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