Policy in the Pub: Consumer engagement in Victoria’s retail electricity sector


From: Wednesday September 18, 2019, 5:30 pm

To: Wednesday September 18, 2019, 6:30 pm

Consumer switching behaviour in Victoria’s retail electricity market

Trends in the level of consumer engagement in retail electricity markets are routinely assessed using the annual consumer switching rate; however, the rate of switching is principally driven by consumers changing address rather than consumers proactively seeking out better deals. After controlling for this, and other factors that can introduce upward biases, we find the level of consumer activity is typically around one-third to one-half of the crude annual switching rate.  Furthermore, the rate of switching retailers tends to be positively correlated with annual electricity consumption.

Despite meaningful increases in consumer engagement during the past two years, the level of long-term disengagement from the retail electricity market is rising over time. Our analysis also shows long-term disengaged consumers most at risk of paying higher than necessary prices for their electricity are more likely to reside in postcodes with higher socioeconomic status, and have lower consumption, relative to more active electricity consumers.

About our speaker

Andrew is a public policy professional with the Department of Treasury and Finance, Victoria. He has extensive experience working on energy, environment and resources policy and in applying economic design principles to public policy problems. Before joining the Department of Treasury and Finance, Andrew worked in environment and biodiversity policy at the Organisation for Economic Cooperation and Development and in a range of other roles in Australian state governments.


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