Smart electricity meters would help consumers manage bills and reduce pricing pressure

Posted : Monday, October 22, 2012

Smart electricity meters and high summer peak tariffs must be introduced in Australia to help even out demand for electricity and reduce pressure on prices, AGL Chief Economist and Group Head of Corporate Affairs, Professor Paul Simshauser has told a CEDA forum on energy and hardship in Adelaide.

He said smart meters could help ease the cost pressures caused by the need to build excess network capacity to cater for peak demand during the 12 hottest days of the year.

Differential pricing - having a tariff of 12c a kilowatt during off peak periods, 40c a kilowatt during peak usage times and 80c or 90c per kilowatt during those 12 days of maximum demand could produce a 20 per cent average fall in household demand for electricity, Professor Simshauser said.

People might decide it is better to turn off their air conditioners and go to the movies instead, he said.

The CEDA forum, which included Australian Bureau of Statistics Environmental Accounts Section Director, Mark Lound, Executive Director of the South Australian Council of Social Service Ross Womersley and Energy Supply Association of Australia, Corporate Affairs General Manager, Andrew Dillon, found more needs to be done to help consumers manage their energy costs.

The forum heard:

For every $2000 air conditioner installed, energy suppliers must spend $7000 in network costs to service it;
Australian energy prices are likely to continue rising in the medium term and it is families, not the elderly, who are particularly feeling the pinch;
Monthly billing, smart meters and peak demand pricing would help consumers to manage their energy use more efficiently and reduce distress around bills;
Policy measures aimed at tackling hardship should target low income earners through the Family Tax A benefit rather than providing energy concessions via Senior's Card entitlements, which are not means-tested;
Energy policy and regulation needs to be integrated to focus on social and economic issues; and
More longitudinal data is needed to guide energy policy.

Professor Simshauser said energy markets continued to face a range of pricing pressures, including higher export prices, consumers' increasing use of technology, population growth and industrialisation in developing countries.

"There will be sustained pressure on fuel prices, going forward," he said.

A joint study between AGL and KPMG found that the "family formation" segment of the energy market was particularly struggling with high electricity prices as these families had limited disposable income and high usage.

"Energy related hardship policies currently focus primarily on pensioners and concession card holders - our results imply that they are actually working. You don't see many pensioners in distress," Professor Simshauser said.

Mr Lound said ABS data showed that while the bottom 20 per cent of income earners paid $22 or four per cent of their average weekly income on energy, the top 20 per cent paid only $44 or one per cent of their average weekly income on energy.

Additional data collections would need to be developed to produce simpler, longitudinal indicators to measure trends and policy impacts, Mr Lound said.

Mr Womersley said people on low incomes were affected disproportionately by high energy prices despite having relatively low demand for electricity because energy bills absorbed a greater proportion of their income.

As prices rose, more people were unable to pay their energy bills despite the fact that these bills were a high priority for most, he said.

Governments needs to focus on integrating the economic and social aspects of energy policy which were spread across a web of Commonwealth and state agencies and the community sector, Mr Womersley said.

"What we have is a picture of interrelated and overlapping responsibilities involving a significant number of players," he said.

When change does happen there are very few attempts to coordinate the actions of the relevant parties and when the links between social and energy policy are recognised... there is little or no effort made to join up the domains," said Mr Womersley.

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