regulation of New Zealand’s electricity industry. 

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Transcript

SPEAKER_01 0:07

Kyoda, welcome to the electricity brief. Each month we bring you a conversation with the people that are shaping New Zealand's electricity market. Talk about what's happening, why it matters, and how it affects you. Today we're joined by Andrew Miller, GM Retail and Consumer for the Authority. Andrew's going to walk us through the new rules that are coming into effect for electricity retailers. Rules that are designed to better protect consumers, stop big back bills, and help consumers better understand and compare the plans they're on. They also require retailers to regularly check that their consumers are on the best plan for them. Kilda, Andrew, it's great to have you join us today. Welcome. Hi Carl, it's great to be here. Andrew, let's jump straight in. Is the retail market, the electricity retail market, working as well as it could for consumers?

SPEAKER_00 0:55

The good news is that consumers have a lot of choice in terms of retailers. There's a number of them in the market, and they're offering different products, different services, and you can really get a good deal if you shop around. The challenge is that there's more complexity in the market as well. We're seeing retailers offering different products and services, and we're seeing retailers investigate new ways of sharing electricity, like using solar panels and batteries. And that choice is great. We want to encourage that, but what it does mean more complexity for consumers, and that can make it harder for them to understand what plan they're on, what their bill is telling them, and where they can go to find a better deal. So to test our understanding of the issue, we ran a consumer survey and asked them, do you understand your bill? And also, do you support us making changes? And what over 1,500 consumers told us was that 90% of them struggle to understand whether they're on the cheapest or the best bill. Over half of them struggle to understand what the bill told them or what information was contained within it. And over 90% supported us making changes to the bills to make them easier to understand and clearer. As a regulator, we want to strengthen the conditions for competition. We want consumers to benefit from competition in the market, to be able to shop around and find the best deal for them and use the information on their bill to really power that. We also want to protect consumers from the risk of large back bills. The changes we're going to talk about today achieve that. They both support competition in the market and also protect consumers from additional consumer harm.

SPEAKER_01 2:26

Building on some of that uh intel and feedback that you receive directly from consumers, tell us a little bit more about the problem that these rules are designed to solve.

SPEAKER_00 2:34

There are three main problems we're trying to solve with these changes. The first is the way that bills are confusing and hard to find the right information on. So, for example, bills vary from retailer to retailer. The information on one can be different from the other. For example, some retailers can include GST on their bills, some don't, some include calculations in one way and calculations another. And what that does is that it makes it hard for consumers to understand what they're being charged for, how much they're using, and why their bill is different to someone else's, and could they be on a better deal if they use that person's plan? Secondly, it's really building on that second point. It is hard for consumers to find out if they're on the best deal. That's that could be because the information on the bill is hard or complex to understand, or also because they're really time poor and just can't get around to it, or there's something else going on in their lives. So we think it's important that there is the ability for retailers to work harder for consumers in this way. And certainly we're trying to solve this problem of large back bills. And these are bills that can occur from usage from months and months ago that can hit consumers at the time when they least expected and can at least afford it. We ran a consumer survey at the end of last year to understand the scale of these issues. And that told us that one in three consumers aren't confident that they understand the electricity bill. And what this tells us is that the system isn't working well for consumers. And we want the system to work well for consumers, not for consumers to work hard for the system.

SPEAKER_01 4:07

If I understand correctly, some of these changes in the rules come into effect from the 30th of October. Talk us through what consumers will see then, beginning with the bills.

SPEAKER_00 4:16

You're right, Carl. So from 30th October, consumers will see bills that are clearer, more straightforward, and easier to compare. We're making sure that retailers have flexibility in the design of their bills. We know that retailers know they're consumers and and have spent a lot of time and energy making their bills work well. But we want mandatory information up front that consumers can find easily, like how much electricity you're using, what kind of plan you're on, and how much you're being charged for. This is going to be logic, a logical layout and some plain English. So it just makes it easy for consumers to understand that bill. I think it's worth saying that the bills are just one part of it. Really, it's about making sure that billing as a whole works better for consumers. And so we're taking these obligations not just on the physical bills themselves, but making sure they apply to things like apps and emails and other ways that retailers communicate with their customers.

SPEAKER_01 5:06

We mentioned backbills earlier. Talk to us about how we're protecting consumers and customers from unexpected backbills.

SPEAKER_00 5:14

Well, most people don't know what a backbill is until they receive one. A backbill is effectively a catch-up bill or a large amount owed for electricity use, potentially many, many months in the past. A consumer can get a backbill for a number of reasons. It could be because their meter isn't communicating well with the retailer. Um it could be because uh they have a they don't have a smart meter and they need a physical person to come and read, and that hasn't been done for a long time. Or it could be because there's a billing system error somewhere in the retailer's uh back end. Regardless of how it happens, what that means is that consumers can unexpectedly get a bill, sometimes a large bill, um, many, many months after they've used electricity, and and that can really affect them in a in a material way. Uh for example, utilities disputes have done some work and they tell us that on average, uh $5,000 is is a size of a back bill, which is a considerable amount for uh anyone, a small business or a consumer to deal with. And on and they say it's gonna be up to 14 months old. So a long time after that's been used. What we also know is that although New Zealand has really good smart meter coverage overall, those areas where there is poorer coverage often correlate to higher areas of social deprivation. And so what that means is that there's a higher risk of backbills in those areas. And those communities are already facing hardship, but they're already facing financial stress. So they can get hit doubly hard by those backbills. So what we're doing about it is making sure that there's a reasonable limit. So there's six months between when a electricity is used and how long it can be billed for. That gives enough time for a retailer to understand if there's more work they need to do to get that accurate meter read and to get that bill out. We're also taking action to make sure that retailers have strengthened obligations to catch backbills early. That includes identifying if there hasn't been a physical read of a meter and there needs to be one for a number of months, and also offering things like payment plans to consumers and hardships. So not hitting them with that full backbill in one hit. There are some exceptions to these rules. So if a customer is being unreasonable in terms of accessing a property or accessing a meter, but by and large, we think it's important that retailers are the ones who are making sure that consumers are accurately billed, not consumers.

SPEAKER_01 7:40

Andrew, the new rules also mean that retailers have to provide better plan advice to consumers in addition to the annual consumer care obligations check. Is that correct?

SPEAKER_00 7:50

That's correct. So once a year, a retailer is obligated to check whether a consumer is on the best plan for them based on the historic usage. And if they're could be on a better plan, then they're obligated to tell that consumer. The goal is that consumers shouldn't need to become experts in in the alt trusted market to make sure they're not overpaying on their bills. And if a consumer wants to move to their cheaper plan, then there's no fees or obligations or additional costs for them to do so. They shouldn't be penalized for doing so. No, there is some exception. So if a consumer has received a uh an inducement like a fridge or a or a big credit to move to a new retailer, the the retailer is able to recover some of that. But ultimately we want consumers to be able to move freely between plans to be on the best deal. And also to try new plans. So for example, if they're interested in trying a time of use plan to shift their load to the weekend or or to shift their load to the evening, then there shouldn't be a barrier for consumers to do that.

SPEAKER_01 8:47

Andrew, I've also heard you talk about the consumer mobility program of work. Can you tell us a little bit more about this initiative?

SPEAKER_00 8:54

Consumer mobility is all about making sure consumers can be on the best plan for them. Consumer mobility isn't a single project, it is a program of work that's designed to give consumers more choice, more control, and better value of their electricity use. It's got a number of different features. Uh, for example, we're taking action to strengthen the digital foundations of the electricity market. So, for example, that means standardizing the way that electricity information, uh, information about a retailer's plans, information about your use and my use, how that is standardized and shared between retailers to make it easier, make comparing information, comparing sites, comparing plans easier and more efficient. It's also about exploring new ways that a consumer might want to engage with the electricity market. So, for example, we're looking at a proposal called Multiple Trading Relationships that would enable a consumer to have one retailer that they use to draw down electricity from the grid, but another a different retailer uh that they use to sell any electricity back to the grid through a maybe a battery or a or a solar panel. Uh and that creates innovation in the market and it creates more consumer choice. What we're also doing is enhancing the consumer touch points. So the way that consumers interact directly with the electricity market. These changes today will make it easier for consumers to understand what plan they're on, how much they're using, and how to switch to and compare with another electricity provider.

SPEAKER_01 10:17

That's a great segue into the conversation about the comparison and switching services we've alluded to a few times. I understand there might be some news there as well, Andrew.

SPEAKER_00 10:25

Uh yes, the authority is launching a new comparison and switching website later this month. This new website is free for both consumers and retailers to use, and it's designed to keep pace with the changing electricity market. It's a great platform for consumers to identify which plan might be best for them and switch to a new provider. It's also designed to work really well with the changes we've talked about today. So we're going to support this new platform with a big range of regulatory changes. Andrew, what are the next steps?

SPEAKER_01 10:51

What happens from here?

SPEAKER_00 10:53

So retailers have until 30 October to comply with the new obligations. And what I would say is that retailers have been really enthusiastic about these changes. We've had great engagement with the with retailers about these proposals, both our original proposals and how we can make them even stronger and better for consumers. So it's been great. And we're going to continue working with retailers closely. So as part of implementation, we're going to design a toolkit that will support retailers to make the changes in the time available. This time between now and 30 October will give retailers an opportunity to update their systems, to train their staff, and make sure they're ready to go from day one of the new changes. And this retailer toolkit will support them to do that. We're going to run some industry workshops. We're going to help them to make sure that they are meeting the obligations in a way that best supports consumers. So to surmise, retailers and consumers from 30 October will have clearer bills, more straightforward bills, and more transparent bills. There'll be this new obligation to make sure that once a year your retailer checks whether a consumer is on the best plan for them based on the usage. And we're going to stop these large back bills for more than six months. Striking the right balance between a retailer gets getting fairly paid for their usage, but also not inflicting a large backbill on the consumer who might not be able to afford it.

SPEAKER_01 12:08

That's excellent, Andrew. Kyoto, really appreciate your time with us today. Thank you. And to everyone else, thanks for joining us. If you'd like to learn more about any of the topics we've covered today or read some of the decision papers in full, they're all on the authorities website at www.ea.govt.nz. That's all for now. Kakiti ano. We'll see you again soon.