Government turns to behavioural economics unit for experiments with energy bills

By Jackson Graham

Monday November 1, 2021

The AER partnered with the government’s behavioural economics unit. (Jason/Adobe)

The federal government has turned its behavioural economics unit towards understanding how people interact with energy bills as new regulations are set to be introduced. 

Energy minister Angus Taylor in April 2020 tasked the Australian Energy Regulator with enforcing changes to how retailers present and inform consumers about the costs of energy bills. 

It followed concerns about the complexity of Australians’ power bills leading to confusion and higher costs. 

The Australian Competition and Consumer Commission has found that people switching from a standing offer to a median market offer could save households up to $230. 

Current regulations only require energy companies to provide information relevant to the customer but there is no uniform presentation or format that would allow consumers to compare deals.

The AER partnered with the government’s behavioural economics unit, called BETA, to unpack how 14,000 consumers interacted with and what they wanted from their bills. 

The guidelines, to be released in coming months, will give AER the power to implement changes to how energy retailers must present, deliver and format their bills in shifts to begin from August 2022. 

BETA’s work showed only 9% of respondents had switched retailers in the past year, yet 24% said they had considered doing so. ‘

The behavioural economics unit created four mock bills that varied in levels of length and simplicity and experimented with how people interacted with them. But its findings show people were able to discern information almost equally from each test. 

Yet the unit also found that bills with only ‘minimum content’ failed to meet what consumers wanted. Past energy usage, benchmark comparisons, solar exports and help to switch to a cheaper plan were all considered useful additions to bills.  

The report found people who have experienced financial hardship in the last 12 months were more likely to rate bills as difficult to understand. 

Electricity prices are on a downward trend and set to fall by 8.7% by 2022-23, according to the Australian Energy Market Commission

The BETA team, which sits under the Department of Prime Minister and Cabinet, has completed more than 30 projects for the government since 2018, including on cyber security, add-on insurance and encouraging census engagement. 


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