A third of Australians have missed electricity bill payments

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Monday 13 October 2014 - Nearly one in three Australians have missed a payment on an electricity bill in the past 12 months while more than one in 10 have missed three or more payments.

These findings from EY’s latest Customer Experience Series – Utilities survey highlight that rising electricity prices are a major factor contributing to hardship for Australians, with “unable to afford payment” the single biggest reason given for not paying on time (60%).

The proportion of customers often or occasionally worried about being able to pay their electricity bill has remained consistently high at 70% since EY last undertook the survey in 2013 (73%). Notably more than one in 10 respondents said energy bills were the “everyday” thing causing them most stress at that moment.

EY Oceania Customer Leader, Jenny Young, says there is an opportunity for retailers to retain and attract market share by better meeting the needs of customers in monitoring and controlling energy use and by managing “bill shock”.

“This research shows customers are looking for simplicity, transparency and the ability to manage their energy use and method of payments. The sector needs to be faster in adopting new technology and practices that improve the customer experience but we are starting to see new, smaller, nimble players move into this space – but there is a first mover advantage for the bigger retailers who can get it right,” says Young.

Switching providers remains difficult

EY’s research shows 55% of respondents have recently switched or have considered switching electricity providers in the past 12 months. Receiving an unexpected large bill was a significant trigger to consider switching providers for a quarter of those respondents.

Customers felt that retailers continue to make the switching process too difficult and complicated, with 20% of potential switchers not making the change because they find the information search too hard, up from 15% in the previous survey.

Making paying easier

Young says the survey results provide an insight into strategies retailers can use to assist customers with on-time bill payments.

Customers were most interested in discount incentives (55%), access to real time online energy usage information (44%), and monthly billing (30%), to help manage and pay bills.

However, while discounting was the factor most likely to encourage on-time bill payment (78%), the next most influential factors making it easier to pay were SMS reminders (71%), the ability to select billing date (65%), a monthly billing cycle (61%) and paying by direct debit (60%).

‘Whilst discounting is effective, there is a lot of opportunity for retailers to make it easier for people to pay,” says Young.

The move to solar

Nine in 10 Australians say they have or would consider switching part of their energy mix to solar. Actual uptake of residential solar photovoltaic (PV) has soared from about 1,000 installations/year a decade ago to nearly 200,000 last year, with 1.2 million installed across Australian since 20011.

For survey respondents, saving money was the key driver (70%) for those who had installed solar while the cost of installation was the main reason (50%) for those who had considered but not installed solar PV.

EY Power & Utilities Advisory Leader, Stuart Hartley, says: “Energy affordability is a big issue for many people so they are looking at alternatives including more self-sufficiency. Given the advances being made in solar and battery technology, uptake could increase further, impacting demand and adding to the pressure on traditional retailers”.

Customer focused transformation required

Hartley says declining electricity consumption, affordability issues and the switch to self-sufficiency are disruptive trends being seen not just in Australia but around the world, and local operators could learn from their global counterparts.

“Offerings such as no-frills, fixed price monthly contracts and apps that assist customers in managing their energy use will become increasingly common. Retailers need to be thinking about what their business might look like in the future and how they provide energy management solutions. For instance, they could well become providers of solar PV batteries via leasing arrangements,” he says.

“Due to this type of disruption, the sector is going to look vastly different in 10 years. Utilities businesses will increasingly need to be dynamic and customer-responsive if they are going to survive and prosper in the long term. Service will more and more become a key competitive advantage,” he says.

Survey results – key findings

  • Of those not set up for direct debit, 31% paid an electricity bill late at least once, 12% missed three or more payments
  • “Unable to afford payment” was the main reason for not paying (60%)
  • “Unable to afford payment” was significantly more likely to be people in regional areas (78% compared to 49% in metropolitan areas)
  • 34% of respondents had switched providers at least once – 23% of those last switched following a door knock while 16% switched after receiving a large bill
  • 20% of potential switchers do not follow through because they find the information search too hard
  • 71% pay their bills manually and 29% pay on direct debit
  • 80% are on a quarterly billing cycle

1Source: www.cleanenergyregulator.gov.au

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Notes to editors

About the report
The EY Customer Experience Series has been developed to investigate consumer decision-making in key sectors, focusing on pain-points and opportunities.

This survey, Customer Experience Series – Utilities, explores the perceptions and experiences of over 649 electricity retail customers across regional and metro markets in Victoria, New South Wales and Queensland. The results of the this 2014 survey draw on comparisons with the findings of the same survey 12 months ago.

About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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This news release has been issued by Ernst & Young Australia, a member firm of Ernst & Young Global Limited.

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Contact

Megan Ball
Ernst & Young Australia media relations
Tel: +61 2 8295 6427