Power bill shock is getting a lot worse
Far-reaching and costly changes to the way you are charged for electricity are under way, but protecting consumers is not a priority. We say it must be.
Key points
Electricity smart meters are being rolled out across most of Australia.
Power distribution and retail customers are implementing technologies and tariffs without consulting customers.
National Seniors says the rollout is misguided and more support and protection for consumers is needed.
So-called “smart meters” are being rolled out across the nation as part of a suite of power reforms – and consumers do not have the right to opt out.
Even the electricity regulator, the Australian Energy Market Commission, admits it’s playing catch up in understanding the full implications of recent reforms, and adequately protecting householders from secrecy and price gouging by energy retailers.
The installation of smart meters is part of the national transition from fossil fuels to renewable energy.
However, in the absence of expensive batteries, most renewables don’t provide round-the-clock, consistent, at-call power, so energy consumption must be carefully managed to preserve the electricity network from over-demand especially at peak times.
Enter smart meters. The theory is that the meters will encourage consumers to shift their electricity usage away from peak times – making more efficient use of the poles and wires network.
However, few customers appear to be aware of the changes thanks to a loophole that allows power companies to pass on tariff overhauls without forewarning them.
Also, most have no idea they are being put on to rates that change according to the time of day, the capacity they need from the grid or simply by dint of getting a smart meter.
Even more disturbing, retailers appear to be putting consumers on tariffs that favour them, the retailer, to the detriment of the consumer.
For example, under the “demand tariff” – the single highest point of demand for power from the grid, which is measured in 30-minute blocks – is used to calculate how much you pay for a whole month.
ABC News used the example of a person who is away from home for all but one day in a month but on the final day returns and has heavy power needs, such as using the washing machine, cooking dinner in the oven, running the heater, and drying clothes.
This would form the basis of the demand charge for the entire month.
And it’s not just electricity bills. Gas retailers are also billing customers based on what they think the customer had used previously, not on real use.
Retailers justify the practice on the grounds they don’t have staff to go to individual properties and read the meters or that some properties are not accessible. Customer beware – and check the bill.
Electricity distribution companies control the electricity network and have been allowed to change the way they charged retailers. Thanks to a loophole in energy rules, retailers were allowed to pass those network tariffs on to household consumers without even having to tell them beforehand.
Belatedly, and after actively promoting smart meters in 2023, the Australian Energy Market Commission (AEMC), which sets the rules in a national electricity market servicing about 10 million homes on the eastern seaboard, has raised a red flag.
ABC, AEMC chair, Anna Collyer, suggested a slower rollout of tariff reform as the commission undertook a review of the rules around electricity pricing and looked to strengthen consumer protections.
“It’s critical to the success of the rollout that we work through these concerns raised about how retailers might be applying demand or time-of-use tariffs in unexpected ways. And we expect we may need to push back the final determination to do this well,” she said, while emphasising that the rollout would proceed.
National Seniors Australia is not convinced by the current speedy rollout of smart meters.
Given the inflationary environment and ongoing cost-of-living concerns, now is not the time to engage in a wide-scale network investment projects which place increased cost pressures on consumers.
Simply, not enough is known about the impact, and cost, of this reform on consumers in general, and vulnerable older people in particular.
The current rollout should be paused until adequate consumer protections are in place and there is adequate consultation and information available to consumers.
National Seniors CEO, Chris Grice, says that despite the objective of the reform to encourage people to change their behaviour, not all consumers can do so.
This is especially pertinent for low-income households who cannot afford technologies to mitigate consumption in peak times.
“Rolling out smart meters to households that cannot realise the benefits and face increased power prices as a result is highly inequitable and completely undermines the logic of a mandatory roll out,” Mr Grice said.
“Lower-income households cannot afford more efficient appliances or to install solar, let alone batteries.
“We are particularly concerned about the potential impact on seniors on low fixed incomes, who may depend on home heating and cooling and have limited capacity for remediation or investment in technologies that enable behaviour change or mitigate energy consumption in peak times.”
Smart meters and new tariff regimes are complicated and can require a high level of technical knowledge.
To better understand and manage the reforms, householders must be given more time and resources. Otherwise, there is the risk they will be severely financially disadvantaged.
