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## Providing an excellent experience for our customers 

AGL retails natural gas, electricity and energy related products and services to almost 3.5 million customers across New South Wales, Victoria, South Australia and Queensland. Retail Energy sources its energy from AGL’s Merchant Energy Business. 

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## Financial Performance 

Retail Energy’s Operating EBIT of $332.8 million was up 9.1% on last year due mainly to improved margins and increases in customer numbers. Business operating costs increased by 10.7%, mainly due to the additional campaigning and advertising costs incurred to respond to the increased intensity of competition in Australian energy markets, and the higher amortisation of costs incurred in increasing our electricity customer base in New South Wales. 

## Main achievements in 2012 

During the year AGL acquired over 180,000 new customer accounts. Of these, 152,000 are new electricity customers in New South Wales, as a direct result of the three year organic growth strategy we commenced in 2011. Our electricity customer base in New South Wales now exceeds 620,000, which puts us on track to achieve the target of at least 800,000 customers by FY2014. The number of “dual fuel” customers also increased by over 10% during the year to 1.62 million. 

AGL’s Energy Online service has grown steadily during the year, allowing customers to switch to AGL, manage their accounts or move home at their convenience. Of the 300,000 registered users, more than half receive their bills electronically and self- serve on simpler transactions. 

AGL is providing energy solutions to help customers manage their energy consumption and help reduce their energy bills. AGL’s Smarter Living Centre and Smarter Living Store were launched in October 2011. They offer energy efficiency products, personalised services and practical solutions to reduce energy use. 

During the year, AGL introduced a range of additional initiatives to attract and retain customers. In April 2012, AGL entered into a partnership with the Coles flybuys loyalty program which rewards customers for everyday spending on electricity and gas. To date, more than 200,000 of our customers have linked their accounts to flybuys . 

Changes were made during the year to a number of the call handling processes at our Customer Service Centres. These changes have resulted in improved first 

call resolution of customer enquiries and a reduction in the time taken to respond to, and deal with, customer calls. We have started to see the benefits of these improvements through increased levels of customer satisfaction. 

AGL’s share of complaints made by customers to the Ombudsman in each State was also significantly below market share. 

In 2012, AGL received an award from independent research company Canstar Blue for most satisfied customers, electricity providers – New South Wales 2011. 

## Key challenges 

AGL operates in some of the world’s most competitive retail energy markets, with Victoria having the highest level of customer switching or churn in any deregulated energy market globally. 

AGL’s consumer market churn rate continues to be significantly lower than the total market. AGL’s actual churn rate improved with a reduction year on year from 16.2% to 15.4%, despite the total market churn increasing from 20.0% to 20.3%. 

