Carly Hyde, Essential Services Manager at QCOSS, presented to the recent Energy Consumers Australia Foresighting Forum.
The annual forum brings together the whole energy sector to work collaboratively on key issues affecting the long term interests of consumers.
Carly presented to the forum on the opportunities for consumers to make more informed choices about how they use energy and how to give consumers more control over their energy costs in Queensland.
I don't have any slides but you're not missing out because I'm not that creative on the power point anyway. But thanks Rebecca she mentioned I'm from QCOSS, our organisation has a vision of a Queensland free of poverty and disadvantage so I'm here to really represent the interests of low-income consumers particularly in the Queensland energy market. So as has been covered quite a bit this morning already there's a clear policy direction to encourage the development of new products and services forenergy consumers – to enable opportunities for consumers to make more informed choices about how they use energy and give consumers more control over their energy costs.
However, these opportunities are not extended equally to all households. The way the energy market is evolving risks creating a divide in our communities, between those who can take control of their energy costs, and those who cannot. Given the essential nature of energy, the inequitable distribution of energy costs across households has important social and economic implications.
So our research has identified households who rent as one group who are increasingly at risk of being behind. The proportion of households who rent is trending upwards across Australia. In 2013-14, 36 per cent of all Queensland households were renters.
While renters have been considered in energy policy development to some extent, most of the time renting is viewed as a condition experienced by low income consumers. And certainly, many low income households are renters. In Queensland, approximately half of all rental households are on low incomes - hence, our particular interest in this customer group.
However, the data is showing an increasing proportion of households across other income brackets who are becoming long term renters. Home ownership is becoming less achievable for growing numbers of people. And as a result, the nature of renting is changing from one which has traditionally been transitional, to one which is long-term and permanent for many households.
The demographics of who is renting is also changing. In the 1980s, the largest group of private renters in Queensland were single person households. Now, it is families with dependent children. In Queensland, families represent around 60 per cent of all private rental households. And as we all know, families with children are particularly at risk of struggling to control their energy costs.
At the same time, there are also increasing numbers of aged pensioners who are likely to remain in private rental accommodation as they age.
And private rental accommodation is by far the most common form of renting for these groups. Only 4 per cent of all Queensland households rent in social housing. The vast majority – almost 85 per cent of renters – live in private rental accommodation.
So rates of home ownership are increasingly relevant to energy policy as market reforms and technological developments seek to offer consumers greater choice and control over their energy use. A range of new products and services, such as solar panels, smart meters, load control devices and battery storage, provide consumers with the opportunity to control their energy costs like never before. Significant increases in energy prices over the last ten years has meant that many consumers have taken up some of these opportunities with great enthusiasm.
However, in many cases, uptake of these products and services requires electrical work to be undertaken, or for changes to be made to the structural aspects of the home, to home fixtures or fixed appliances. And these are factors which renters have little to no control over. As technologies become more closely integrated into the home, the well-established issue of the ‘split incentives’ between renters and landlords is becoming more critical.
I’d like to share a few statistics from the Queensland Household Energy Survey which is conducted annually by Energex and Ergon Energy in Queensland. They surveyed over 4,000 Queensland households and identified that 40 per cent of owner-occupiers reported having solar panels, but only 4 per cent of renters.
89 per cent of renters said both they did not have solar panels and did not intend to go solar in the next two years. 84 per cent of renters cited the reason for that being because they are renting.
Renters also appear to have much lower awareness of energy related features of their property – for example, 41 per cent of renters reported that they did not know whether their property was insulated, compared to only 6 per cent of homeowners who did not know.
Last year, QCOSS conducted a survey of around 200 Queensland renters which found that three quarters of respondents did not consider the energy efficiency or energy supply arrangements of their property before entering into the lease. Some of these were social housing tenants who have no choice. But the most common reason given by private renters was that there was limited availability of rental properties for them to take so they couldn’t afford to be choosy. Others said they did not know what to look for or had not been given enough information, or enough time to make an assessment of the property’s energy efficiency.
Renters are over-represented in housing types such as apartment complexes where energy services can be varied and complex. For example, one case study gathered for our research, a Brisbane lady and her son, were living in a home under the National Rental Affordability Scheme and they reported paying separate bills for her electricity, gas, bulk hot water and centralised air conditioning. She had multiple sets of supply charges and inconsistent access to energy consumer protections across those services. It was certainly not a “consumer driven” choice for her to receive her energy services in this way.
Situations like this can quickly get further complicated by the fact that some services under the Australian Energy Regulator’s Exempt Selling Guideline are also influenced by jurisdictional housing legislation. In Queensland, as I’m sure there is in other states, there is a complex web of state-based housing legislation which can influence the outcomes for renters in terms of their energy costs.
For example, a renter living in a Queensland apartment complex supplied with energy, via an embedded network, can face different electricity charges and consumer protections depending on whether their situation comes under The Residential Tenancy and Rooming Accommodation Act, The Body Corporate Act, The Retirement Villages Act – or The Manufactured Homes Act – to name a few.
Each of these acts applies different requirements on the energy prices to be charged to renters in embedded networks.
However even if housing policies do not explicitly mention energy charging, housing policy still has a significant impact on renter choice and control as it sets the conditions under which renters and landlords interact.
Research released last week by Choice, National Shelter and the National Association of Tenant Organisations, highlighted that Australia has poor protection for tenants and their rights compared to other countries. They found this is resulting in poor outcomes for renters, such as rental properties not always being in an acceptable condition, landlords not always being responsive to requests for repairs and maintenance, and tenants being reluctant to ask for repairs in the first place because they are concerned about eviction or rent increases.
In relation to the energy market, tenancy law can influence whether or not renters are able to get faulty fixed appliances repaired or replaced in order to control their energy use; whether they have a choice around their supply arrangements; whether they are given information to make informed decisions before entering into a lease. Whether they are given the time and opportunity to assess the features of the property before the sign on to a lease; what level of control they have to make modifications to the home at their own cost; and whether they are willing to risk asking for modifications or repairs in the first place.
The length of a lease has an impact of energy use and costs, as it can influence how strongly a renter values particular factors or features of the property they rent, or whether or not they might wish to invest their own time or resources into making improvements to the property.
The median length of private rental tenancies in Queensland is only around 13 months. So, even if a renter wishes to respond to price signals by investing in improvements to a property they rent, the poor security of tenure reduces the payback period available to make those bigger investments worthwhile.
In most instances, the lack of tenant protections means that renters are typically not willing to even ask their landlord for permission to make changes to their property. And if they are not sure they can make a particular change, they will err on the side of caution to avoid risking their tenancy. An example, we have seen this happening is with the Queensland market-led rollout of smart meters in Queensland – where there is a strong perception amongst renters that will require landlord permission in order to initiate a change to their meter – as is required for other fixtures on the home. This makes them hesitant to participate in that market- even though they may be freely able to do so.
In our survey of renters, more than one third reported that they haven’t asked a lessor to make improvements to reduce their energy bills as they do not want to do anything which might put their tenancy at risk.
As the energy market evolves, the scope of the issues we are considering here today has shifted beyond just a narrow energy policy conversation. State-based housing policy and tenancy legislation can have a significant impact on the level of choice and control that renters have over their energy costs.
This is problematic for our energy market stakeholders who seek to develop nationally consistent policy. Energy policy is undertaken at a national level mostly, whereas housing policy varies considerably from state to state.
While we are of course here today to talk about energy, we are here to focus also on a “consumer-driven future”.
From the consumer perspective, there is a relationship between housing tenure, tenancy protections, energy consumer protections and energy market development and innovation. With the increasing focus on consumer choice and control in the energy market, renters are a distinct group of customers, who need targeted solutions to address the issues that emerge as a result of their housing tenure.
As the proportion of consumers who rent continues to grow, the solutions we seek may not always be found within the domain of energy policy. For renters at least, a consumer driven energy future will require energy policy to be closely integrated with housing policy to ensure they have the opportunity to exercise choice and control and benefit from energy market reform and innovation.