Energy Source & Distribution gets to know Energy Consumers Australia CEO Brendan French, who has spent the better part of his career advocating for consumer rights.
Brendan, tell us a bit about yourself:
I’ve worked in and around consumer protection for many years. I started as an academic (my doctorate is in the history of ideas) and consultant, followed by several years as Deputy Ombudsman at the Energy & Water Ombudsman NSW. I then worked as Executive General Manager Customer and Community at the CBA for quite a while, before taking on this role. I like working at the intersection of social transformation, corporate culture and civil rights. I also believe very strongly in the goodwill and community-enhancing role of big industry—they just sometimes forget it themselves.
Since joining Energy Consumers Australia as CEO in late 2023, what’s been your focus?
As everybody knows, the energy system is undergoing a once-in-history redesign as we move away from the carbon sources that have supplied energy for the whole of human history. Just about every reliable truth of energy generation, distribution, and retail is being questioned and replaced. Yes, this is scary, but it’s also a singular opportunity to design a new system informed by all the knowledge of what worked—and what didn’t—in the old system. My biggest worry is that we might end up sleepwalking into outdated service models rather than actively seizing the opportunity to create a 22nd century energy model.
We recently launched our three-year plan, which internally we’re calling our ‘Planifesto’. It presents the seven targets that must be met for a modern energy system to work for consumers: equity, value, agency, ownership, control, justice, and representation. Underneath each of these targets, we’ve identified the individual issues energy consumers need resolved. We’ll be working with the whole sector on these and invite everyone with an interest to join us in the task. Underpinning everything is the need for consumers to have far greater standing in the decisions that affect them.
Related article: Energy consumers request rule change from AEMC
What have you learned about the energy sector since taking over at ECA?
Every sector I’ve ever worked in has said to me that they are uniquely complex, with the highest compliance burden, the most challenging tech, and the most unforgiving political environment. Quite honestly, I think it’s lovely that people feel energy is so arcane and exclusive—but we really shouldn’t fall into the trap of thinking it is a sector apart. Don’t get me wrong, I fully appreciate how critical engineering and economics are to the energy system, but I am not so sure that only engineers and economists can fix everything. I would really like to see a far broader base of expert problem solvers involved so they can look at things differently.
A big part of the problem, of course, is that there are multiple transformations occurring simultaneously. As ECA has long said, this isn’t just about decarbonisation—it’s also equally about decentralisation and democratisation. Of course, this doesn’t mean we’ll all get to vote on energy contracts in the public square. What it does mean is that people will demand far greater authority over the means and manner of their supply. Energy firms that don’t fully grasp that might face real problems down the track, I think.
The other thing we need to wrestle with is what we call the ‘energy burden’. Lower income households pay a much higher share of their income on energy and, unlike those with more capital, they find it more difficult to participate in and benefit from the energy transition. Consumers who can install rooftop solar, battery storage, and efficient, electric appliances and cars can see massive benefits in the transition and they are rightly looking for a return on that investment. But renters, those in apartments and those with low-incomes—who collectively represent half of all Australians—don’t have the same ability to buy and use this new tech. These consumers are already doing it tough in many circumstances, and they are the ones who will need the most assistance to take part in and receive an advantage from the transition. Balancing the needs of these two groups will be the great policy challenge of the transition, in my view. If we can forge the right kind of social compact between these contrasting obligations, it will say a lot about how positive the future can be; if we can’t—and we end up with an indentured energy divide—then it will say something else entirely.
What are the biggest issues facing consumers in regards to energy policies and pricing?
We’re pretty tired of hearing that it’s up to consumers to engage more with the retail market and educate themselves on energy pricing. I have spent much of my life looking into the idea of consumer literacy and numeracy programs and, to be perfectly honest, they almost never work (at least in my experience). Frankly, people have better things to do with their time. I also think we were all told not to play near the power point as children, and this hesitancy follows through into adulthood.
It’s often said that it’s fair enough that those who ‘engage’ with the market should be entitled to better outcomes and, on the face of it, that’s a reasonable proposition. But in reality, it’s not nearly that simple. ECA conducts the biggest longitudinal surveys of energy consumers in the country and it’s entirely clear to us that there are structural obstacles that actively prevent classes of consumers from getting better deals. And what this means in practice is that it often ends up being very expensive to be poor or unsavvy digitally or one of the quarter of Australians who don’t feel confident in written English, and so on.
The flip side of this, it seems to me, is that market settings almost oblige retailers to focus unduly on customer churn to stay competitive. This inevitably leads to loss-leading acquisition pricing to get customers through the door and the inevitable challenge that you probably only profit from them if they stay more than a year or two. As the data consistently show us, the result is a loyalty tax on settled customers—and this is hardly fair. I’m unconvinced that a ‘churn and burn’ retail model is in anybody’s interest, really.
We also have to ensure all consumers can manage their energy consumption to greatest cost benefit, not just those who have economic and social capital. Why should only owner-occupiers benefit from the energy transition, when nearly half of Australians live otherwise? We need minimum energy efficiency standards for all rental properties, mandatory disclosure of energy efficiency ratings at point-of-sale or lease for all homes and businesses, much improved appliance labelling, and so on. Given the pretty average state of much of Australia’s housing stock—I’m told we’re at an average of 2 stars out of 10—imagine how we could turbocharge the transition if we could match energy efficiency incentives with universal access to consumer energy resources! We might even save ourselves the huge cost of having to add so much new capacity into the system.
Energy Consumers Australia recently submitted a rule change request to the AEMC to improve existing distribution system planning processes. How will this help energy consumers?
We’ve recently lodged six rule change requests with the AEMC. One relates to consumers having access to real-time data from their smart meter (which, after all, they’ve paid for). Four others involve changes we think are critically important as we transition from reticulated gas and electrify our homes and businesses. I’ve thought for a while now that many in the sector are admiring the problem, rather than actively planning for it—so we hope these proposals spur us all into action.
As you mention, another rule change we’ve submitted deals with improvements we think are needed to electricity distribution planning. AEMO’s Integrated System Plan is a compelling and, in many ways, international best practice example of the 20-year ‘far horizon’ view. The problem, though, is that its focus is mostly upstream on generation and transmission. We think that there is a real need for a whole-of-system planning process that elevates distribution network planning to the same level, particularly because the distribution asset base is about 3.5 times larger than transmission, from memory. The proposal also seeks to increase transparency of data, actively accommodate consumer energy resources in system planning, and create a more level playing field for non-network providers (which, among other benefits, would enable better use of community batteries rather than further network augmentation).
We’re also doing quite a lot of work on the whole question of network utilisation at the moment, particularly with the AER and the University of Technology Sydney. A lot of customers simply don’t know that something like 45% of their bill is made up of network charges, so anything that can be done to ensure the system is working optimally—and thus forestall expensive upgrades—is money returned to consumers. We think this is critically important work because there remains some danger that the real long-term cost benefit of renewables could be eroded through increases in network costs.
What are some key goals for Energy Consumers Australia in the next 12 months?
Like everyone else, we want to see an energy system that is fair, affordable, reliable, and meets consumer needs. The conundrum, obviously, is how to do that for everyone all at the same time.
A big challenge is the utter, unnecessary complexity of retail tariffs and pricing. By all means, networks should send price signals to encourage smoother demand distribution, but I just don’t think every customer should have to deal with this at a retail level. If anything, this just adds to the cognitive burden which prevents them engaging with the market. It’s not a surprise to me that in our recent survey of 4,000 people who manage their household energy accounts, only 19% knew what a tariff was and 18% understood their pricing with any confidence. If this occurred in any other essential service sector there’d be an uproar. We are really pleased all of this is being considered by the AEMC in its current pricing review, and we are optimistic at this point of significant improvements.
We have also long advocated for some kind of ‘one stop shop’ for Australians to visit—digitally, probably—to get reliable, trusted advice on energy decisions. There are dozens and dozens of these across the world, all providing great services to consumers. In Australia we’ve seen some fine early work from the ACT and the SEC in Victoria, but we really need something bigger and better across the board if we’re going to expect consumers to make optimal decisions. Given how much money and time are being spent on the supply side at the moment, it’s not a lot to ask for consumers who, after all, will end up spending as much or more collectively at their own homes and businesses. Interestingly, we recently mapped the question chain that a typical consumer would need answered to buy a home battery. Would it surprise you that there were more steps and agencies involved than in buying the home it would attach to?
Another important area for us is consumer protection. When I came into the job, one of the first things I read—naturally enough—was the NEO (National Energy Objective). Note that I said ‘objective’ and not ‘objectives’ because all it talks about is one objective: efficient investment/operation. This was quite a surprise to me because other major sectors tend to have a combination of objectives—and, critically, include a consumer duty of some kind. In banking, where I’d been for some years, s912A of the Corporations Act requires financial services licensees to act ‘efficiently, honestly, and fairly’. There are lots of other examples: financial planners have to have ‘act in the best interests of the client’ (s961B) and there’s currently a lot of talk in parliament about imposing a digital duty of care on social media companies to protect users from harm. We think there is a very strong case for a consumer duty to apply in the energy sector—and we are not alone, as the AER published a really important paper on this in November 2023, from memory, and Ofgem in the UK is looking to introduce such a right in the UK.
A consumer duty is not a duty on the customer but to the customer. I feel strongly that it would be just about the most important thing we could do to create a sustainable symmetry in the sector. I should note, before people start to worry about the extra burden on industry, that when this kind of ‘outcomes regulation’ is introduced it can significantly reduce the backward-looking compliance burden firms face from an over-reliance on ‘prescriptive regulation’. In my view, it is a more modern regulatory philosophy and, from a commercial perspective, is more adaptive, cost efficient and far better for corporate culture. Win/win.
Another area we’re focusing on is retailer debt management and, in particular, disconnection. Building on great work across the sector, including by the Justice and Equity Centre and the Energy and Water Ombudsmen, we want to compare practices in Australia against other regulated economies. Should disconnection be the default response to nonpayment? We know that retailers would like to examine other options, particularly in households where disconnection from supply can have a profound impact on children, older people, those with a disability, and so on. We want to work with them to explore more economic and, frankly, humane paths.
Related article: Q&A with Lynne Gallagher, Energy Consumers Australia CEO
What do you enjoy most about working in the energy industry?
Would you mind if I say that from a consumer advocacy perspective, it’s a ‘target rich environment’? For example, I am repeatedly struck by all the hidden cross subsidies that exist in this industry and feel strongly that this is a reputation risk that must be addressed if the sector is going to avoid the misconduct episodes that have plagued other industries I have known, such as banking, insurance, funds management and so on. Some cross subsidies are sensible, some are hopefully temporary while we transition, while others seem to me to be simply unfair. I think the time is right for these to be examined quite closely. Sunlight is the best disinfectant, after all.
Another thing I very much enjoy about energy is the spirit of reinvention that I feel everywhere I go. So many people seem to see the hazy outlines of a new energy system somewhere in front of them. Notwithstanding that a lot of these visions differ considerably from each other, it gives me considerable hope that if someone is able to bring these together in a compelling way, a new big picture might will emerge.
