The ACCC monitors and enforces the Competition and Consumer (Industry Code—Electricity Retail) Regulations 2019 (the Code), a mandatory industry code prescribed under the Competition and Consumer Act 2010.
The Code applies to all retailers that supply electricity to small customers in the applicable distribution regions of New South Wales, South Australia and south-east Queensland. It sets a cap on standing offer prices and specifies how prices and discounts must be advertised, published or offered.
The ACCC and AER jointly commissioned research, Testing Comprehension of the Reference Price, from the Behavioural Insights Team (BIT). This research provides new insights about the ways consumers understand electricity offers, and the ACCC and the AER will use these insights to consider how the presentation of electricity offers could be improved.
We commissioned the research to understand if different explanations and presentations of energy price comparison information would improve consumer comprehension of retail offers.
The key findings of the research are that improvements in comprehension can be made by:
- focusing on clear, simple language
- using full sentences rather than compact technical sounding formulations which are hard for non-experts to understand
- using descriptive language such as referring to the reference price as the ‘benchmark price set by the government’.
The research will inform the ACCC’s work enforcing the Electricity Retail Code (the Code), and the AER’s revision of its Retail Pricing Information Guidelines (RPIG). The Code and the RPIG each require retailers to present energy price information to customers in a clear and easily understood way, helping them to make better choices about energy offers.
About the research
Our research closely examines the best ways for retailers to communicate with consumers about the reference price, the unconditional percentage and the lowest possible price. These are concepts introduced by the Code.
- engaged 2,500 consumers to test real-world responses to terminology and descriptions
- presented consumers with a range of realistic mock scenarios to identify what information would best enhance consumer understanding
- is an important joint initiative to provide a better, evidence-based understanding of consumer concerns and preferences.
BIT undertook interviews with consumers and conducted an online randomised control test to gauge consumer understanding of the concepts and potential alternative wording. The report makes a number of important findings that demonstrate how wording in energy advertisements can improve comprehension. The insights from this research can influence how information is presented to consumers.
The Code was introduced to reduce confusion and make it easier for consumers to compare retail electricity offers. This report provides important insights for retailers and policymakers into how consumers understand and engage with the Code information. Consumer education and understanding of how to use the Code information is a critical objective and the ACCC is carefully considering the findings and ways to improve consumer understanding of offers in the market.
The ACCC recently released its revised guide for retailers on the Electricity Retail Code. The guide was revised to reflect the additional requirements following amendments to extend the Code to a greater number of tariff types. We will now consider whether other changes to the guide incorporating findings from this research are appropriate, consistent with our agency's general response to the COVID-19 pandemic and acknowledging its significant effects on Australian consumers and businesses.
The ACCC promotes, monitors and enforces compliance with the Code. The Code came into force on 1 July 2019. As part of this role, the ACCC has published a guide to the Code for electricity retailers. The guide to the Code was recently revised to reflect changes to the usage profiles for time of use offers in the AER’s 2021-22 final determination for default market offer prices.
The ACCC released draft guides to the Electricity Retail Code for consultation in May 2019 and May 2020. The received submissions have been published to their respective consultations:
- Consultation on the draft Guide to the Electricity Retail Code 2019
- Consultation on the draft Guide to the Electricity Retail Code 2020.
Monitoring and reporting
The ACCC will also be monitoring and reporting on the broader effects of the Code on standing and market offers and advertising practices as part of its inquiry into the supply of electricity in the National Electricity Market.
See: ACCC role in energy