3.1.2 Network tariffs for customers who generate electricity
Currently the networks provide a single service allowing customers to receive electricity for consumption and generate electricity to export to the grid. All customers connected to the distribution network consume and generate electricity if they choose to invest in generating assets.
A customers’ connection to the network is based on their expected capacity requirements. This capacity could be a maximum capacity to transfer electricity into the grid or take electricity from the grid. Enhancing this capacity drives our costs up, particularly when we need to invest in our network to facilitate customers’ peak demands.
Our network tariffs are based on the combined costs of providing the capacity for this single service with no differentiation in our charges to reflect any difference in costs imposed on the network between customers who generate electricity and those that do not.
We are interested in stakeholders’ views on whether they believe there should be separate network charges for customers who have the ability to use power from the network and also have the ability to feed surplus power back into the grid.
An export generation tariff for network usage could be technology neutral, and could be charged to residential or small business customers who export electricity to the grid to reflect the costs imposed
on the network. This could include householders with photovoltaic solar panels, battery storage, or
Should we consider a tariff and/or charge for recovery of network costs for customers that export electricity
to the grid for other customers’ consumption? Should a charge be technology neutral?
3.1.3 Declining block tariff
Today, declining block tariffs are used as the primary tariff across our three businesses. With this tariff, the first block of energy costs more than electricity used in subsequent blocks of electricity.
This tariff has been implemented to provide customers with predictable, stable pricing, and to avoid bill shock. Because our regulator caps the total revenue we can collect from customers each year, it is in consumers’ best interests to maintain utilisation of the network to maintain stable prices. Under capped revenue regulation, increasing electricity consumption reduces network charges and declining network consumption increases network charges.
With an inclining block tariff, the first block of energy used attracts a lower charge, and there are higher costs when more energy is used in subsequent blocks. Without the necessary ‘smart’ meters in NSW, most customers do not know when these increases occur.
Given the predominance of basic meters across the networks and the Rule requirement for efficient pricing, how supportive are you of declining block tariffs?
Are declining block tariffs more effective in preventing “bill shock” while providing flexibility to reduce bills compared to other alternatives?
3.1.4 Transitioning to tariffs that promote more efficient outcomes
New regulations require that electricity distributors must consider the customer impact of changes in tariffs. Distributors may vary tariffs, including from those that comply with “efficient” pricing principles after a reasonable period of transition.
We are interested in customers’ views about what is an appropriate transition period, if the obligation to move to more efficient tariffs (based on LMRCS and the application of residual costs to minimise pricing distortions) results in changes to existing tariffs. Customers should be aware that an immediate transition may create “winners” and “losers” in that some customers’ bills would decrease and others would increase.
A staged introduction of declining block tariffs commenced in July 2014 and continued in July 2015.
If transitioning to more efficient tariffs over time results in “winners and losers”, over what period should
any transition occur?
Would customers support a cap on necessary increases limited to no more than CPI as a way of lessening any price shock to customers?
3.1.5 Regional pricing
Different geographic areas, climatic regions, transmission connection points or areas of network congestion in NSW, could attract location-specific tariffs for residential customers to address local issues.
A location-specific tariff could be used to reflect higher or lower costs or big swings in low and high demand in a particular area. These types of tariffs could result in neighbours paying different rates for their electricity.
Would location-based tariffs for in the same distribution network areas be acceptable?
What situations would they be applied?
Would customers be prepared to pay for the higher administration cost of this structure?
3.1.6 Demand tariff
Demand tariffs are commonplace for large businesses, and allow actual demand to be reflected in the price the business pays for their use of our network capacity.
The highest demand electricity meter reading for a particular time (usually monthly) is used to calculate the electricity bill. This is because that point of demand tells us how much network capacity we need to reliably service that customer, and this in turn helps reflect our investment costs.
We are interested in customer and stakeholder views on whether demand tariffs may also be appropriate
for residential and small business customers.
To make this tariff available, properties would need to be fitted with an interval or smart meter. There would also need to be changes in billing systems, resulting in additional costs.
Based on forecasts of relatively flat demand for growth in peak electricity consumption in NSW, and a view that a demand tariff may not lead to less money being invested to maintain the NSW electricity distribution network, we are interested in customers’ feedback on whether future residential tariffs should include a demand charge component.
Should customers be charged for service based on their usage at peak times? How could a demand charge be structured?
Who should pay for the costs of metering if an interval or smart meter is required?
With loads flattening in NSW, will a demand tariff likely lead to lower future network costs?
If there is interest in a demand tariff, over what period of time should the businesses transition to this tariff structure?
3.1.7 Time of use tariff
Ausgrid, Endeavour Energy and Essential Energy offer residential customers a declining block tariff as the primary network tariff, with a choice to “opt in” to a voluntary time of use tariff. There has been a low take up and indeed, recent interest in, time of use tariffs by customers in many parts of NSW.
What do customers think of time of use tariffs?
Why do you think the take up of this tariff in NSW is so low?
Are there other voluntary tariffs of interest to customers?
3.1.8 Food and fibre tariff
Some primary producers in NSW have proposed a ‘food and fibre’ tariff for agricultural businesses that typically only place demand on the electricity network for short periods during the year. A purely efficient tariff for these customers based on demand is likely to result in high charges when demand occurs at peak times.
We are interested in customer views on whether a specific tariff for these customer groups is appropriate, and if so, how the tariff should be structured.
What do you think of a specific tariff for these groups?
Should such a tariff be set at an efficient level if it means higher charges at peak times?
3.1.9 Ancillary network services, setering services & street lighting
The Australian Energy Regulator has previously set price levels and structures for ancillary network services for metering services and street lighting.
However, we remain interested in hearing community views about these services and pricing, including feedback from local government about street lighting pricing structures.
Insights from our stakeholder engagement around 2017 – 2019 tariff structures will help inform our future pricing strategies, and approach to how we consider tariffs for the next regulatory period.
What are the main issues you think we need to consider about Ancillary Network Service charges, metering
charges and street lighting pricing structures?
Dear solar customer,
Electricity networks in NSW are sounding out stakeholders about a possible new charge to be levied against solar households who generate power for the grid.
You can read about it here, on p21:Â
http://www.haveyoursay.nsw.gov.au/asset ... -Paper.pdfÂ
We've had some media interest in the proposal and we are looking for members to be interviewed for a TV news story.
If you've gone solar and you're happy to speak to media about how you feel about this issue, please reply to me at this address with your postcode and best contact details.
Joel @ One Big Switch