Competition and switching in the residential electricity market in Australia, 2007

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• ANALYSIS
  • Australian States continue to exhibit amongst the world' s highest levels of customer switching and churn
    • South Australia and Victoria lead the way in customer switching in Australia
    • Globally South Australia and Victoria have comparable switching rates to highly competitive markets such as the UK
    • Switching and churn rates have been shaped by markedly different market conditions across the competitive States
      • Rising regulated retail prices
      • Dual fuel offerings
      • Aggressive new entrants
    • Wholesale prices are expected to have a major influence on near-term acquisition strategies
  • Driving customer switching - results from an Australian household customer survey
    • Customers want lower prices and other financial incentives, but convenience of dual fuel also key
    • Retailer representatives are core to facilitating switching
    • But with one quarter of switchers considering switching again, having won the customer the focus needs to turn to retention
    • Convincing non-switchers increasingly means reducing the inconvenience of switching supplier
    • Green energy and customer service levels more influential for non-switchers, but price still key
    • In targeting customers in the future, telemarketing is, and will remain, unpopular
  • Expectations for retail competition in Queensland
    • Full retail competition in Queensland commencing on 1 July
    • Consumers keen to seek out a cheaper deal
    • But high wholesale prices will hinder new entrants' discounting
• ACTIONS
  • Driving customer acquisition
    • Dual fuel offers are the most attractive non-financial inducement to switch
    • Door-to-door by far the most effective method and forecast to continue to be so
    • Inconvenience as a key factor behind non-switching
    • Green energy at no extra cost a key factor for non-switchers
  • Penetrating the newly opened Queensland market
    • South-east Queensland expected to see most intense competition, but stifled by wholesale prices
• APPENDIX
  • Definitions
  • Methodology
  • Further reading
  • Sources and relevant links
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: On a scale of 1 to 5 with 1 being irrelevant and 5 being critical, how important/influential were the following in your decision to switch electricity supplier
    • Table 2: Average rating of importance/influence of incentives to switch electricity supplier - by State
    • Table 3: For the most recent switch, which of the following were sources of information (tick all that apply)
    • Table 4: What channel initiated your most recent switch to the new supplier (please choose one)
    • Table 5: When would you consider switching again?
    • Table 6: If you did not switch, what were the main reasons (tick all that apply) - State
    • Table 7: How important/influential would the following be in your decision to switch supplier in the future? Please rate 1 - 5 where 1 = irrelevant and 5 = critical
    • Table 8: Through which of the following channels would you be willing to be contacted by retailers with regards to future offers (Tick all that apply)
    • Table 9: Through which of the following channels would you be willing to be contacted by retailers with regards to future offers (Tick all that apply) - by State
    • Table 10: Through which of the following channels would you be willing to be contacted by retailers with regards to future offers (Tick all that apply) - by State
    • Table 11: Full retail contestability will be coming to Queensland in July 2007. Which of the following statements best fits your intentions
    • Table 12: Survey sample by State
  • List of Figures
    • Figure 1: Switching rates in the Victorian, NSW and South Australian power markets - small consumers, 2003-2007
    • Figure 2: On a scale of 1 to 5 with 1 being irrelevant and 5 being critical, how important/influential were the following in your decision to switch electricity supplier
    • Figure 3: Average rating of importance/influence of incentives to switch electricity supplier - by State
    • Figure 4: Channels used to initiate switching by State (VIC, NSW and SA)
    • Figure 5: If you did not switch, what were the main reasons (tick all that apply)
    • Figure 6: What is the likelihood that you would switch for a 10% saving?