Electricity Smart meters

[bripenny]

Hi, I have heard a lot of comments on Smart meters and how once switching to a smart meter the consumer finds their electricity bill is quite a bit higher. Refer to Energy Price Fact Sheet below, these prices are before the July price rises of up to 20%.
As you can see the peak rate changes from 26.72571 cents per kWh all day to 53.98844 cents per kWh with a Smart meter during peak and Smart Meter shoulder rates change to 21.62446 cents per kWh. Peak 6hrs and shoulder 9hrs = 15 hrs per day. Off peak is from 10pm & 7am, Monday to Sunday = 9 hrs per day. This is generally when everyone is asleep except maybe for shift workers
It would appear that the electricity suppliers are the smart ones and the consumer the fool when switching to a smart meter. Hourly peak cost no smart meter = 26.72571 cents per kWh and smart meter average cost per hr peak & shoulder 34.57005 cents per kWh.

Electricity Charges: Peak
Applicable Charges Price (excl. GST) Price (incl. GST)
Usage - First 10.9589 kWh of Peak usage per day 24.2961 cents per kWh 26.72571 cents per kWh
Usage - Next 10.9589 kWh of Peak usage per day 23.747 cents per kWh 26.1217 cents per kWh
Usage - Balance of Peak daily usage > 21.9178 kWh 23.2079 cents per kWh 25.52869 cents per kWh
Daily Supply Charge 76.275 cents per day 83.9025 cents per day

Electricity Charges: Residential Time of Use (Smart Meter costs)
Applicable Charges Price (excl. GST) Price (incl. GST)
Usage - Peak usage per day – 49.0804 cents per kWh 53.98844 cents per kWh
Between 2pm & 8pm, Monday to Friday AEST / DST

Usage - Off-Peak usage per day (if applicable) 10.9429 cents per kWh 12.03719 cents per kWh

• Between 10pm & 7am, Monday to Sunday AEST / DST

Usage - Shoulder usage per day (if applicable) 19.6586 cents per kWh 21.62446 cents per kWh

• Between 7am & 2pm and 8pm & 10pm Monday to Friday,
  7am & 10pm Saturday/Sunday and
  Public Holidays AEST / DST 19.6586 cents per kWh 21.62446 cents per kWh
  Usage - Dedicated Circuit usage per day (if applicable) 8.6648 cents per kWh 9.53128 cents per kWh

Daily Supply Charge 90.584 cents per day 99.6424 cents per day

[bripenny]

I missed an important point. The retired who are home during the day and sleep most of the night would be paying more for their electricity using a Smart meter and yet most are pensioners on low income. A sad state indeed when our elderly are neglected. I have often heard in the past how some elderly people avoid turning on the heater as they can’t afford the electricity cost.

[gordon]

Another “feature” of the smart meter is the ability of the electricity provider to turn your power off remotely when bills are late being paid etc. The smart meter makes it so much easier than sending a tech around to do it manually, and I read that it has seen a significant increase in the number of disconnections made in Victoria.

If you are able to install a PV system, you can make a big hole in the expensive peak rate usage - solar becomes even more economically viable when the daytime price per kWh is higher, with payback times in the order of 5-7 years being typical.

[allandorrington]

Hi bripenny:
Sorry, but I do not see the point of your post? I suspect that it is a matter of not understanding how the various rates apply, plus there are a lot of nonsense conspiracy posts around that totally misrepresent ‘time of use’ meters.
Warning: Following is a longish detailed explanation, I apologise if it is boring but this is a highly complex issue - and this is the ‘simple’ version.

The charges for ‘peak’, shoulder’ and ‘off peak’ power reflect the changing cost for power charged by the generators (power stations). The cost for power is determined by a number of factors (see the link to NEMO at the bottom), but generally the higher the demand the higher the price. This is because as the power demand increases more generators are needed and the generators will BID to supply power at a higher price - it is a competitive process. The price rise for two reasons: one is that the market needs the power and therefore must buy what is needed; and second, as because the less efficient generators are needed, and they require a higher rate to make it worthwhile for them to operate.
When you mention night time when most people are asleep, the power demand is the lowest, that is when only the most efficient generators operate and many (most) generators remain idle. It can happen that the demand is so low that the generators supplying power operate at a loss just so they can keep running. In between to ‘peak’ and ‘off peak’ load times there is a middle ground, or "shoulder’.
The electricity retailers, the people you pay for your electricity, buy the electricity from the market operator (NEMO) and then sell it on to you. Just like groceries from a shop they add on their own extras and margins to make a profit. However, when the retailers buy their electricity the cost varies every 30-minuts and can change quite dramatically - up and down. It is quite impractical for the retailers to reflect these changes in cost, so they have a fixed rate for the three time periods.
One of the reasons ‘time of use’ rates was brought in was to bring a market force onto people’s usage of power. With a ‘flat rate’ charge it does not matter to you what is happening to the system because you pay the same rate. This has resulted in peak demand is growing uncontrollably to the extent that the generators are struggling to cope with it, resulting in the near miss power failures in NSW, SA and Victoria last summer. So, the peak rate encourages people to use power at other times where possible. This is not something that can be done with all power usage, some things, like cooking dinner are at particular times - that is why peak loads happen!

The “daily usage charge”, also known as “network charge” or “supply availability charge”, does not go to the electricity retailer, but to the owners of the distribution system, or ‘poles and wires’. Sometimes it is the same entity, but technically they are separate arms. This charge pays for all the maintenance and new work on the distribution system. It is a flat rate, so everyone pays the same amount no matter how much electricity you use - except for Victoria where you pay more if you have solar power, this is covered in detail under a separate line of comments.

At this point I would like to say that the above is NOT meant as a defence of electrical retailers, it is meant as an explanation of how the different electricity rates work and it time of use not a rort in itself. I do believe that electricity costs in the past was way too low and users were shielded from true cost by government subsidies. However, I now believe that privatisation has lead to over charging and in some cases price gouging!
The price for electricity varies dramatically between states and how the various rates operate is different as well. In the ACT where I live, there is a morning ‘peak’ as well as the evening ‘peak’ and the times for all rates are the same every day of the year - in NSW there is no “peak” on weekends or public holidays. However, ACT (semi-government) costs are about half of what is charged in Victoria (fully private) and will remain so even after the latest price hike!

And finally: for anyone interested here is a link to the Australian Energy Market Operator (AEMO) - the ‘Price and demand’ tab shows what is happening with power today, with a selection for each sate. If you want to see something scary select “Medium Term Outlook” then look at Victoria and SA:

Australian Energy Market Operator

[bripenny]

Hi, Thank you for your detailed reply. The point I was trying to make was that a Smart meter will lead to a higher electricity bill. I fully understand that as demand increases electricity costs increase, no argument on this point. For the majority of people who are home during the day, pensioners, unemployed, retirees, parents looking after babies and children when they come home from school this is their electricity usage time, the peak time followed by shoulder. Dishwashers, washing machines, dryers and ironing can all be scheduled for shoulder time or off peak from say 5:00am to 7:00am. However, the evening meal, using a heater in Winter and watching TV etc cannot be scheduled to off peak times. So the majority of electricity is used in peak time, high demand and higher cost. I have heard of pensioners not turning on heaters in winter for fear of the electricity bill and this is a big problem.
You are right in the Government no doubt subsidised electricity pricing. It could also be argued that the Government did not have long term planning for population growth, increased technology and the resultant increased electricity demand. We are also a society that is driven by technology and technology demands electricity. What is the solution? That is the 64 million dollar question. Maybe, and I mean a big maybe, should we have a nuclear power plant, not a preferred option. One thing is for sure if the suppliers can increase prices they will whether it be warranted or not. As individual households we have to do what we can to keep our costs under control. I believe that at the moment I am better off without a smart meter.

[gordon]

@bripenny

Maybe, and I mean a big maybe, should we have a nuclear power plant,

Not if you want cheaper electricity, nuclear power is significantly more expensive than solar, wind, coal and even gas, not to mention the potentially catastrophic environmental problems, and no cheap/easy/secure way to dispose of and store the radioactive waste.

I personally make use of the existing nuclear fusion reactor in the sky for 99% of my energy needs

[allandorrington]

Hi bripenny
Time of use was never meant as a cost saving measure, it is there to encourage people to move their power consumption away from 'peak’times. If you continue to use power as always then your cost will increase, only if you change the way you consume power will you potentially save power - that is the whole purpose of it.
The entire power system is designed to cope with a very few weeks of the year when the the demand for power is extreme. The whole reason for the ‘gold plating’ of the poles and wires was to upgrade the distribution system so it would not fail during this extreme days. If people stopped using as much power during peak times then there would not be so much need for the electrical system to be upgraded. These extreme days are now happening during summers as more people use air conditioning to cool. In the past it was during winter for heating. so, the more power people use at other than ‘peak’ times the cheaper the power will be in future.
You mention dishwashers and washing machines, these ware the very things that can be timed to operate at times other than ‘peak’, i.e. either ‘shoulder’ or ‘off peak’ times. Yes it can be annoying but if you do not change behaviour there is no chance of saving money.

This has absolutely nothing to do with how power is generated. Whatever the generation used (coal, solar, wind, even nuclear) if peak power continues to rise, so will costs rise for everyone whether we have 'smart meters’e or not! Also, I AM a pensioner, so being able to reduce power costs by timing when I use appliances is very important. There is a need to prepare dinner at a particular time, most of the population has no choice in this. However, if there is no incentive to use less power during ‘peaks’ by avoiding doing some things (like do the washing) the costs will continue to rise!

Remember, the problem with expensive electricity and potential blackouts exists NOW and that may be exacerbated by a shortage of generating capacity. So, building large centralised power stations whether coal fired or nuclear will not help, it will take TEN years before they will generate even 1-Watt of power - that is assuming everything is in place to start work right now, otherwise add even more years. Something must be done now, one of those is for people to cut power consumption during peak times and that will be more likely to happen if there is a cost incentive to do so!

[bripenny]

Hi, As I live in a strata complex I am not able to take advantage of Solar power. So like all the other people living in strata we are not able to take advantage of solar power generation. There is just not enough roof space. I agree nuclear power generation is not something I would like to see. We need more power generation though. Closing coal power generation is good for the environment. With the population continuing to grow and closing coal power generation without replacing that lost electricity generation is only going to lead to increased power demand on the current power generators. The Federal Government has now decided to expand the Snowy River power generation ( a 10 year plan) and talk about gas. We are I think the biggest supplier of natural gas in the world and we sold so much of our natural gas overseas that we did not have enough for Australia’s own needs so we now buy our excess gas demand from the world market at a much higher price. Again the Federal Government is intervening to ensure their is more natural gas for domestic supply. These Government actions have only come about due to the electricity supply problems and blackouts. The Governments of Australia are supposed to be doing what is good for the country and planning for our future. I only see reaction to current problems and not proactive future planning when it comes to electricity generation and road infrastructure for that matter. Why do the Governments not do more to encourage use of public transport, not using clothes dryers, and changing laws to encourage improved energy efficient new housing being built as an example. We build all these high rise apartment blocks but there are no clothes lines.

We do not have a smart meter but we still strive to keep our electricity use low. We still wash and iron in the shoulder demand time, we do not own a clothes dryer, we use led globes throughout our home and when replacing appliances we look for the most energy efficient as our first priority. We have installed a heat pump water heater and we do 90% of our cooking in a microwave oven. We still use blankets when watching TV rather than turn on a heater (this may need to change if it gets too cold) and in spite of all our efforts our electricity costs continue to increase and this time by 20% from July 1.

[PhilT]

Hi Allan, a nice overview but it appears one sided in spite of your assurances it is not a defence of the utilities. It describes what they want us to know, not what their accountants know. It omits reference to how energy is bought and sold beyond spot pricing as well as their P/L.

Futures and forward pricing contracts act as a hedge. A more complete description of the economics of the supply process is here and includes a short overview of futures and hedging contracts.

My opinion, based on business rather than spot supply and demand, is that except in unusual circumstances time-of-use pricing has turned into a furphy rather than a reason and is a mechanism to increase average prices without being seen to do so. If the utility gets its supply contracts wrong that should be their problem (reference the NAB P/L overview below). They usually get it right, hence their profitability in spite of the “snow” to convince consumers the companies are doing it hard.

To wit (excerpted from a NAB report last year) : AusNet recently reported a 4.6% rise in revenue for FY16, to $1.92 billion, and an underlying profit rise of 20%, to $326.2 million. Total dividend rose by 2%, from 8.36 cents in FY15 to 8.53 cents, which disappointed analysts.

DUET Group has earned security holders a total return of 16.6% a year over the last five years, but has struggled recently, generating just 5.2% in the last 12 months.

Specialist infrastructure fund Spark Infrastructure has been an excellent market performer, showing total return of 20.7% a year over the last five years, and a stellar 21.7% in the last 12 months.

AGL has generated total return (capital growth plus dividends) of close to 11% a year over the last five years, and really got cracking over the last year, with a return of more than 30%.

Of course those share price and P/L reports are not always just about electricity and include expansions and everything else, but. If one wants to isolate any part of their operation, eg electricity, that could be (flippantly) taken as akin to K Mart claiming they are losing money because of the size of their customer toilets, regardless of their turnover and profitability.

There are many resources on the internet that show Australian costs are below the OECD average (often sites representing our energy companies) and others that show the underlying pre-taxed costs are about the highest, so I’ll leave that discussion for another day. As for infrastructure, most businesses are expected to pay for it out of the P/L, not by a customer levy by whatever name. The rising profitability could imply they are paying dividends not investing. Just sign me cynical.

[bripenny]

A great post. Thank you.

[bigalan7]

Yes great to how we are getting ripped off after signing up the precentage goes up in price and where the profits go. We get sold out and goverments privitise it.

[gordon]

@bripenny

Hi, As I live in a strata complex I am not able to take advantage of Solar power

That’s not necessarily the case, see this article:

Get in on the ground floor: how apartments can join the solar boom - One Step...

[draughtrider]

@gordon

[…] If you are able to install a PV system, you can make a big hole in the expensive peak rate usage - solar becomes even more economically viable when the daytime price per kWh is higher, with payback times in the order of 5-7 years being typical.

A little over two years for the one I just put in, but it’s only 5100W and its rather sunny here …

[PhilT]

Ah Melbourne, you can see the cloud cover over the metro area from about about 45 minutes prior to landing

[grahroll]

Currently there is a Class Action over Qld Electricity Pricing https://www.qldenergyclassaction.com.au/

As the investigation of this has progressed it is alleged there were a series of faulty smart meters installed by energy providers. Having received an email I thought it might be helpful to share it in case anyone had been concerned with their meter reading amounts. I have removed some of the message as it would be seen as directing traffic to a business.

Dear QLD Energy Class Action Group Member,

Our investigations into Qld’s electricity issues have uncovered a series of faulty smart meters that were installed by energy providers in Australia.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Regards
xxxxx

xxxxx xxxxxxxxx
Litigation Group Project Coordinator

[Fred123]

We received this hypocrisy from Ergon yesterday.

Our meter was changed from an analogue unit to a non WiFi smart meter when we bought our current home in 2015, and we did not need to have it changed when we had solar installed in 2019, unlike our neighbour.

So Ergon would now like us to change so we can get our bills in “smaller, more manageable amounts.”

No mention of Ergon getting paid some 2 months earlier or saving money by making the meter readers redundant.

And this garbage.

“We’ll install your meter with no upfront cost and you won’t be required to pay any additional meter charges over and above Ergon Retail’s published meter charges for all customers.”

A late family friend worked at the forerunner of Ergon in Cairns as a meter reader after serving in WWII until he retired, and I would not want to put any such person out of a job.

And it is “great” to see that Ergon’s business address is now in Rockhampton, closer to BrisVegas than Cairns.

Sorry Ergon but you can put your new meter somewhere else.

[syncretic]

@Fred123

A late family friend worked at the forerunner of Ergon in Cairns as a meter reader after serving in WWII until he retired, and I would not want to put any such person out of a job.

If Ergon kept their prices up due to the salary cost of carrying supernumeraries you would be the first to complain that they were inefficient and not doing enough to keep prices down.

There is more to deciding on policy change or technology adoption than the simplistic question of whether somebody says it will cost any jobs, though the argument is often advanced by opponents to such change, whether it be true or not.