Supply charge rises in WA will hurt the poorest the most.
On the first of July electricity prices increased in Western Australia. This was not a surprise as the state government had announced prices would be increasing over the next three years. The surprise was they increased them in the worst possible way.
Rather than increase what is charged per kilowatt-hour, the most common standard tariff, Home Plan A1, was unchanged at 26.5 cents. Instead, the daily supply charge was doubled from 48.6 cents a day to 94.9 cents1. This means every household, whether rich or poor, will be hit with a straight $169 dollar increase in their electricity bills per year.
This is bad for a number of reasons. A major one, which is important for people who want to live or who want other people to live, is: it’s bad for the environment.
This is because increasing the supply charge:
- Does nothing to encourage energy efficiency, and…
- Does nothing to encourage rooftop solar.
But what will probably most upset Western Australians is a household supported by a person working as a casual kitchen hand will have exactly the same amount added to their electricity bill as demi-billionaire Chris Ellison living in his $58 million Mosman Park mansion.
Perth’s multi-millionaires don’t seem to have embraced solar. Even Malcolm Turnbull worked out rooftop solar makes sense.
This means a household that only uses an average of 7 kilowatt-hours a day, either because they are careful with their electricity use or that’s all they can afford, will have their electricity bills increase by 20% while Perth’s billionaires will have perhaps a 1% increase in their mansions’ electricity bills.
Solar households, because they use less grid electricity and receive a feed-in tariff for electricity they export, will also see their electricity bills soar. Generally by 10-20% for people with 3 kilowatt or larger systems, but potentially more.
There are no good economic reasons for having supply charges on electricity bills in the first place, but the doubling is blatantly unfair to the poor, unfair to those who have made the effort to cut their grid electricity use, bad for environment, and I am personally disgusted by this gouging of the poor for the benefit of the rich. I feel shame for my country that Western Australia has allowed this to come to pass. Unless WA’s millionaires and billionaires want to become known as parasites, they should rise up and demand the state government find less obvious ways to rip off the poor for their benefit.
How The Doubling Of Supply Charges Hits Families
The doubling of supply charges means the less grid electricity a household uses, the greater the proportional increase in their electricity bills and the more they will pay in total for each kilowatt-hour of grid electricity.
So if there is some poor bugger getting by on just one kilowatt-hour of grid electricity a day, then before the first of July she would have been paying a total of 75 cents per kilowatt-hour and after she’d be paying $1.21. That’s a 61% increase. If the reason she is only using 1 kilowatt-hour of grid electricity a day is because she has rooftop solar, then it would be possible for her electricity bills to increase by 300% or more, depending on the size of her system.
But some rich bugger living in a mansion and using 120 kilowatt-hours a day would have paid 26.9 cents per kilowatt-hour before the increase and now pays 27.3 cents. That is a 1% increase.
To make the inequity of it all perfectly clear, I will make a graph showing the percentage increase in electricity bills for the following households:
- One poor bugger getting by on one kilowatt-hour of grid electricity per day.
- A household without solar with an average consumption of 7 kilowatt-hours a day, which is half the average for a two person Perth home2.
- A household with 3 kilowatts of rooftop solar3 that averages 14.1 kilowatt-hours of total electricity use a day — the average for a two person Perth home.
- A household with 5 kilowatts of rooftop solar4 that uses an average of 22.9 kilowatt-hours a day in total — the average for a 5 person Perth home.
- A household without solar that consumes 14.1 kilowatt-hours a day — the average for a 2 person Perth home.
- A household without solar that consumes 22.9 kilowatt-hours a day — the average for a 5 person Perth home.
- A rich bugger who uses 120 kilowatt-hours a day.
I also made this graph showing how much each of the households pay in total for each kilowatt-hour of grid electricity5. It shows the cents per kilowatt-hour before and after the doubling of supply charges:
This is clearly not a fair situation.
The Alternative Is To Increase The Charge Per Kilowatt-Hour
If doubling supply charges places an unfair burden on poorer households but electricity prices need to increase, then the solution is to raise the charge per kilowatt-hour. Charging people for each kilowatt-hour of grid electricity they use is reasonable. After all, it costs money to generate and distribute electricity, somebody has got to pay for it and, when you think it through, it is probably actually fair for the people who use it to pay for it.
But there is no good reason, either moral or economic, for making poor people, or those who have rooftop solar, or are simply careful with their electricity use, pay more per kilowatt-hour of grid electricity than large residential consumers of electricity, who are usually rich or at least well off6.
Supply Charges Don’t Pay For The Grid
Some people think the charge per kilowatt-hour covers the cost of generating electricity while the supply charge pays for the cost of the grid. But that’s not the way it works. On the first of July the West Australian grid didn’t suddenly undergo binary fission, doubling its capacity and making it twice as expensive to run. Daily supply charges and charges per kilowatt-hour used aren’t earmarked for specific purposes. It’s all just revenue that goes towards paying for generation, transmission, distribution, and retailing as required.
Charging Per Kilowatt-Hour More Fairly Distributes Grid Costs
Some people are under the impression that each household is responsible for an equal share of grid costs and the best way to pay for that is through supply charges that are identical for each home. But households don’t result in identical costs to the grid, and even if they did daily supply charges would not necessarily be the best way to pay for them.
The main reason why grids aren’t cheap is because they need enough capacity to meet demand during summer heatwaves when almost every air conditioner is operating at full power7. Under these circumstances it is going to be the $58 million dollar mansion with the huge ducted air conditioning system that will be using the most power and putting the most strain on the grid. It certainly is not going to be the single room air conditioner of a modest 2 person home and it sure as hell is not going to be the guy who is getting by using a fan and a damp cloth because that’s all he can afford.
So it doesn’t make sense for each household to be charged the same fixed costs when the mansion is using far more grid assets to power itself than the modest home or the poor guy with a wet rag. This means increasing the cost per kilowatt-hour and not increasing supply charges will more fairly distribute grid costs. It’s not a perfect way to distribute them, but it is better than increasing supply charges.
Supply Charges Exist To Discourage Energy Efficiency
You may be wondering why we have supply charges in the first place, since they result in such an unfair distribution of costs. Well the answer to that is easy. They exist to discourage energy efficiency.
The higher the cost of grid electricity per kilowatt-hour, the more incentive people have to be efficient with their electricity use, and the more efficient people are the less grid electricity get sold. To counter this, supply charges are used to lower the cost of electricity per kilowatt-hour consumed and reduce the amount of savings from cutting consumption.
As the large majority of Western Australia’s electricity is generated from burning fossil fuels and the pollution and greenhouse gases they release kill people, using supply charges to increase the amount of electricity sold is evil and no nation that uses a significant amount of fossil fuels to generate electricity should use them.
Reducing Supply Charges Encourages Rooftop Solar
Lowering supply charges and increasing the charge per kilowatt-hour encourages people to be efficient with grid electricity and encourages them to install rooftop solar, which is the only cost effective method of generating electricity available to on-grid homes. As rooftop solar is very clean and doesn’t kill people the way using fossil fuels do, the more rooftop solar installed the better.
Western Australia’s doubling of supply charges appears to be an attempt to protect current fossil fuel generators from electricity price increases encouraging people to install solar. This may backfire as battery prices come down and high supply charges make it more economical for people to drop off the grid. But battery prices still need to fall a long way in price before this will make economic sense8, so they are probably safe from this for now.
A Fairer Deal For Renters
One way Australians have been dealing with rising electricity prices is by installing rooftop solar. But this is next to impossible for those living in rental properties. Unless they can somehow convince their landlord to install rooftop solar they are stuck with only using grid electricity. This means supply charges place an unfair burden on renters and they should be eliminated. And just in case you are a Nazi who has trouble with context, it is the supply charges that should be eliminated and not the renters.
On average renters have considerably lower incomes and total wealth than home owners and should not be forced to pay more per kilowatt-hour of electricity than large residential users of electricity.
The WA Government Should Be Ashamed
I don’t know what the West Australian government was thinking by allowing supply charges to be doubled. Well, they probably weren’t thinking. Politicians seem to be very easily influenced by whoever was the last person to buy them dinner.
But Western Australia has a Labor government. You would think there would be at least a few people in the state organization who could keep their daft politicians on track long enough to not screw over their base.
Ben Wyatt, the WA Minister for Energy, should be ashamed of himself. As should the Premier and anyone who had anything to do with this travesty. For the sake of their souls I hope they didn’t realize they were potentially forcing Grandma to decide between keeping the electricity on or eating her cat.
Footnotes
- Technically, this is not quite a doubling, but a 95% increase. But no one is going to win any arguments by pointing out it’s technically only a 95% increase. ↩
- This figure is out of date, as it is from 2011, but it should still be accurate as there hasn’t been a large change in the amount of electricity used by Western Australian households without solar in that time. Note the majority of Perth homes have gas and use it for water heating. ↩
- It is assumed the 3 kilowatts of rooftop solar faces north, generates 4,700 kilowatt-hours a year, the household self consumes 40% of the solar electricity, and they receive WA’s usual feed-in tariff of 7.135 cents. ↩
- It is assumed the 5 kilowatts of rooftop solar faces north and generates 7,835 kilowatt-hours a year, the household self consumes 25% of the solar electricity, and they receives WA’s usual solar feed-in tariff of 7.135 cents. ↩
- Note that receiving a feed-in tariff affect’s a household’s total electricity bill, but it doesn’t affect how much they pay per kilowatt-hour of grid electricity used. Selling some electricity to the grid doesn’t make electricity from the grid cheaper. ↩
- People who are poor and use large amounts of grid electricity generally either learn to cut back or get cut off. ↩
- Being spread out over a wide area also increases grid costs. Horizon provides grid electricity in rural WA and the cost of doing so is subsidized by an average of around $4,000 a year per customer. ↩
- Going off-grid never makes environmental sense, as surplus solar electricity produced by a household can’t be sent into the grid to displace fossil fuel generation. ↩
About Ronald Brakels
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I expect that we will see more increases in supply charges around Australia in the future. I put solar on my roof in an attempt to control my energy costs and this is working well. My power bills have been reduced substantially. But as more and more households put solar on their roofs, revenues will continue to fall for power companies. Increasing the supply charges is a way of clawing back the shortfall. I can even imagine a day when power could be free, but the supply charges is huge, and this is how power companies will guarantee their revenue. Bit by bit, the supply charge will ramp up until it overtakes the cost of power. But this strategy will only force more and more Australians to go off grid altogether.
I have no doubt that your prediction regarding supply charge increase is correct. Big companies are inherently avaricious, and CEO’s are constantly searching for ways to justify their criminally excessive renumeration. . It is interesting however to compare the Australian electricity charging system with that in Europe and especially in Germany where the consumers rather than the suppliers have the upper hand. I’d like to think Australians are capable of growing a set and taking on the power companies, unfortunately the legendary apathy of Australians is ensuring this isn’t happening as quickly as I’d prefer. Going off grid can actually be achieved much more economically than many suggest, but the desire to have start of the art equipment puts a brake on that transition for most.
This article makes very little economic sense. Approximately half of the cost of delivering electricity to households and businesses is fixed and only about half is variable.
The WA Govt has sensibly moved towards increasing the fixed charge so that all electricity consumers contribute to the cost of the power that they receive. It would be unfair for me with my solar panels not to make a reasonable contribution to the cost of making power available to my house for the times that I need power from the grid.
Governments has other means to try and help the disadvantaged in our community.
The article points out raising the charge per kilowatt-hour more accurately captures costs imposed on the grid by households than raising supply charges.
To take this point further: what isn’t really dealt with strongly enough is the burden on the grid that is created by people operating air conditioners on hot days. I would go as far as to advocate that a sliding scale of usage tariffs would be fair, in that it would impose costs on those most able to pay and those who are putting the most strain on the grid.
A sliding tariff scale would encourage energy efficiency, encourage adoption of solar, and ensure that those who put the most load on the grid pay for it.
It would probably not be the least bit unfair to charge any domestic user who consumes more than 1000kWh from the grid per month a 30% higher tariff for the usage above 1000kWh, for instance.
What you have described is already in place in other places it is called a Seasonal Demand Charge. They read the meter for consumption data between the hours of 3:00pm – 9:00pm and in some cases 9:30pm looking for peak kWh used in a sampling time interval. The fixed day rate is multiplied by that kWh value. As an example lets say the fixed daily rate is $0.90c and the fixed daily consumption as per the sampling method was 2.5 kWh then the additional fixed daily charge would be 0.90 x 2.5 = $2.25 usually with a minimum charge based on 1.5 kWh. In effect this is an unavoidable cost which is in addition to the kWh consumed in a 24 hour time period at the applicable Tariff + Fixed Network and another other daily charges + Seasonal Demand Charges. The actual method might vary between distributors. What I have described is the basic method being promoted in Victoria.
This article makes good economic sense. Just because a cost is fixed doesn’t mean a fixed charge should be passed on. We the people can design pricing mechanisms so that they support the national interest. Now that solar + storage is dropping in price, the best way to reduce coincident peak demand is to encourage home owners to install solar + storage, via eliminating daily charges and moving to full volumetric pricing. As we reduce coincident peak demand we reduce grid costs for everyone. Eliminating daily charges also eliminates the retail pricing confuseopoly that exists in contestable markets (such as VIC).
https://www.facebook.com/groups/996387660405677/permalink/1633422346702202/
Following Neil Bradley’s logic, are we expected to agree that turning an essentially trivial matter into a command performance is economically, morally and socially justifiable ?. The overheads associated with running ‘other means to try and help the disadvantaged in our community.’ would vastly exceed the value of any benefits gained due to the abysmally low efficiency of contemporary bureaucracies. Supply charges are merely an attempt to maintain profitability in the face of reducing consumption, and cannot be excused as anything else. Ultimately this skullduggery will backfire and I for one won’t shed a tear about the fate of the parasites.
Those who use the grid the most ought pay the most.
The grid is like a taxi or bus for electricity.
Bus or taxi passengers don’t pay a minimum share of the fixed costs of a bus or taxi.
The total costs of the bus or taxi is spread over the usage of the vehicle and paid pro rata based on usage, broadly speaking.
The grid ought be charged for in the same way, not by abusing monopoly power to impose high base costs of access on persons who have very low usage.
I think the WA problem is the cost of maintaining the poles and wires given the vastness of the State amortised over two few users in the locations the network is legally obliged to provide power services. For isolated communities would it not make sense to create stand alone renewable energy and storage locations to support relatively small number of users in close proximity? When it comes to amortising cost you can select what-ever attribute you like and you will very quickly come to the conclusion there is no solution that does not involve some subscribers subsidising others in one form or another that is just the way it is. The analogy is like this you share a house with a housemate you agree to split the energy and other bills 50 50. His girlfriend stays over on weekends in any one month up to 3 times and during those stay overs showers on at least four occasions to the point of running out of hot water on each occasion. How do you think the discussion with your house mate will go when you want the share to be re-cast do you honestly believe when it comes to money you will agree on a particular formulae. Oh and she ate all you breakfast cereal without replacing it.
Hi Ronald,
I have been told by my solar installer that Essential Energy will only allow me to export 2kw from my new 4kw system. It needs to protect the wires. He could not explain simply why. Is it a way to discourage solar.
In rural areas there are limits to how much the Single Wire Earth Return (SWER) transmission lines can cope with. But whether or not the limits are always reasonably and fairly applied is a question I don’t really have enough good information to answer at this time. Two kilowatts is a very low limit.
The 2 kW will be the maximum right now spit second kW value you can export to the grid that is not a kWh value. In reality depending on consumption your system might never achieve that right now split second output value of 2 kW. The installer will be required to throttle your inverter to 2 kW however at the end of the day your FIT will be calculated on the kWh value by aggregating split second values exported to the grid that were less than 2 kW. I think that is how it works happy to be corrected.
The big picture? WA _has_ enjoyed much lower electricity bills with an LNP government for some time. And YES, the LNP ran us _seriously_ into debt… which allows Labor to respond “Blame them!” As you’ve pointed out, there _is_ a better way to have managed a more equitable clawback, a _fairer_ tax on WA citizens… .
But WA governments, whether LNP or Labor, have never really been logical about their utility ‘cash cows’.
Consider, for example, our WA Water Corporation. Back in 1995, the WC offered to connect scheme water to our property. OK, we thought, the pipe runs right past our door… that shouldn’t be expensive. Over 6K to connect! NOPE. Now, 22 years later, the state has foregone well over $20,000 in Water Rates alone. Add to that (at least) another $15,000 in Water Use charges. That’s (at least) $35K* in lost revenue! And we wonder why WA is in such an economic abyss!~
Let’s stay with the state-owned Water Corporation… . I suspect WA is the _only_ state which doesn’t charge renters for their water use. Owners pay, if tenants don’t. That old ‘user-pays’ principle doesn’t exist. So a tenant can leave a hose running 24/7 in an unauthorised above-ground pool all summer, vacate, and burden the owner with a thousand-dollar plus water bill… .
In conclusion, _fairness_ really isn’t a guiding principle with WA governments of _any_ political persuasion. Utilities are cash-cows… and there to bleed us dry to transfuse other widespread government mismanagement.
* More likely $50,000 revenue lost, per property. Now multiply that by the _thousands_ of us who laughed at the $6K connection proposal… and stayed with rainwater. “Poor fella my country!” he laughed.
Hi Ronald,
Is this my wire to the road 150m or Essentials wiring If Essentials does that mean those of us in rural areas will be limited in the amount of solar we put on as it would not be financially viable putting on a large system if excess production doesn’t make it to the grid
It’s Essential’s power lines.
Fortunately, the cost of buying systems that can export limit is decreasing, and less electricity will probably be lost because of export limiting than you would expect due to home consumption and because solar panels rarely produce more than 80% of their rated capacity and spend most of the day producing less than that.
But, it still definitely has a large negative impact on the economics of rooftop solar. If you think it would be worthwhile, you could pay for an export limiting system that’s 4 kilowatts or larger, but your most cost effective option may be to get a 2 kilowatt solar inverter and get as close to its 2.66 kilowatt panel capacity limit as possible.
In Rural FNQ the rules have change in relation to System Size and [FIT] you are now allowed up to 10 kW [PV Inverter Size including Battery Inverter] Single Phase and 30 kW up to Three Phase [10 kW per Phase] provided your Feed-in is throttled to a maximum of 5 kW. The tariff for those systems in excess of 5 kW is now 10.102c per kWh introduced on the 1st September 2017. The FIT compared to Storage financial analysis now favours FIT where you are consuming 25% or less of what you are capable of producing.
Its a simple solution for every kWh you import you should export 4 kWh. The difference between the Import and the FIT not only offsets the cost of the Import but also provides a credit that helps offset the fixed daily charge.
Out of interest, did the WA Finance Minister give any reason for adopting this approach ? eg “Two thirds of power is used by business, and we want to avoid sending them broke (and putting people out of work) which is the danger from increasing the usage charge, so we are charging everyone a bit more”
The West Australian Treasurer, Ben Wyatt, didn’t specifically say why they chose to only raise supply charges, but he did say the following:
“Every West Australian needs to do their share in fixing the budget.”
“We have had to make tough decisions to help get the Budget under control and unfortunately the burden of those decisions need to be shared across the community.”
I think he needs to go back to preschool because I think he missed learning what the meaning of the word “share” is. It definitely doesn’t mean a 1% increase for billionaires and a 20% increase for many low income earners.
I suspect that Labor resents the subsidies and tariff rebates offered by the LNP* which ideology might argue ‘benefits the rich’; or as a wealthy pensioner friend terms it ‘middle class welfare’. Note that he still accepts a part pension! 😉
Thus, hitting those ‘rich’ who adopted the generous LNP deal, makes sense to Labor ideologically. (Mine dew, they’re also hitting all our tenants who benefit from solar powered electricity systems we fitted to rentals, after interest rates fell from 9.58% to 5.4%.)
* Funnily enough, Mr Buzzy attempted to renege on our ten-year tariff rebates, before we threatened a state-wide class action. The LNP introduced paid parking at railway stations, instead(!)
Yeap I whole heartedly agree!! I was so fustrated and angry at this ridiculous increase to the supply charge. This including the pathetic feed in tarif is appauling. I am sure the wholesale price of power has increased ???
Hi, not sure where you get this 26.5 cents per kw or the 94.9 cents per day for supply charge from. I received my bill a couple of days ago and the price per kw has remained unchanged at 24.0673 cents as it has been for ages, and my daily supply charge is only 86.278 cents per day. That is a large increase i know, but not the 94.9 you say.
Hi Bob.
Those are the prices before GST is applied. As GST has to be paid, I included it in the figures in the article.
Excellent article Ronald. Here is another presentation of the case for full volumetric pricing:
https://www.facebook.com/groups/996387660405677/permalink/1633422346702202/
That was stuffed full of excellent points, Jeremy.
I see the same situation with my gas bill. Cents per megajoule have increased 40% over a 10 year period and the service charge is usually about 35-45% of my total bill. The retail power industry both gas and electric is milking the public via the increase in these service charges. A disgrace situation and another example of the failure of privatization and competition policy. Remember that ‘competition’ would lead to lower prices? Utter rubbish and yet we still swallow this bullshit from our leaders.
In response to ramjetski, ex Queensland ALP premier Teflon Pete is credited with the same shenanigans but rather than being permanently) run out of town, the clown was appointed to some ridiculously overpaid international junket for long enough for the flak to die down, now he’s popped up again as the CEO for the 2018 Commonwealth Games,
Hello. My 2 cents as it were. The government is run by the rich the screw the poor no matter where you live.
That said, This increase is on grid usage, so get off the grid. The State of Hawaii now has a no export policy so as the saying goes “you run what you brung”.. Either put up a larger system so you don’t need grid power or get a better storage system, or a storage system period.
If all else fails then you have to change the way you run your life. Find out where you can cut the excess power you are now purchasing. Easier said than none,yes.
Remember if you don’t have anything to complain about your dead. lol
In SA the supply charge has been gradually sneaking up for quite some time, so although the latest rise is not as sudden as in WA, we are now paying $0.9856 per day (Energy Australia). That’s $360 a year which could go towards being off grid for those on a low FIT, so the economics of batteries deserves continued close monitoring.
On my analysis batteries that cost between $800,00 and $1,000.00 per kW installed have a payback period of around about 10 years given a general tariff of 0.28c kWh and FIT 0.10c. At an installed price of $1,666.00 per kW the ROI is approximately 4.00% PA [Not GST Adjusted]. GST is not payable on self consumption in my the ROI calculation I do not add back the cash flow value of GST [just to keep things simple]. So right now it would be a toss up whether you left the money in a fixed term deposit or invested it in storage.
Most calculations of the viability of battery storage omit one factor which has a real value to me, that is the ‘up yours’ value. As a consequence of many years in a voluntary advocacy capacity for victims of official malpractice, I have a pathological contempt for all things official. The opportunity to tell abusers (which includes electricity companies) to go do something physically impossible is something too attractive for me to ignore.
I believe that simplistic reporting of complex issues are counterproductive, we have to understand that the energy that we as a society have used and wasted over many generations are now required to be holistic and understandable by everyone. The cost of energy to a home has a number of individual components that have to be appreciated against a weighted priority and the cost apportioned accordingly if long term if investment is going to be viable. Ask yourself the question “what is the real problem” before rushing off with a simplistic solution as the solution is going to hurt someone and that issue will require some mature judgement decisions.
I guess one positive that could come of it is it wiil push more people qhp can afford to to go off line. There by reducing the cost of such systems so that hopefully some of those that can’t afford to now may be able to I’m the near future. I’m certainly thinking seriously about it.
By importing lead acid batteries from China, getting an Australian GSL regulator, used panels and shopping around for a reasonably priced inverter, a very usable off grid PV system can be assembled for well under $5000 if one can do most of the work. One trick is to design the setup so that the regulator input voltage is below the threshhold that ‘officially’ necessitates a professional installer. Mind you some take the view that laws are meant to be broken. This stuff is not rocket science providing the apparent obsession with using whiz bang gear is set aside. A bloke in my area built the crappiest off grid system in the galaxy some forty years ago and it is still running today. Six completely different panels that came from junk shops,(I doubt that he understands anything on the sticker), a regulator that Noah had on the Ark, and a couple of old truck batteries (which get replaced when they won’t take a charge) complete the setup. Certainly it doesn’t run a mansion but the family had no other source of electricity bar a generator used to run the washing machine each week. Everything else runs off 12 volts except the fridge, stove and hot water which are gas.
Is it a Henny Penny aka Chicken Little moment well I am not sure because there are many options in reducing one’s own expenses when it comes to energy. Put simply the requirements of a person on a heart lung machine has an extraordinary degree of reliance of the continuity of the power supply and the medical professional that makes sure the machine continues to go beep. So it is with domestic energy because no two circumstances are exactly the same and have the same requirements. So to put it simply when it comes to renewables one size does not fit all and good decisions require a process of an analyse of your exact requirements including due diligence involving a considerable amount of research and the bona fides of the supplier before you put any money on the table. As for those who create their own solutions from a bit of this and that you need to ensure that your building and contents insurance is not rendered null and void because what you have done does not meet with Australian design standards and you just happened not to be a certified manufacturer and/or installer of the equipment deployed. Contrary to what they would have you believe Insurers by practice look for a reason to decline a claim rather than approve it. So you pay your money and takes your chances.
The increase in Supply charges is no surprise. Its been coming for a while because its the ONLY way power suppliers can protect their revenue.
Increasing $/kWh charges just accelerates the (inevitable) transition to solar, which accelerates the loss of revenue. Power companies are simply preparing for the day when everyone generates their own power and the only revenue they can collect will be the supply charge.
Mass, microgeneration is coming at an ever increasing rate and the power companies are doing whatever they can to slow this rate of change to extend their business life. Power company conglomerates are the present day dinosaurs – and they are just beginning to realise how dire their situation is becoming. Extinction in less than 15 years, possibly 10.
You WAers are lucky. Here in Port Macquarie my daily cost is $1.562 inc GST & supply is $0.319/kWh. I am gunna keep checking on daily/supply charges & calculate if going off grid with storage is feasable (cost wise). One day down the track it will be feasable, soon I hope.
While it’s true that our electricity is cheaper (not privatised) it’s not particularly reliable. Too often the wires are down… and food in our freezers is at extreme risk. Poles-and-wires are not only horse-n-cart technology, vulnerable to increasingly violent storms, but aerial systems are very, very expensive to maintain. Thus maintenance is ongoing and pretty much hit-n-miss. In our street there’s one pole leaning over so much, that looking down the line of poles, you’d swear it was actually falling!~
Where we _have_ been lucky (but not personally*) has been with those ten-year tariff rebate contracts, introduced (then threatened) by the LNP.
Like you, we’re planning to go offgrid in the (near?) future. We’re waiting for the right battery system. A lot of our home technology (including two eBikes) is lithium-ion… and we’re also looking at Tesla’s Model 3, the _new_ Nissan Leaf… and, once it’s available, the BMW full-elec Mini.
* Gotta laugh… . We fitted nearly all our rentals with Solar Elec panels, scoring 10-yr-contracts for our tenants… before the state government ceased offering these contracts. We missed out ourselves(!) My chief concern, BTW, is the immense danger of bushfires, when storms bring down those effing wires.
You say -footnote 8: ‘Going off-grid never makes environmental sense, as surplus solar electricity produced by a household can’t be sent into the grid to displace fossil fuel generation.’ That is not necessarily self evident. If the grid became more carbon neutral, staying on grid would be OK. But if it is going to become less efficient and more expensive and still burn 80% fossil fuel, there would be an environmental benefit in using less power from it. Can you do an article on this please?
If you do not send your excess PV to the grid you incur a loss of opportunity cost to the value of the FIT. If you send excess power to the grid you are diluting the cost to produce commercial power that is a positive benefit. Staying on Grid and paying the fixed costs is a bit like paying an insurance to have the distributor as the energy supplier of last resort. When it comes to renewables we have already reached the tipping point in the cost to generate power. Non-renewables in the not to distant future will not have a cost per megawatt advantage. Coal and Gas generators are unlikely to be replaced when they read the end of their useful life. Irrespective of what the Government might demand it is likely that AGL will close their coal fired power stations when they are no longer economical to operate in the absence of a material subsidy payable by the government in as much as 1B. The future when it comes to dispatchable power is storage taking full advantage of generator capacity when supply is greater than demand. When it comes to storage there are many different disruptive technology solutions already available and under development. There are Batteries, Hydro and Pumped Hydro, Compressed Air, Centrifuge just to name a few. When you analyse any issue at its core you will find that it is all about money and has only ever been about money. If money drives the adoption of renewables to produce cheaper power then climate change will also be one of the beneficiaries.
I think the point where renewable energy is cheaper than non-renewables will come sooner than many think. At a retail level, I suspect we may have already passed that point – rooftop solar probably already has a business case for the individual home even without subsidies (that is if you do not count the FIT as containing any subsidies – that is again debatable).
That is the primary reason why I am increasingly of the opinion that it may make no sense to build any more new coal-fired generation. Coal cannot provide dispatchable generation – as a result, coal-fired power stations will increasingly generate power that nobody wants to buy during the day.
” When it comes to renewables we have already reached the tipping point in the cost to generate power. Non-renewables in the not to (sic) distant future will not have a cost per megawatt advantage ”
Tosh. We can’t have reached the ‘tipping point’ if non-renewables still have a cost per megawatt advantage.
To deliver power on a windless night requires investment in storage to store the power produced by intermittent generators. Factor that in (including retrofitting it to all the PV and wind-farms that have been built) and the cost to deliver the infrastructure to replace coal-fired power stations looks pretty sick.
As for Liddell, why complain if the government pays $500M or even $1,000M? Recent estimates in the press are that the federal and state governments have spent $60 Billion to date on subsidising intermittent power.
Without ongoing subsidies, intermittent power is significantly more expensive than coal-fired generated power, and the cost of the infrastructure for intermittents (generation plus storage) is significantly more than building new coal-fired stations.
And look where the fixation with intermittent generation has got us: – power prices have doubled and are set to keep rising. Intermittent power is economical for householders only by virtue of the subsidies (Renewable Energy Certificates) given by government to purchasers of panels.
Business (which uses two thirds of all power) is going to have to pass on the price increases. Those that cannot pass it on will go broke – and those that are most at risk are the country’s export industries. We’re looking at increased unemployment and the virtual de-industrialisation of Australia because of the refusal to accept that intermittent generation is inherently uneconomic for the nation.
Firstly Liddell is not a dispatchable power generator that puts it at a price disadvantage when calculating any ROI. Why well wholesale prices when dispatchable power is required can be as high as $5,000 per megawatt [average wholesale price $110]. For any class of generator there is a significant loss of opportunity cost for the power that could be generated at times of less demand not being stored. Storage turns renewable energy generators into the dispatchable power class and will have the effect of pushing down peak prices. Coal in Australia is already subsidised to the tune of 1.8B and as a consequence a class of industry that by any measure is simply being propped up. RET’s are a one time subsidy created only when someone installs solar and have a regulated maximum value. India seen by Australia as a market for its Adani coal has taken the decision not to proceed with the building of 14 Coal Fired Generators in preference for Solar based on the economics. Dubai will be totally renewable energy sufficient by 2020 where they have been able to reduce the cost of energy to less than $0.06c US per kWh. In Australia an appetite to invest in non-renewable power other than the government appears to have evaporated. Power Generators is always going to be a mix of technologies simply because they can cover the weakness inherent in each of the different classes. And finally the energy source to produce power in the case of coal and gas comes at a cost whereas there is no cost applicable to renewables energy source. So given inflation what is going to be the cost of non-renewables now, tomorrow, next week, next month, next year and in 50 years [the life of the plant] when compared to Solar and/or Wind and how will that translate into the cost of power in Australia? It is not about adopting a technology that makes us energy poor but one that makes us energy efficient and cost effective. And finally private individuals are turn to domestic solar as a cost effective way of reducing household cost. Yesterday without solar my daily cost would have been $9.49 and with Solar $0.53c including the fixed network costs which would you rather pay?
*Yesterday without solar my daily cost would have been $9.49 and with Solar $0.53c including the fixed network costs which would you rather pay?*
Just curious… I’m not a numbers whiz – does this mean you only import 2 KWH daily ($0.53) and self supply about 33 KWH per day? Is this only due to solar generation or do you have battery storage or use other means (completely shut down everything and you all go to sleep at dusk)?
I guess I am asking what system do you have and what other means do you employ to get it down to only $0.53 per day (I presume that doesn’t include the 95 cent Supply Charge, or is it included but offset by feed in tariff?)
Thanks.
Curious says:
This is for the 24 hours midnight to midnight 26/9/17 Consumption 23.10 kWh PV Production [7.99 kW System] 42.30 kWh Imported 2.8 kWh Exported 22 kWh Battery 2.4 kW Charged 2.83 kWh Discharged 2.45 kWh. Tariff 11 0.28479c FIT 0.10102c Fixed Daily Cost $1.16. Cost without Solar $6.58 + $1.16 Total $7.74. Imported Cost 0.80c – $2.22 [FIT] + $1.16 Total -0.27c Cr. The value of the battery discharge was 0.45c. The Import and Export values are after the batteries contribute to consumption at their maximum discharge rate.
During the day we ran a pool pump, pool heat pump 3 x fridges, 2 x dishwashers 1 x washing machine. Cost of the system $18,200 ROI 16.05% Annualised Cost $-96.74 Cr Overall Savings $2,921.35 or 103.42%. Out of Sunlight [Nil PV Production] 3.86 kWh Mthly Avg 4.02 kWh.
We have an Enphase System 23 x 250w 7 x 310w Panels and 2 x 1.2 Kw Batteries. We start generating power at 6:00am to 6:00pm and usually run the the utilities during PV Production. You can view our system at this URL https://pvoutput.org/intraday.jsp?id=60686&sid=54027
In order to make it through winter and periods of cloudy weather, any properly designed off-grid system is going to produce a considerable amount of solar electricity in excess of the home’s needs over a year. It’s far better to install the solar panels and remain connected to the grid so that surplus can be used to displace fossil fuel generation. Or at least it is up until fossil fuels are eliminated from the grid.
I recall speaking with someone a few months ago that mentioned he and the company he worked for are working on technology to export stored solar energy to grid at night time. As in the energy company flicks a switch to gain access to your stored energy when they need it ( same as they turn tariff power off and on when demand is high ). Looking forward to that coming into play not too far down the track I would hope. Provided ROI is adequate I would be more than happy to install more capacity.
In WA Western Power, the State’s Network Operator has determined that single phase will be limited to an Inverter size not exceeding 5 kW in the case of three phase 5 kW per phase making a total of 15 kW. If you are single phase and get approval to increase the Inverter size you loose the Feed-in Tariff which they call REBS [Renewable Energy Buyback Scheme]. So for Western Power to gain access to domestic stored solar there would have to be a significant rethink about what would need to be the average Inverter required to produce and store an excess to consumption the equivalent of 10 kWh of power because that unlikely to be achieved with a system limited to 5 kW. https://www.infiniteenergy.com.au/maximum-residential-solar-pv-system-size-wa/
*As in the energy company flicks a switch to gain access to your stored energy when they need it ( same as they turn tariff power off and on when demand is high ). Looking forward to that coming into play not too far down the track I would hope*
Don’t get too hopeful, that technology would likely not be for your benefit.
As the changes in rebates, feed-in tariffs, supply charges demonstrate, this is a game the average end user is not designed to win. When the government owns the power generation company and selects the people who make the regulation decisions and owns the company that sells the power, how could it be otherwise? More people installing solar, so increase the Supply Charge to claw back their savings. Meanwhile get your in-house ‘retailer’ Synergy to start selling solar systems to its customers (includes nearly everybody) – if solar is going to be installed, might as well earn the profit on systems themselves and, hey, if the Feds won’t give us our GST earnings back maybe we can get a tiny bit more money through STCs.
And if they can flick a switch to gain access to your battery storage, you can darn well bet it won’t be at night because they don’t want to pay for storage – it will be during Peak usage times when you want to use it yourself after generating/storing it all day. And of course since they make the rules there will be a clause that if you have storage and are connected to the grid that they have the right to do that if you have more than ‘x’ available at any time. You could have 1 or 4 Powerwalls or similar but they will mandate they can take everything above ‘x’, leaving you no doubt with enough for your household to go 24 hours, just. If you don’t like it, you can’t be grid connected. And if you think they will pay you anything more than the current feed-in tariff, I think you’d be wrong even though by then they will no doubt have moved more people to the ‘Smart Home’ tariff which currently has a peak of about 50 cents per KWH so maybe they will often 2 or 3 cents more for what they steal (oops, ‘buy’) during Peak hours. Clever tariff name because it ‘smarts’ (is painful) if you have to use it and can’t supply your own Peak power needs.
So in WA we should expect a Supply Charge increase again next year at least, and in the announced third year of increases they will likely mandate that ‘they have listened’ and in order to make charges more fair they will eliminate the Standard A Tariff and only have the Smart Home Tariff. Probably the vast majority of the WA households that haven’t installed solar by then won’t be able or willing to plunk down the one time cost of installing solar which they will need to do as electricity will be much more expensive at that point. So that makes Synergy the most attractive option as they will nicely bill you your solar system cost over 3 years in your regular bill (hey, I’ve got solar yet my monthly bill is the same.) for a small fee.
At that point with Smart Home as the only tariff, it will no doubt be economic to install batteries but by then they will pass legislation that mandates some type of Storage Connection charge (whether initial installation or ongoing or both) plus they will have the right to monitor your storage capacity and tap it whenever they need/want it.
The final insult will be when too many people finally give the grid the flick because of the intrusive regulations and the power disappearing from their battery systems. Then the powers that be will create an annual levy because you use public areas (roads, parks, etc.) that must have power supplied. The new charge will be added to every non-grid connected property owners Rates and amazingly be equal to the then current annual Supply Charge.
After all, this isn’t about generating power efficiently or in an environmentally sound manner. It is simply another example in action of the organizational imperative to survive at all costs.
It is the bureaucratic version of the Uber/airBNB model. Revenue generation from other people’s assets while returning only the minimum amount that will keep punters (the asset owners) signing up for the privilege. Only it’s even easier for the government in this case as they also make and can keep changing the rules that underlay the game plus they have a lot of practice in reaching into other people’s wallets.
My crystal ball says ‘Bet on it.’ Or I just could have been in the sun too long and be delirious…
Hi,
While I’m not a Nazi (usually), I do understand the context, and having had a few in our house (renters, not Nazis), I disagree the renters should not be eliminated.
Also, I agree service charges suck big time!
dRdoS7
Service charges suck well do they? When actual kWh consumption does not cover the total cost of supply then it makes sense to have a fixed daily charge to cover the cost of distribution which everyone should pay. When it comes to attribution to recover cost within any pricing structure it is quite natural for people to disagree because there is no formula which takes account of individual circumstances that can and will achieve an equitable outcome. If you end up with a Fixed Seasonal Demand Charge then consumers might really have something to whinge about.
Here in the States, I see what is happening with you blokes down there…and it does not look good. Since 2013, I have gotten my solar PV system in the country ramped up to 20kW, all Enphase M-series microinverters. I am grandfathered in, so my NEM agreement actually pays me out yearly. The utilities in Florida now have more than halved their NEM rates, and they’ll keep reducing them as more people wake up to solar PV. I think the article below from your country, really woke me up to the way things will go if the powerful utilities are not controlled. http://reneweconomy.com.au/networks-propose-compulsory-fees-for-all-to-stop-grid-defections-28523/
FYI our business Supply Charge didn’t double, it more than trebled!
ACCC need to fix this, doing this should be illegal. Every service is on a rate of the more you use the more you pay, having the supply charge at $60 every 2 months is the biggest con ever.
Gas companies charge me around $12 every 2 months for theirs, why on earth is the government run electricity company 5 times this? Simply because it is criminal and trying to offset solar or those who don’t even have solar and are switching to all LED etc in a desperate measure to reduce power prices.
Even if you go away you get slugged with this enormous supply charge cost when are not even using it! This should be illegal!
ozbloke36: ” Every service is on a rate of the more you use the more you pay…”
We’re different in WA, ob36. We completely agree with you on this, but in WA utilities are state government cash cows. Our current premier seems obsessed with inflicting pain on voters, arguing that the previous LNP government got us into debt… and voters (regardless of income) must pay the price.
To be completely fair, we’ve always been a little arse-backwards, regardless of which party is in power. There’s no user-pays principle in effect for water use, for example. A tenant can erect an above-ground swimming pool (without permission, between quarterly inspections) run a hose in the pool 24/7, then disappear… leaving the owner with a $1000.00+ Water Use bill! The owner pays!
Adding insult to injury, when a tenant pays Water Use bills late (accumulating an exorbitant interest rate, 11.7% p.a.!) the owner must pay that interest!~
A class action on misuse of government cash cows is l-o-n-g overdue… . 🙁