The Australian Energy Regulator has approved tariff structure statements submitted by the Victorian energy distributors, which from 2017 will assist consumers in making better choices about their electricity use.
“The new tariffs will provide a price signal to retailers about the cost of using the distribution network. This will allow retailers to design offers to best suit their customers’ needs,” AER Chair Paula Conboy said.
The increasing use of technologies such air conditioners and rooftop solar and the emergence of new technologies mean that different households are using the electricity network in different ways. It means that the pattern of electricity demand becomes subject to greater peaks and troughs.
The Victorian distributors have designed tariffs that have lower prices at off-peak times and higher prices during times when the network is under the greatest pressure. The new tariffs will be offered on an opt-in basis and seek to influence consumer behaviour to reduce usage in peak summer periods.
“Changing the way that consumers pay for the poles and wires that transmit their electricity allows consumers to make more informed decisions about their energy usage. This will help consumers make better choices for themselves individually, which ultimately benefits the entire system,” Ms Conboy said.
In particular, reducing pressure on the networks reduces the need for new network investments and this will help defer costly network upgrades. The investment needed to meet peak demand has contributed to the electricity price increases experienced by Australian consumers in recent years.
New demand-based tariffs will be offered for the first time from 2017, but residential and small business customers who don’t take these up will remain on their existing network tariffs.
For large commercial and industrial customers there are no changes to existing tariff structures where demand-based charging already exists.
Notes to editors
- The AER has approved tariff structure statements submitted by a range of energy distributors, including CitiPower, Powercor, Jemena and AusNet Services.
- These new tariffs will apply from 1 January 2017 to 31 December 2020 and will include demand tariffs for small business and residential customers.
- An amendment has been made to United Energy’s demand tariff, to require that it be provided on an opt-in basis in line with government mandates. In all other respects, United Energy’s tariff structure statement was approved and will apply over the same period.
The distribution businesses’ poles and wires carry electricity from high voltage transmission lines to household and commercial customers’ premises. In Victoria approximately 20 to 40 per cent of a customer’s retail bill is related to regulated network tariffs. A range of other factors including actual electricity use, the retail plans customers choose, individual retail charges and wholesale costs, also help determine final bills that customers pay.
The AER only regulates network tariffs. The AER has no role in approving or assessing retail tariffs. These have been deregulated and are subject to full competition.
About the AER
The Australian Energy Regulator regulates energy markets and networks under national legislation and rules in eastern and southern Australia, as well as networks in the Northern Territory. Its functions include:
- monitoring wholesale electricity and gas markets to ensure energy businesses comply with the legislation and rules, and taking enforcement action where necessary;
- setting the amount of revenue that network businesses can recover from customers for using networks (electricity poles and wires and gas pipelines) that transport energy;
- regulating retail energy markets in Queensland, New South Wales, South Australia, Tasmania (electricity only), and the ACT;
- operating the Energy Made Easy website, which provides a retail price comparator and other information for energy consumers;
- publishing information on energy markets, including the annual State of the energy market report, to assist participants and the wider community.