The AER is responsible for assessing the annual Customer Service Incentive Scheme (CSIS) performance of the electricity Distribution Network Service Providers (DNSPs).
The CSIS was introduced in July 2020 and is designed to encourage electricity distributors to improve their engagement with their customers. This is achieved by distributors undertaking consultation with their customers to identify services their customers want to improve, and then set targets and incentives to improve those services based on customers’ preferences. The distributors may be financially penalised or rewarded depending on how they perform against their customer service targets.
The CSIS has 4 principles that reflect the necessary components of an incentive scheme which cover:
- performance parameters – what customers want to be incentivised
- measurement methodology – how performance is measured
- assessment approach – how performance is rated, and
- financial component – how penalties/rewards are calculated and applied.
For the CSIS to be applied, incentive designs must meet the schemes' principles. Importantly, we will not apply an incentive design unless a DNSP can demonstrate that its customers support the incentive design through genuine engagement.
Application
The CSIS is applied at the discretion of the AER to a DNSP in its distribution determination. Since this is a new scheme, it currently only applies in Victoria. We expect most, if not all, DNSPs will be seeking to apply this scheme in the next rounds of regulatory proposals.
Details on the Victorian DNSP's individual CSIS applications are available at the relevant DNSP's 2021–26 determination page.
- AusNet Services determination 2021–26
- CitiPower determination 2021–26
- Powercor determination 2021–26
- United Energy determination 2021–26
Outcome 2022–23
The AER has approved a total of $5.98 million for these Victorian distribution network service providers (DNSPs) due to their efforts to improve their customer service throughout the 2022–23 regulatory year. The breakdown of these incentives for each DNSP are:
- AusNet Services $296,225
- CitiPower $1,677,949
- Powercor $1,643,886, and
- United Energy $2,364,501.
Distributors will obtain these incentives as a result of implementation of new programs, IT solutions, and internal practices to improve their customer communications and complaints management. The cost will be recovered by DNSPs through Victorian consumer energy bills as part of their annual pricing proposals for 2024–25 regulatory year. There is no material impact on consumer bills as result of the CSIS outcomes for this year.
As part of our assessment, we have also decided to suspend the complaints performance parameter for AusNet Services because the data used to measure this performance indicator was incorrectly collected by the distributor. AusNet Services' outcomes were therefore calculated on its remaining three parameters (communication on planned outages; communication on unplanned outages; and customer service for new connections). AusNet Services has also elected to forego the recovery of the $185,877 for good customer service performance for unplanned outages during 2022–23.