Australian energy retailers turn to AI to cut costs

Australian energy retailers are increasing their use of artificial intelligence and automation in customer service as the sector faces pressure to cut costs and compete more aggressively on price.

Richard Valente, Vice President of Customer Experience Strategy at TP in Australia, said energy companies were moving faster on AI than other industries because of pressure from governments and consumers to reduce costs. The central question for retailers, he said, was what customers were prepared to trade off in return for a cheaper energy deal.

Households have faced higher electricity costs despite falls in regulated prices, as retailers lifted daily usage and supply charges in response to higher underlying costs. That has sharpened the focus on operating expenses across the sector, including call centres and customer support functions.

Valente said retailers were looking at automation to lower the cost to serve without removing access to human help when customers need it most. Routine billing queries and simple requests can be handled more quickly by automated systems, while more difficult cases can be directed to trained staff.

"Energy companies operate in a highly competitive market, with customers increasingly willing to shop around. Retailers must identify what consumers value and invest accordingly," Valente said.

He added that the energy sector was showing a stronger appetite for AI than many other parts of the economy.

"There's no doubt we are seeing the energy sector looking at AI more aggressively than other industries because it is under constant pressure from both government and customers to reduce costs," Valente said.

The current structure of customer service in energy helps explain why companies are examining where automation can be introduced. Across TP's energy and utilities operations, 82% of supported interactions take place through voice channels, with 16% handled through back-office channels and 2% through social media assistance.

That mix suggests many customers still prefer to speak to a person, especially when an issue is complicated or urgent. It also means support operations can be expensive, particularly when retailers are handling large volumes of basic enquiries that could be resolved more simply.

Voice still matters

Valente said there was little sign that customer service in the sector would become entirely digital, even as AI adoption rises. In his view, the more likely model is a blended system in which automated tools manage simple, repeatable tasks and staff focus on interactions that require judgement or empathy.

"Reducing the cost of operations can give retailers greater flexibility to compete on price and potentially pass those efficiencies on to consumers. However, customers shouldn't have to choose between a cheap energy plan and a good customer experience," Valente said.

He said the nature of many energy queries made that distinction important: customers will accept speed and automation for a straightforward problem, but expect a person to step in when an issue becomes complex.

"Nobody wants to spend 20 minutes waiting on hold to ask a simple question about their bill. But if there's a complex billing problem or something has gone seriously wrong, that's exactly when you want a skilled customer service expert involved," Valente said.

Hybrid model

Another part of the cost debate is staffing structure. Valente said retailers were assessing hybrid workforce models that combine Australian-based teams with offshore or nearshore operations, matching the level of support to the complexity of the task.

That approach could allow companies to reserve local specialist staff for difficult cases while using lower-cost teams and automated systems for more standard interactions. The model is already common in other consumer-facing sectors, but energy's reliance on voice and the sensitivity of billing complaints make the balance more difficult.

"The choice doesn't have to be between a person or a machine. The best customer experience is likely to be both. Let technology do what it is exceptionally good at - speed, consistency and handling volume - while people focus on the moments where empathy, judgement and problem-solving matter most. Combining AI and automation with human expertise, and Australian-based teams with offshore or nearshore operations, helps match the right resource to the complexity of the customer's needs. The goal should be to make every dollar spent on customer service work harder," Valente said.

As competition in the Australian energy market intensifies, retailers are likely to face closer scrutiny over the economics of the entire customer journey, from billing and onboarding to complaints and account changes. Pressure to offer lower prices without undermining service standards means back-office efficiency and frontline support models are becoming a more significant part of retail strategy.

"Retailers are seeing that they can use AI to remove unnecessary costs and make everyday interactions easier, and everyone can benefit," Valente said.