Rules on smart meters leave consumers unprotected
The installation of ‘smart’ electricity meters has accelerated ahead of promised consumer protections, generating a scathingly critical report by the NSW electricity ombudsman.
Key Points
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New rules for energy retailers to speed up the rollout of digital or smart meters will take effect on 1 June 2025 and impact customers in Queensland, NSW, South Australia, and the ACT.
A smart meter is a digital electricity meter that measures and records electricity use at least every 30 minutes. This electricity data can be accessed remotely, so meter readers will no longer need to enter your property to read your meter. Sounds good, right?
Worryingly, smart meters empower retailers and meter installers at the expense of consumers, leaving them confused and vulnerable to higher energy bills without adequate protections.
At their heart, smart meters change the way power use is measured and how prices, or tariffs, are applied. Traditional fixed tariffs that charge the same rate regardless of the time of day will be replaced with cost-reflective tariffs that charge higher prices during peak demand times, mostly in the evening.
National Seniors Australia (NSA) has been watching this closely, advocacting for stronger protections for households.
NSA isn’t opposed to smart meters but we are opposed to customers being automatically transferred to tariffs they don’t understand or cannot manage, as this could result in higher energy bills. You can read more about what we’re pushing for later in this article and sign up to our campaign to show your support.
Retailers have begun communicating with customers, to alert them that they intend to install a new smart meter, but unsurprisingly say little about the negative implications of this change.
One of the concerns with the rollout is the lack of protections. While smart meters will be compulsory from 1 June 2025, consumer protections won't apply until 1 December 2025. This leaves a period of six months when retailers are free to move consumers onto new tariffs. As you will read later, NSW consumers are pushing back on the tariffs claiming retailers and meter installers are exploiting them.
When consumer protections start on 1 December 2025, these include a two-year window where consumers can’t be automatically moved onto a different tariff without their explicit consent (though there are exemptions). After the two years, consumers can be switched, with no consent required.
Dissapointedly, energy retailers are already trying to move people onto smart meters before 1 June making overly positve claims about their impact on households.
Households who already have a smart meter installed, will not get access to these protections becuase they only apply to new smart meter installations.
You can read more about smart meters in our submission to energy regulator the Australian Energy Market Commission (AEMC) here.
The NSW power and water watchdog has reported a major increase in complaints about sudden, unexplained changes to people’s electricity tariffs.
Such changes involved customers being switched from flat rate prices, where they paid the same rate for a unit of power no matter when they bought it, to complex and dynamic charges.
Among these were time-of-use tariffs, in which customers paid more for power at peak times, and demand charges, which involved charging someone based on their single biggest half-hour of use across an entire month.
Also, smart meters were supposed to replace billing by “estimated electricity use” with actual usage. However, the NSW Ombudsman’s report detailed complaints by customers on smart meters that retailers were still billing according to estimated power use.
The report outlines the disconnect between energy retailers, customers and meter service providers (MSPs), which own and control the smart meter at customer’s properties.
The NSW Ombudsman was critical that there was no regulation requiring MSPs to respond to customer or retailer queries, assist with resolving customer disputes or participate in external dispute resolution schemes, limiting its ability to assist customers, with complaints taking longer to resolve.
The Ombudsman said customers are confused about receiving estimated bills and frustrated by lengthy delays when trying to dispute or query a bill with their retailer.
“The smart meter rollout aimed to increase flexibility and customer engagement with the energy market, by allowing customers to manage their energy usage and save money,” the Ombudsman said. “But we aren’t seeing evidence of this in complaints … in fact we are seeing the opposite.”
The NSW Ombudsman’s report confirms our suspicions that the hasty rollout of smart meters is currently not in consumers’ best interest, and that new tariffs are confusing and can result in higher energy costs if customers do not manage/minimise their energy use in peak times.
Regardless, customers may not realise the implications of moving to a transitional demand tariff or time of use tariff until they receive their first bill.
Most people would not know to question their retailer if they were automatically moved to a time of use or demand tariff before 1 December. Customers need to be aware of this situation but it’s very complicated.
The NSW Ombudsman report is available here.
- Demand tariffs should be banned, demand tariffs are confusing and punitive and have no place in the energy market as they only act as cost-recovery tools and not educational tools.
- Customers should always have access to a flat tariff option if a smart meter is installed, and they should not be moved to a time of use or demand tariff without their informed consent and adequate information.
- Customers with smart meters should ideally be offered a dual tariff if they opt for a flat tariff – one that only charges them the lowest price from either a flat tariff or an alternative time-of-use tariff (but displays the cost of both) – if the bill using a time of use tariff is higher than the flat tariff they should be given information about how they could have changed their behaviour to get a cheaper price than the flat tariff. This innovation will help to educate household about how they could reduce their energy use in peak times but protect those who cannot change or manage their energy use.
To support this advocacy, please sign up to our Energy Affordability campaign below.
Flat-rate tariffs, also called single-rate tariffs, apply a flat fee per unit of electricity used during a period of time. They may include a “controlled load” tariff, which is a lower rate for some uses, such as electric hot water.
“Cost-reflective tariffs” are meant to reflect the cost of providing different amounts of electricity at different times. There are two main types:
Time-of-use tariff: The price per unit of electricity can change throughout the day, week, and year. This often involves some combination of “peak”, “shoulder”, and “off-peak” hours.
Demand tariff: Adds a fee for the demand placed on the network, separate from a charge based on usage. The charge is based on the highest usage across the whole period. This can be based on a single point in time, a window of 15 or 30 minutes, a whole month, or even a season or entire year.
There is more on smart meters and the tariffs here.
Mike complained his energy retailer billed him about $6,000 for electricity over 10 months. He contacted his energy retailer to discuss his high bills and was offered a $200 credit to reduce the amount owing.
Mike asked the retailer to review the billing, which was found to be correct and in line with the meter data. However, the retailer’s mobile app showed the customer had consumed 931kWh in one day, which he said would have been impossible.
The Energy & Water Ombudsman of NSW (EWON) contacted the energy retailer to request further information. They provided copies of Mike’s bills and the meter data provided by the MSP and said that its billing review was ongoing as it was waiting on the MSP to check the meter data.
Our initial review of the records indicated that Mike’s billing for three months didn’t align with the data provided by the MSP. The retailer had also provided copies of notes showing they had requested a meter investigation or accuracy test, but no action had been taken.
EWON requested further information to clarify the billing had been appropriately reviewed. Two months later, the retailer still had no response from the MSP to review the original meter data, despite the retailer escalating the matter with the MSP multiple times.
The retailer agreed to make a request that the accuracy of the customer’s meter is tested. A month later, the MSP had confirmed verbally that the customer’s electricity meter passed an accuracy test, although the retailer was still waiting on the meter test report.
The retailer acknowledged that over a five-month period it had failed to obtain adequate information from its MSP to complete a billing review, including:
Verification that meter data originally used to bill the customer was valid
A report confirming that the meter passed an accuracy test.
The retailer offered to resolve the complaint by offering to apply a credit of $754 relating to pay on time discounts the customer missed while the complaint was investigated, and a goodwill credit of $3,075 to his energy account.
Related reading: AEMC, ABC, Alinta, EWON 1, EWON 2
