Published Date: 2017/03/27

5-Minute Insights: How Consumers View Electricity and Gas Deregulation (by DEMS)

Yasuaki Matsumoto

Dentsu Inc.

#Management/Business#Energy Deregulation#Consumer Awareness Survey

Last April saw the start of "retail liberalization for household electricity," and this April marked the beginning of "retail liberalization for household gas."

Dentsu Inc.'s energy-related cross-functional team "DEMS" and DENTSU SOKEN INC. conducted the "4th Survey on Consumer Awareness Regarding Energy Liberalization" in November 2016, targeting 5,600 people nationwide. We previously released information on consumers' awareness and actions related to electricity liberalization. We present that content here in a Q&A format.

【Table of Contents】
▼Q1: How many people actually switched providers after residential electricity liberalization?
▼Q2: What percentage of people want to change their electricity provider or plan, and how satisfied are those who have changed?
▼Q3: Why don't people want to change their electricity provider or rate plan?
▼Q4: What do consumers know about electricity liberalization?
▼Q5: Full retail liberalization of city gas starts in April! What do people want?

Q1: How many people have actually switched providers since household electricity liberalization?

Q1 looks at "How many people have actually switched electricity providers since liberalization?"

Question: After electricity retail liberalization, did you change your electricity supplier or rate plan?
電力小売り自由化後に電力の購入先や料金プランを変更しましたか？

As of November 2016, 7.5% of respondents had "changed their electricity supplier," and 6.6% had "applied to change their rate plan within their existing electricity company." This means a total of 14.1% had made some kind of change, doubling from the 6.7% total recorded in a survey five months earlier.

This figure is not low compared to the EU and the US, which pioneered electricity liberalization. While few people around you may have switched yet, with gas liberalization also underway, the liberalization of household energy is expected to progress steadily going forward.

A1: Approximately 14% changed their electricity provider or plan. This figure doubled in six months.

▼Q2: What percentage of people want to change their electricity provider or plan, and how satisfied are those who have changed?

Q2 consists of two parts: "What percentage of people want to change or are considering changing their electricity provider or plan?" and "How satisfied are those who have changed?"

Question: Do you plan to consider changing your electricity or gas provider in the future?
あなたは今後電力やガスの購入先の変更を検討したいですか？

For electricity, 10% expressed an "intention to switch," and even including those "considering switching," the figure was 56%, slightly lower than last time. This slight decline in intention rates is influenced by factors such as the initial wave of switches by those considering it at the start of liberalization having largely completed, and people adopting a "wait-and-see" approach after observing others' changes.

Meanwhile, for gas, 13% expressed an "intention to switch," and including those "considering switching," the figure reached 59%. Here too, considering the current state of electricity liberalization, there is a noticeable wait-and-see attitude.

So, are those who changed their electricity provider or rate plan satisfied with their decision?

Question: Are you satisfied with changing your electricity provider or rate plan? Would you recommend others consider switching?
電力の購入先や料金プランを変更したことに満足していますか？

Among those who changed their electricity provider or plan, 67% reported being "satisfied with the change," while only 4.7% were "unsatisfied."

Furthermore, 41% responded that they would "recommend others consider switching," indicating overall satisfaction appears very high.

Going forward, widely sharing these "voices of satisfaction" from those who switched could help build momentum for greater activation.

A2: 56% of people "want to change or consider changing" their electricity provider or plan. Satisfaction among those who changed is very high at 67%, and they seem willing to recommend it to others.

▼Q3: Why don't you want to change your electricity provider or rate plan?

Part 3 covers two topics: "Why don't you consider changing your electricity provider or plan?" and "What are the experiences of those who switched?"

Question: Why don't you consider changing your electricity provider or rate plan?
電力の購入先や料金プランを変更しない理由は？

Reasons for not considering change include: "Don't understand the benefits of switching" (48%), "Somewhat uneasy about it" (38%), "Prefer the familiar company I've used so far" (34%), and "Concerned about stable supply from new entrants" (23%). This shows that the benefits of switching are unclear and uncertainty is high.

So, how do those who actually switched feel?

Question: How do you feel after switching your electricity provider or rate plan?
電力の購入先や料金プランを変更後、どう感じていますか？

Those who switched are generally positive: "Satisfied with electricity rates" (53%), "Satisfied with services/benefits beyond electricity rates" (40%), "Electricity supply is stable with no worries about outages" (62%), and "The switching process was easy" (66%).

These responses counter the concerns of those who did not switch, highlighting the gap between the two groups.

A3: Reasons for not switching include "don't see the benefits" and "vague unease." However, those who switched feel secure and satisfied, revealing a clear gap between the two groups.

Q4: What do consumers know about electricity deregulation?

The fourth survey focuses on "What do consumers know about the basics of retail electricity liberalization?" We presented nine fundamental points about household retail electricity liberalization and asked whether they were aware of them.

Question: "We'd like to ask about the details of 'retail electricity liberalization for households'. Which of these did you know about?"
「家庭用電力の小売り（販売）自由化」の内容について伺います。

Regarding the nine points, non-switchers showed very low awareness, with one in three people stating they "didn't know any of them."

Non-switchers generally lack knowledge about electricity liberalization. Even for the most commonly known point—"Switching electricity providers won't make power outages more likely; you can use electricity just as before"—awareness was only 40.8%.

This suggests that a lack of basic knowledge is a factor hindering the progress of switching providers under electricity liberalization.

A4: Consumers' understanding of electricity liberalization is still far from sufficient.

Q5: Full retail liberalization of city gas begins in April! What do people want?

The fifth survey examined awareness of the "full liberalization of city gas retail."

Question: Once retail liberalization of city gas begins and you can freely choose companies for both electricity and gas, what would you like to do?
電気とガスいずれについても自由に購入する会社を選べるようになったら？

66% of respondents answered, "I want to consolidate my electricity and gas purchases with one company."

Breaking it down: 13.1% want to consolidate with an electric company, 11.0% with a gas company, and 42.1% haven't decided but want to consolidate with one provider. While they haven't decided on a specific provider yet, there is a clear desire to consolidate.

A5: 66% of respondents answered that they "want to consolidate their electricity and gas with one company."

The liberalization of retail energy sales for household electricity and gas is expected to steadily permeate society going forward. DEMS and DENTSU SOKEN INC. plan to continue focusing on household energy retail liberalization, conducting research and disseminating information.

<Survey Overview>

●Title: 4th Survey on Consumer Awareness Regarding Energy Liberalization

●Survey Method: Internet survey

●Survey Period: November 18–25, 2016

● Area: 9 Electric Power Company Service Areas (excluding Okinawa Electric Power service area)

●Respondents: 5,600 men and women aged 20–69 nationwide

●Respondent Criteria: Household heads or their spouses who pay their household's electricity bills

●Survey Content: 45 questions in this survey

Basic attributes of general consumers (demographic attributes, family composition, housing type, etc.), actual energy usage (energy supply type, percentage of income spent on energy costs, etc.), knowledge and awareness regarding energy liberalization, status of considering or changing suppliers, general attitudes and awareness trends regarding energy, desired image and services from suppliers, awareness of electric power companies and new power suppliers, process and information sources for changing suppliers, understanding of electricity liberalization content, concerns, etc.

DEMS(DEMS)
Formed as a cross-organizational unit within the Dentsu Group, bringing together energy-related professional members to contribute to the creation of new business for client companies. This initiative responds to the energy industry structure entering its most significant transformation period in history due to the full liberalization of electricity retail in April 2016 and gas retail in April 2017. It leverages specialized knowledge and expertise in "Energy" × "Communication" to provide one-stop services ranging from strategy formulation and product development to advertising communication.