Australian households getting a smart meter installed will have better protection from electricity retailers behaving badly under proposed changes from the AEMC.
A smart meter measures electricity use (and exports in the case of solar homes) at regular intervals, sending this information to a household’s electricity retailer for billing purposes. All new and replacement meters have been smart meters for some years in Australia. And when you have solar panels installed, the meter is switched out for a smart device unless one is already in place.
Aside from remote meter reading, among other benefits of smart meters is the ability to provide customers with more information on how and when they consume and generate electricity. But some electricity retailers have been using the devices as an opportunity to switch customers onto Time-of Use (ToU) or demand tariffs without their consent – and without a way back to flat rate tariffs if the plan doesn’t suit.
What Are ToU And Demand Tariffs?
As the name suggests, time-of-use tariff rates are charged based on the time of consumption. There can be a huge difference in rates during the day when solar electricity exports push wholesale prices down compared to peak demand periods. As an example, here’s the retail tariff structure of a ToU plan currently available in SA:
- Peak: 6am – 10am, 3pm – 1am: 56.98 ¢/kWh
- Off peak: 1am to 6am: 30.80¢/kWh
- Shoulder: 10am – 3pm: 18.04 ¢/kWh
- Feed-in tariff: 8.5 ¢/kWh
- Daily charge: 123.86¢
Time-of-Use works out well for some households – not so much for others.
As for demand tariffs, they can offer cheap grid electricity charges per kilowatt-hour, but also have a demand charge based on peak power draw in kilowatts. An electricity customer may go over the threshold by running multiple energy-intensive appliances concurrently – even if for a very brief period – and be whacked with a hefty demand charge.
Consumer Protections Proposed
The Australian Energy Market Commission (AEMC) is aware of numerous consumer complaints about electricity retailer trickery in relation to forced switching to time-of-use or other unexpected tariff changes after smart meter installation. An AEMC “consumer-focused” comprehensive review of electricity pricing, products and services in Australia is under way.
And just last week, the AEMC announced a consultation on proposed rule changes that would ban electricity customers being subjected to tariff switcheroos without their consent after the installation of a smart meter. This right would be good for three years after the meter has been installed. After that, an electricity retailer can shift a customer to a new retail tariff structure without explicit informed consent.
Additionally, certain retailers would be required to offer a flat tariff option to smart meter customers. However, states and territories will need to pass parallel regulations to implement this aspect within their jurisdictions.
Among other proposed changes:
- Electricity retailers would be prohibited from charging small customers any upfront costs for meter replacements under the accelerated smart meter rollout program.
- Retailers would be required to provide at least 30 business days’ notice and relevant information when wanting to shift customers to a different pricing structure resulting from a change in meter type.
- Providing customers the right to be given an estimate of what their historical bill would have been under a new variable retail tariff structure, compared to their current arrangement.
“We’re seeking to strike a balance between enabling the rollout of this important technology and ensuring strong consumer protections are in place,” said AEMC Chair Anna Collyer. “Social licence is critical for realising the full benefits of smart meters.”
The AEMC is inviting feedback on the proposed changes by 12 September 2024, with a decision expected by late November this year.
Queensland On The Front Foot
In regional Queensland, Ergon Energy can’t change a customer’s tariff without Ergon first obtaining informed consent. But it’s a different situation in South East Queensland. In SEQ, electricity retailers can switch any customer with a smart meter to a demand or time-of-use tariff. They are only obliged to let the customer know about the change before the next bill is sent.
It’s not a great way to win friends and influence people; but it’s happening – and the Miles Government wants to put a stop to it.
“Under the proposed change, South East Queensland households moved to time of use tariffs following the installation of a smart meter, will now be able to revert to a flat tariff,” states a QLD Government announcement. “It is designed to pair with the Australian Energy Market Commission’s three-year ban on tariff changes without consent – an initiative spearheaded by the Miles Government.”
Something I’m not clear on is if this “back to flat” option will be retrospective – and if so, how far back it would go.
While on the topic of tariffs, are you on the best electricity deal available for your circumstances? Compare electricity plans here.
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Demand Tariffs should be abolished for retail customers. For Time of Use, there should be a requirement that the the hourly average price should be similar to single rate hourly price.
For example: Flat rate $0.30/kWh
Time of Use equivalent:
$0.55/kWh between 3pm and 9pm
$0.22/kWh outside of these times
Average price for TOU = ((6*0.55)+(18*0.22))/24 ~ $0.3025
At the moment, retailers give a couple of cents per kWh discount for off-peak but then bump up the peak rates by 10c or more, it’s a ripoff!
AndrewJ,
Your calculation of the average price for the TOU tariff being equal to the flat tariff is only correct for someone using the same amount of electricity on average each hour of the day in each TOU period.
TOU tariffs charge different amounts on average for different customer usage patterns. Lower-cost-to-supply customers will generally save on a TOU tariff compared to a flat tariff, and the reverse for higher-cost-to-supply customers.
In SA roof top solar almost meets daily usage .in summer now and soon for more of the year and the retailers pay 8.5 cents but sell it at 18.5 cents during max output periods. What exactly do they do for that 10 cents? Going forward storage will buy the excess at practically nothing or be paid to soak up the excess and then sell it back at 50 cents when the sun isn’t shining. Fair enough they have capital expenditure to recoup but then so do the households that installed the solar panels to generate power in the first place. The SA government is beating it’s chest as SA heads to 100 % Renewable while leaving those that make it possible pay the price.
This imbalance needs to be fixed through government imposed minimum payments to households making the investment in solar panels or more will invest in home batteries and stop feeding into the grid at all.
This smart meter will cause more grief after 3years as the big players will just wait for that to come around . Then slug everyone after pleading a hard time to which ever political party is in power .Then pressure the watch dog to turn a blind eye as they will do what they want to do.It should be made compulsory to contact anyone before they do anything to change tariffs.
If it’s of any interest you can change from TOU to Flat or Demand and vice versa in Victoria. I believe you can change once every 12 months. I recently moved from TOU with LUMO back to a flat rate because the spread between Peak and Off-peak was too narrow. Cheers Mike
This doesn’t address the problem it is the distributor not the retailer who changes the tariff structure. All this has done is impose obligations on the retailer that distributors don’t need to follow. As a result retailers will just price this risk into their flat rate market offers and increase prices for everyone.
My use has increased by 0.8% on last year. Yet my bill almost doubled. Almost all charged at the peak rate of 56 cents. Smart meters are very useful but are being used to swindle consumers.
In vic only the customer can request a change, resellers cannot change on demand to flat or viscera.
Smart meters have been installed in nearly every household and we have many choices to choose from.
Why are other states so far behind the times?
On demand is perfect for me as I have solar and batteries, the grid is there for backup and to pay me for export.
Stand up for your right or keep letting your state government and companies stop you from having basic rights!
Smart meters only allow the government to control your lifestyle and spending even more because of their bad management so they will not be allowed to install a smart meter on my house this is a democratic country I think the government think they can fix this energy mess up by charging people more and more money instead of the problem they have created.
I use a lot of electricity in the middle of the day (EV charging and cooking in my apartment building). I shouldn’t be charged a Demand Tariff when helping stabilise the grid by drawing lots of electricity during peak renewables time slots.
TOU tariffs are great in theory, but the huge price increases for most of the 24 hour period are way beyond reasonable.
Make it fair and reasonable and there won’t be such a consumer backlash.
There are no residential network demand tariffs in SA (there were, as part of a previous voluntary trial with very low take-up. They don’t apply in Victoria (as advised above). This appears to be a SEQ and AusGrid (Sydney) issue which appears to be in the sights of the AEMC rule review.
I’ve been paying for electricity for 50 years what did they do with the money they certainly didn’t put it back into updating the system or we would have a good system now they took the money and run
I had a Solar system installed in Feb 2024 by a company recommended by solar quotes.I have just found that my system has not been registered with my power supply provider.A smart Metre has not been installed.The system has been generating a consistent excess of power compared to our usage.I am totally frustrated by this situation to say the least.Where the hell do I go to rectify this situation.I live in Queensland. John
Hi John,
Reach out to [email protected] and make sure you have all your details handy for him. We’ll make some inquiries.
When properties I have owned have had the meter replaced with a smart meter , it has lead to interesting “discussions” with retailer sales staff.
They with out exception, have insisted that it it is not possible to have anything but TOU “because of the meter”.
Many of these sales staff seem to have genuinely believed that a smart meter is only compatible with TOU during early discussions with them reading from a script.
My favourite of the strategies they have tried is to say “we have to sign you up a TOU plan and then you just apply to get the meter changed”. That was from a provider linked to a NRMA promotion offering a substantial sign on bonus.
Related to this, can anyone explain why I am charged (well would be if we ever purchased electricity during daylight hours) “shoulder” rate during the day which is 5 times our FIT? While you are at it could you explain why I have to pay 13 times our FIT to recharge a car during daylight hours? There seems to be no impact of domestic solar over supplying, lower FITs and grid pricing.
With Solar, a battery and EV, we only ever use power from the grid for the occasional over night charge on the off peak rate if we need to charge on a short turn around. With each individual retailer having so many different Plans, working out the most cost effective is far from simple.
Anyone have an appropriate rewording to the acronym TOU that is printable? Mine unfortunately isn’t.
Hi Matthew,
These types of conversations have always puzzled me. My smart meter in QLD came with a change to Demand charges (no explicit permission given, but probably in the fine print of having a smart meter installed due to installing a solar system). But Origin did not change tariff then, nor in the three years since, still charging flat rates. When I explored changing retailer a few years ago, both in southern states, one insisted that our meter was Demand charge and the other TOU. This year a third southern retailer offered me flat rates whilst the meter is still registered with Energex as Demand charge. Others talked about reprogramming the meter, but good data management practices for most flexibility taught to me many years ago would be that the smart meter sends all the data to a database, and that all the smarts sit in a processing layer above the database enabling simple implementation of all sorts of different tariff structures. Having tariff set in the meter itself (as suggested by the term reprogramming the meter) seems counter productive, adding barriers to flexibility.
All very confusing…..
Why shouldn’t the retailer have to buy my electricity at peak and off peak rates. If I’m using a lot at peak I won’t be exporting much.
Are these figures correct?
The shoulder tariff seems very cheap, while the off-peak rate is high by comparison; more akin to NSW off-peak rates.
Peak: 6am – 10am, 3pm – 1am: 56.98 ¢/kWh
Off peak: 1am to 6am: 30.80¢/kWh
Shoulder: 10am – 3pm: 18.04 ¢/kWh
Feed-in tariff: 8.5 ¢/kWh
Daily charge: 123.86¢
I’d like my ‘Daily charge’ to be that low too.
I’d like our energy providers to declare if they have changed the domestic charges when a smart meter replaces the old; i.e. Do they now include the reactive power component that most old meters didn’t account for?
If so, where has that been declared, so that consumers can make better choices about choosing appliances with a better power factor?
Even using the 0.8 rule-of-thumb, that’s a 25% increase in power cost for those loads.
Hi Dominic,
I don’t think retailers charge for power factor per se, however poor power factor does cost real money.
A chain of petrol stations I know install power factor correction at all their sites because it immediately reduces their billed consumption by 15%
There are other devices available for domestic premises which do similar things.
https://www.solarquotes.com.au/blog/solar-voltage-rise-drop/