There are many reports and inquiries, both current and gathering dust, into the shameful state of our electricity market and its unprecedented and ruinous price rises.
But there’s one belief they nearly all cling to, as does the prime minister from his meeting with energy chiefs today in Canberra, and it’s as fundamental as the positive and negative wires.
If consumers, whether they are householder or small businesses, faced with a myriad of choice around electricity contracts are not engaged and empowered, the system loses vital efficiency and adds cost.
Surprisingly many seem to be engaged though, and if 50% of homes have not switched to more competitive market contracts in the past five years as energy minister Josh Frydenberg says, it does suggest the remaining half have.
These savvy and active consumers stand to save hundreds of dollars against their less engaged neighbours.
In Brisbane the Australian Energy Regulator says the difference between the most expensive and cheapest power deals – for exactly the same electrons – is $900.
But to understand why so many are leaving “so much money on the table”, to use the economist’s quaint expression, look no further than the letter from your power company that may have gone unnoticed.
In July AGL sent me an actual letter to say my energy plan will be automatically “renewed” by 16 August, and unless I do something would be rolled onto a shiny new plan.
It’s called AGL Savers electricity and, as the name suggests, promises a 22% pay on time discount. But to compare this promised value (a discount against just what?) to my now expiring tariff needs some expertise and patience.
As a consumer campaigner in this market I kept, opened and even read my letter. I might even have understood parts of it but still need to invest in due diligence to determine what’s the best next step.
Millions of others may not have been aware or understood such missives, even if they arrived, and as a result of taking no action might end up with power bills costing some hundreds of dollars dearer.
Of course the letters don’t talk in anything as vulgar or understandable as mere money. The market contract rates I have to compare come in units called cents per kilowatt hour and are mixed in with tables of time of day charging.
Then, like the one in four households with solar, there’s the feed-in tariff to consider and the daily supply charge payable for just being hooked up to the grid. And don’t forget GST.
We are teased into a honeymoon power offer, seduced with discounts, and providers rely on our often set-and–forget mindsets to “roll” us into far costlier tariffs.
Then, with you safely on board, they entice new recruits with tempting marketing and the merry-go-round continues.
Unlike the Greens, who’ve suggested a retrograde return to price regulation, many of us continue to believe in competition as the protector of many, if not all, consumers’ interests.
The issue is not unique to Australia even if our bills are assessed by some as the highest in the world. The UK faces similar switching paralysis and has some solutions we might embrace. There they have the handy TCR, a tariff comparison rate, which simply totals the cost of that plan for a typical consumer. Instead of strange units we don’t understand it tells you in UK pounds, easily adaptable to $A, what the annual bill would be for a family of four in say a detached house.
It’s used here for comparison rates for home loans and credit cards, and while just the first step in any investigation of value it makes sense and empowers many more people.
Engagement is not just a question of addressing affordability issues. Various inquiries around electricity addressing big issues such as demand management rely on what the Australian Energy Market Commission has called “the power of choice”.
It’s about giving consumers more power to make decisions, particularly around technology, to help them shape a more efficient and equitable energy future.
There are tools, comparison sites both government run and commercial, to help, and technology and codes of conduct stand to make them better still.
There will be some segments, perhaps the elderly and marginalised, who – whatever the incentives – either do not or cannot navigate the market options. They may require some protection and regulation.
The fastest and most effective way for us to get more control over our electricity prices is to both empower and engage the mass of consumers in the middle.