New tariffs for electricity networks that will take effect in 2017 will assist consumers in making better choices about their electricity use.
Using the new tariffs, electricity retailers will be able to design offers for customers that best meets their needs and support how they want to use electricity—their solar panels, air conditioners, charge their batteries, or electric vehicles.
“Distribution networks are developing new tariffs that reflect the costs of different patterns of use. This will allow consumers clearer choices and they will be able to directly benefit if they use electricity at times that don’t increase costs for the networks,” AER Board member Jim Cox said.
SA Power Networks has developed its tariff structure statement where it sets out new tariff approaches that are designed to achieve these goals. These new tariffs have been submitted to the AER for assessment. The AER’s role is to ensure the proposed tariff structure statement complies with the National Electricity Rules.
“This is a positive step toward cost reflective tariffs. This should make it clear to consumers how they can save money by changing their energy usage patterns,” Mr Cox said.
“These tariffs incorporate different charges which reflect the network’s peak demand periods, which predominantly occur during hot summers.
“Through lower prices at off peak times and higher prices during peak periods, these new tariffs will give customers more control over their electricity bills”, he added.
South Australia has one of the peakiest distribution networks in the world and can benefit from these new tariffs. If customers move usage from peak summer periods when the network faces its highest demand pressure, there will be less need for new network investments and this will 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.
In its draft decision the AER supports most of SA Power Networks proposed initiatives to reform its network tariffs. However, the AER finds that SA Power Networks must address its customer assignment policies before the proposed tariff structures can be approved.
These changes will not affect the total revenue SA Power Networks is allowed to recover.
Distribution charges make up about 38 per cent of a customer’s final bill in South Australia. It will be up to retailers to decide if and how they pass on the network tariff structures and price signals to users.
For large commercial and industrial customers there are relatively few changes from their existing network billing arrangements where demand-based charging already exists.
The draft decision is available on the AER website. SA Power Networks revised tariff structure statement is due by 4 October 2016. We also welcome submission on the AER’s draft decision from all stakeholders, also due by 4 October. The AER will make a final decision on the tariff structures in February 2017.