Smart Grid, Smart City Strategic Policy & Regulatory Steering Committee

EnergyAustralia James Miller-Randle Retail Strategy Manager, Energy Services and Retail Strategy

28 July, 2014

Retail Trial Recap

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Retail Trial Recap

The SGSC Customer Applications program was designed to test whether various smart-meter-related products can:

• Help reduce overall electricity usage

• Ease the load on the grid during peak demand periods

• Lower electricity costs

In particular, the Retail Trial was concerned with whether the products were:

1. Attractive to customers

2. Effective in engaging customers and reducing churn

3. Effective in helping customers manage and reduce electricity usage

4. Effective in reducing retailers’ exposure to extreme wholesale costs during peak demand periods

Trial Objectives

4

A total of twelve products were introduced as part of the Retail Trial, either as standalone tariffs or tariffs bundled with technology.

Tariff Type Tariff Description Standalone

Tariff PowerSmart

Monitor PowerSmart

Online

PowerSmart Online &

Home Control

$/kWh

PriceSmart Dynamic Peak Pricing

• Low rates during the year

• Higher rates apply during peak events

• Customer encouraged to curtail usage during events

SeasonSmart Seasonal Time of Use

• Seasonal time of use

• Lower peak rates in Spring/ Autumn

• Higher peak rates in Summer/Winter

BudgetSmart Top Up Reward

• Advance pay (top-up) product

• Customers receive a 12.5% discount off bill

• Account must remain in credit

FlowSmart Interruptible A/C

control

• Direct A/C load control

• A/C interrupted during events unless customer opts-out

• Customers earn up to $44 per event

Product Recap

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2. Customer Case Studies

Real case studies talking about customers’ experience on the trial so far, explaining the changes they’ve been able to make in order to save.

Through reading about fellow trial participants, these case studies were designed to motivate the wider trial base to engage with their tariff and technology and stay involved in the trial.

Following customer acquisition, a structured customer communications and retention programme was implemented to drive engagement and retention.

1. Smart Grid, Smart City Spring newsletters.

Participating customers in the Smart Grid, Smart City trial received a quarterly newsletter:

• 3 versions of newsletters tailored to specific customer tariff

• 9 versions of cover letters, tailored to the customer’s technology option to drive use and activation

3. Early Issue Intervention

Resolving issues via verbatim comments:

• Customer dissatisfaction

• Product confusion

• Technology issues

4. Proactive Customer Saves

Tailored processes to manage different customer who:

• Move house

• Leave for another retailer

• Opt out of the trial

Key Engagement and Retention Activities

Retail Trial Findings

7

Trial Statistics

Customer Cancellations

Net Sales (Provisioned)

Trial Opt-Out

Technical Declines

Gross Sales

Final trial customers

Declined due to technology issues e.g. WiMAX coverage

Customer cancellations pre-provisioning

Customers provisioned with tariffs and/or technology

Includes trial opt-outs, move home and change of retailer

8,494

2,392

2,633

3,469

1,063

2,406

Total provisioned

Total customer opt-outs

Total customers on trial at

close

PriceSmart

1,823

458 (25%)

1,365 (75%)

Season-Smart

567

176 (31%)

391 (69%)

Budget-Smart

1,078

428 (40%)

650 (60%)

FlowSmart

1

1 (100%)

0 (0%)

TOTAL

3469

1063 (31%)

2406 (69%)

Trial Participation Funnel Product Breakdown

Of the 3,469 net sales, over two thirds of participants remained on the trial, with PriceSmart showing the highest retention of all the products.

Approximately 28% of sales were declined due to technical issues and 31% were cancelled prior to provisioning

However once on the trial, over two thirds of participants remained until trial closure

Trial opt-out reasons included no longer wanted to participate, move home and change of retailer, with move home accounting for around 25% of total trial opt-outs

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Both PriceSmart and BudgetSmart customers showed the high satisfaction levels and likelihood to recommend the tariff.

Source: ISF Customer Research – includes all unique respondents from 2013 and 2014 surveys

Product Satisfaction - Tariff

PriceSmart showed the highest proportion of very satisfied participants, although average satisfaction scores were on par with BudgetSmart

BudgetSmart showed the highest likelihood to recommend, although all tariffs performed strongly

Overall product satisfaction, by tariff type Likelihood to recommend, by tariff type

45%

46%

50%

40%

37%

35%

14%

17%

15%

0% 25% 50% 75% 100%

PriceSmart(n=822)

SeasonSmart(n=167)

BudgetSmart(n=374)

Proportion of respondents

High Med Low

23%

24%

26%

43%

46%

43%

3.7

3.8

3.8

1 2 3 4 5

0% 25% 50% 75% 100%

SeasonSmart(n=167)

BudgetSmart

(n=374)

PriceSmart(n=822)

Avearge score out of 5

Proportion of respondents

Very satisfied Satisfied Neutral Dissatisfied Very dissatisfied

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Tariff and technology bundles proved the most empowering for customers and drove high levels of customer satisfaction.

Source: ISF Customer Research Report. Combined Retail and Network trial results

28%

27%

18%

45%

47%

41%

Tariff + Tech(n=1227)

Tariff only(n=583)

Tech only(n=452)

0% 25% 50% 75% 100%

Very Satisfied Satisfied Neutral Dissatisfied Very dissatified

Product Satisfaction - Combination

Overall product satisfaction, by product combination

Resulting in high levels of customer satisfaction

31%

20%

17%

44%

44%

44%

Tariff + Tech(n=1227)

Tariff only(n=583)

Tech only(n=452)

0% 25% 50% 75% 100%

Increase a lot Increased a little No impact Decreased a little Decreased a lot

Impact on ability to reduce bills, by product type

The combination of tariff and technology proved most powerful in customers’ perception of control

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Self-reported behavioural change translated into action, with nine out of the eleven retail trial products showing reductions in average consumption.

Over 80% of trial participants indicated they changed their consumption behaviour

This translated into actual consumption reductions in nine out of eleven retail trial products

Source: ISF Customer Research Report, p.76.; Frontier Analysis, p.46.

Consumption Reductions

Customer self-reported behaviour change by product Actual average consumption reduction by product

Budget Smart

Price Smart

Season Smart

65%

71%

71%

17%

11%

14%

18%

19%

15%

SeasonSmart(n=132)

BudgetSmart(n=282)

PriceSmart(n=611)

Reduced use* Shifted only Did nothing

Network Trial Products

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PriceSmart customers showed the greatest peak reductions, however the depth of reductions decayed over time.

Source: Frontier Analysis report; ISF Customer Research Report

0.28

0.33

0.22

0.09 0.1

0.06

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

Overall Retail Network

Pe

ak

e

ve

nt

savin

gs

Reported participating Reported not participating

Peak Event Reductions

Summary of load reduction for DPP events Actual average consumption reduction by product

Average consumption reductions of 39% were achieved on the retail trial, although some decay was observed over time.

The retail trial’s peak price tariff “stick” resulted in greater savings, but lower participation than the network peak rebate “carrot”

Date Start time

End time

kWh saving (%) R06

kWh saving (%) R07

kWh saving (%) R08

kWh saving (%) R09

26 Feb 13 14:00 16:00 43.7 44.0 44.0

22 Mar 13 14:30 18:30 49.7 43.5 48.3

28 Nov 13 15:00 19:00 36.5 33.9 37.5 44.9

9 Dec 13 15:00 18:00 36.9 35.1 40.8 52.7

10 Dec 13 15:30 17:30 35.1 34.8 43.4 49.1

16 Jan 14 15:30 18:30 36.0 38.8 45.1 48.1

29 Jan 14 16:00 19:00 31.2 35.0 39.5 38.2

30 Jan 14 16:00 19:00 34.2 29.6 32.7 35.4

13 Feb 14 14:00 18:00 27.0 23.9 31.4 33.6

Retail Trial Challenges & Learnings

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The innovative nature of the trial translated into a steep learning curve and some valuable lessons learned.

• Low engagement/ understanding

Customers often have limited understanding of the category

• Program objectives and sample design

Customer targeting, product design and sales process didn’t necessarily reflect a business as usual approach

• Suitable DPP days

Scarcity of high-temperature days for testing of DPP events

• Deployment issues

WiMAX coverge and space issues resulted in a significant volume of technical declines

• Technology issues

These included IHDs battery life issues and portal activation glitches

Lessons Learned

Retail Trial Challenges Lessons Learned

• Customer education is key

Adverse customer feedback still received ahead of peak events, despite frequent communication of energy saving tips

• AS4755 compliance

Lack of compliant air-conditioning stock will limit viability of DRED in short-to-medium term

• Managing churn through seasonal price changes

Some evidence of customer opt-out ahead of seasonal price rises requires reinforcing savings received

• Need for contact rules

Some BudgetSmart customers frustrated by the frequency of top-up messages

Thank You