Households are being advised to avoid electricity plans with ‘demand pricing’ as it can be complex and is unsuitable for most residential customers.
Timely advice, noting the tariffs can only be applied to customers with ‘smart meters’. It’s likely too late short of a rethink by Government?
Will there be a fair transition?
Is there a no disadvantage test for customers, given only consumers with Smart Meters will be subject to differentiation on time of usage? The same cannot be applied to the majority of consumers still on the older accumulation metering?
It’s Understood metering and tariff changes are intended to extract a premium from users with greater consumption during the evening peak hours when high cost gas generation is most typical. There is also a social argument against the changes in that they may adversely impact lower income families with both partners working day jobs.
A second point to note is the tariff structures for Cost Reflective Pricing are being applied as agreed to by all the Energy Ministers and the Regulator. It’s not a surprise other than the low key The distributors are now progressively required to introduce billing of the retailers on that basis, where the customers metering provides.
General Comments:
It’s currently up to the retailers to decide whether they use (pass on) the same tariff structure as they are being billed on by the distributor. The retailer may apply a different EG flat tariff when billing those retail customers with smart meters. The AER (Australia Energy Regulator which reports to the ACCC) released this summary in July 2021.
I recently posted this forecast provided to the AER by Energex (SE QLD) which was included in their final approved submission for tariff determinations for 2022-23.
The 2021-22 expected outcome is approaching 400,000 residential customers retailers facing ToU or Demand based tariffs for those premises.
It may be useful, aside from the experts advice to consider how the retailers across all the distributors are responding and their offers to those customers. Many will be on Solar PV plans. Others will be purchasers of new/recently constructed and connected premises.
My personal observations from 12 months prior is that the big retailers were not promoting Demand based plans. This year the offers from Origin and AGL for PV based plans distinguished between, demand based tariffs with moderate offers for feedin, vs flat tariffs with low feedin offers.
P.S.
We’ve one property with PV on a flat tariff and another on a Demand based tariff. The exposure to demand pricing risk is low (accept we are an exception) as our primary peak energy needs are met by NG and solar PV, (no battery). I’d not recommend it for a typical family household that is all electric, especially with an electric oven and induction cooktop, (PV or no PV).
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I suppose it is just another form of gambling. Can you manage your power usage in blocks of 30 minute intervals to beat the bank, in this case the power supplier?
If you can beat the bank, you may save a small amount of money. If you get it wrong, you could loose a lot.
Plenty of businesses recently wish they had never entered into electricity, and probably more damaging gas, demand pricing tariffs.
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The discussion most affects customers with Smart Meters. Although new and existing customers will progressively gain Smart Meters.
A better response might be that some customers will be better off with a Cost Reflective Tariff (demand or ToU) and others will not.
Am I an advocate for Demand tariffs or ToU tariffs.
As a consumer I’m for consumers being better informed and being able to make the best choices. Unfortunately the Industry including all of the regulators and governments involved have agreed to the roll out of CRTs that may benefit some consumers, promoted the tariffs may save those consumers money, and NOT DELIVERED real time metering with the Smart Meters.
I doubt given the technical and financial benefits of levelling grid consumption, the industry nor regulators and governments will walk away from the transition.
I can agree it’s a gamble for >99% of consumers to look at those options, assuming they are given the option of a CRT.
I’d like to drum up more support and consumer discussion towards forcing the Regulator to require distributors to provide fit for purpose and reliable in home (kitchen) real time consumption metering readouts. Preferably as a free offer and as a pre condition of distributors converting any customer connection to CRTs.
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Can electricity demand tariff be managed by a typical consumer ?
It is complicated and difficult to understand, even if you can find anything other than a very general explanation.
As I understand it, in the peak time if your use goes up over some baseline even for a very brief period you get hit with a daily surcharge for a whole month.
Even for someone fairly disciplined in their power use it seems an impossible task to avoid this surcharge.
Seems to me very much like the fines the banks were imposing a while back.
Imposing this fine for a whole month is over the top, or am I misinterpreting the matter ?
Installing solar panels came with a Smart Meter and a new plan with a demand tariff.
Quote here from Energy Matters:
If a household has a peak capacity demand at or above a threshold set by an electricity distributor (let’s say 1.5kW), they are hit with daily electricity demand charges to use that level. Then, for each additional kilowatt of demand, extra charges may apply.
Electricity demand charges apply even though normal usage may be a fraction of the threshold most of the time.
Another unsettling aspect of residential demand tariffs is if the calculation often comes from the maximum half-hourly interval kW demand occurring during the monitoring period over an entire month.
If you happen to be running one or multiple major appliances (e.g. air-conditioner + electric oven) simultaneously for just an hour during the monitoring period on one day during the month, you’ll pay the calculated daily capacity charge for each day of that month!
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Welcome to the community @RobertA101
The topic heading “Experts sound alarm on electricity demand tariffs” emphasises the concerns noted. There are responses in previous posts to some of the questions asked and points made.
The opening post by a choice staffer responds to your opening question.
Can electricity demand tariff be managed by a typical consumer ?
(Please note the removal of the bold emphasis as it’s already captured in the topic heading)
There are reasons why the Energy Ministers of the states and territories served through the NEM and the appointed bodies have all agreed to progressively introducing cost reflective tariffs. It’s a more complex discussion (technical + financial) than trying to explain how a demand tariff works.
Whether Energy Matters comments fully explain how it is with demand tariffs, requires a longer reply. As a resource Energy Matters fail to mention plans with a demand tariff have a lower flat rate for metered consumption, a significant saving and are generally better than a ToU alternative.
As consumers we are free to speak up about how the changes/progress relate, ask important questions, and expectations to be treated equally and fairly. There’s also a significant social question, whether energy supply (electricity) is a community responsibility subject to cross-subsidisation (by Govt or ….), or the user pays?
P.S.
The peak demand charge is supposed to reflect the added cost (notionally capital cost of the extra network, and peak generation) meeting household consumption in the evening, 4-9pm in our area. It’s not perfect, IMO.
Depending on your distributor you may have the option of a ToU tariff. Our retailer is required to put new Solar customers onto the default tariff. We still had an option last time I looked for ToU. It assumes you talk to your retailer when installing solar to agree which plan. If you share which area/distributor others may be able to comment further.
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Thanks for your replies
I guess I will watch my next bill closely and decide then if I need to change anything.
