The Australian Energy Regulator (AER) has today approved the revised Tariff Structure Statements (TSS) for Energex and Ergon Energy.
This is a key reform enabling Queensland consumers to change their electricity consumption patterns at times of high demand.
AER Board member Mr Jim Cox said the new tariffs, coupled with smart meter reform commencing in December 2017, allow retailers to develop offers so consumers can choose how and when they use electricity, taking advantage of peak and off-peak network pricing to have more control over their bills.
“These changes to network tariffs allow retailers to develop offers that help consumers get better value from the energy choices they make.
“Choices about how and when they use electricity and what new technology they buy,” Mr Cox said.
“These tariff reforms will also help promote better use of the existing poles and wires by rewarding customers for shifting their electricity consumption to off-peak periods,” Mr Cox said.
“This will help reduce the need for future network upgrades and replacement, lowering prices for all customers in the long run,” he added.
The Queensland Government’s uniform tariff policy will continue to mean that Ergon Energy residential and small to medium business customers in rural and regional Queensland will pay the same tariffs as their South East Queensland counterparts.
Extensive consultation has been undertaken on the tariff structures, with stakeholder feedback being considered on Energex and Ergon Energy’s draft proposals prior to the final decisions.
“Today’s decisions complement other reforms taking place in the electricity market, including the gradual rollout of smart meters and provisions enabling customers to have access to their own consumption data,” Mr Cox said.
Notes to Editors
- The electricity bills consumers pay are made up of three main components: 1) wholesale electricity costs 2) network [transmission and distribution] charges 3) retailer charges including costs associated with environmental and other policy costs.
- Distribution charges make up around 35 per cent of a customer’s electricity bill in Queensland.
- The AER decisions allow for the reforms to be phased in. It will be up to retailers to decide how and if they pass on the distribution network tariff structures and associated price signals to consumers. For example under tariff structure proposals consumers who use a high level of electricity at peak periods can save money by making small changes in their consumption choices.
- The AER’s role in reviewing tariff structure proposals is to ensure those tariffs proposed by the networks comply with the National Electricity Rules and effectively signal when the networks might be congested or constrained or when there is spare capacity. The AER also monitors compliance.
- The TSS does not affect the total revenue the networks are allowed to recover. It is the next step in the reform process and relates to how distributors divide up the total amount of revenue into network prices that apply to individual consumers.
- Residential and small business customers who don’t take these up will typically remain on their existing network tariffs.
- For large commercial and industrial customers, there are few changes to existing tariff structures where demand-based charging already exists.
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.