Household Segments for Tariff Reform

Working with CitySmart, Brisbane City Council’s sustainability agency, this research program investigated the changing needs of residential energy consumers in the digital information age, with a particular focus on the implications for tariff reform in the electricity sector. Tariff reform refers to changes to electricity pricing on the base of cost-reflection to manage peak demands for electricity. Accommodating peak demand events requires Australia’s electricity system to be able to avoid outages and cope with the additional demand. Although peak demand events may not occur often, networks must be able to reliably respond to the pressure and provide consumers with safe and reliable power (Origin Energy, 2015). One pricing approach that resonates favourably with consumers is time-of-use pricing (CSIRO, 2015) and so that was the focus of this study.

The rise of the digitally-connected consumer and the opportunities that digital channels present for reaching and engaging this vast and growing audience were a core focus in this project, specifically we investigated consumer responses to technology solutions for time-of-use pricing such as track-and-monitor devices, augmented reality or wifi devices. Conventional education and awareness approaches in the electricity sector need to evolve to better meet the needs of today’s digital consumer, and most previous approaches focus on the individual consumer, despite the fact that electricity is consumed at the household-level. This report therefore responds directly to calls for more segmented approaches in the electricity field by empirically (qualitatively and quantitatively) developing a segmentation model of Australian households. We found six household segments, and these were defined using animal symbolism to ensure broad applicability across gender, family-type, age, and race. The six segments were: the Ant Colony, the Bee Hive, the Flock of Geese, the Wallabies, the Domestic Cats, and the Lion Pride.

This project built an evidence base around the needs and unique characteristics of different consumer household segments, as well as their desired learning needs and the behavioural changes required to overcome perceived barriers. The outcomes of this project can be used to support policy development and consumer education programs for the National Energy Market.

Guiding Theory:

• Mintzberg’s Theory of Organisations
• Household Decision-Making