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.
Energex and Ergon Energy have developed tariff structure statements where they set 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 statements comply with the National Electricity Rules.
“Based upon our assessment, our draft decision is to approve Energex and Ergon Energy’s proposed tariff structure statements to apply from 1 July 2017 to 30 June 2020,” Mr Cox said.
“Residential and small business customers who wish to remain on their existing network tariffs may do so, but new optional tariffs, incorporating time of use and demand tariffs, are being offered by Energex and Ergon Energy. This is a small but significant step in a longer term tariff reform process” Mr Cox said.
Time of use and demand tariffs will better reflect their networks’ peak demand periods. Through lower prices at off peak times and higher prices at peak times, these new tariffs will give customers more control over their electricity bills.
If customers move usage from peak 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.
These changes will not affect the total revenue these businesses are allowed to recover. Energex and Ergon Energy spent more than two years consulting with their customers about the new network tariffs.
Distribution charges make up around 42 per cent of a customer’s final bill in Queensland. It will be up to retailers to decide if and how they pass on the distributors’ network tariff structure 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 has been common for some years.
The draft decision is available on the AER website. The distributors’ revised tariff structure statements are 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.