Download ActewAGL Tariff Structure Statement

Clean Energy Council submission to AER Issues Paper
ActewAGL Tariff Structure Statement 2017-2020
Executive Summary
The Clean Energy Council (CEC) welcomes the opportunity to provide feedback on ActewAGL’s
proposed Tariff Structure Statement (TSS).
Support for the new electricity distribution pricing arrangements will be strongest if they are
implemented on a customer-driven basis and in conjunction with new customer engagement
strategies and support for the adoption of emerging energy-related technology.
ActewAGL’s opt-out approach for existing customers (until the end of the regulatory period in
December 2019) meets CEC’s principles for tariff reform in that it gives customers choice and does
not selectively penalise owners of solar, storage or smart meters.
The proposal to automatically assign new customers to a demand tariff with no opt-out provision
after December 2017 is likely to disproportionately affect certain groups of customers and the ACT
Government might wish to develop a program to assist some adversely affected groups in their
transition to new tariffs. It would assist efficient program design and delivery if ActewAGL were
required to provide data on the groups of customers it expects will be most adversely affected by its
proposal.
In order to build strong public support for tariff reform we recommend that ActewAGL adopt an optin approach that is integrated with the ACT Government program that will result in 36 megawatts
(MW) of battery storage being rolled out in more than 5,000 Canberra homes and businesses. This
could form part of a program to assist adversely affected customers with making the transition to
demand-based tariffs.
1. CEC’s approach to new distribution pricing arrangements
CEC supports the principle of moving toward more cost-reflective distribution network tariffs. We
understand that electricity pricing is crucial to influencing demand on the network. We also know
that recent behavioural economics research (eg. from the CSIRO) shows that price signals alone are
not enough. Cost-reflective pricing will be more successful the less it relies on consumers,
themselves, responding to changing price signals. Automation technology for electricity demand
management will play a key role in the success and acceptance of implementation of cost-reflective
tariffs.
The key issue for tariff reform is to implement the reforms in ways that build public understanding
and support.
The principles that guide CEC’s approach to distribution network tariff reform are:

We strongly oppose any tariff that discriminates against households or businesses simply
because they own solar, storage or a smart meter.

We oppose increases in fixed charges because customers should be able to respond to price
signals and especially to changes in pricing.

We understand the crucial importance of building public support for tariff reforms and
therefore we support the customer-driven opt-in approaches proposed in Victoria and
Queensland.

We understand that cost-reflective pricing will be more successful if it is introduced
alongside automation technology and does not rely on changes in the behaviour of
consumers themselves.
CEC strongly opposes any discrimination against customers simply because they own solar, storage
or a smart meter. We are pleased to note that ActewAGL does not propose to treat customers with
solar, storage or a smart meter less favourably than customers without such facilities but with a
similar load profile.
The importance of building public support
The CEC was a supporter of the mandatory roll-out of smart meters in Victoria. We have learned the
lessons of that experience, which demonstrated that a slow, steady and successful reform process is
preferable to one that is quick, unpopular and unsuccessful.
It is crucial that the transition to cost-reflective tariffs is handled well and builds public support
rather than antagonism. There was inadequate public support and education when smart meters
were first introduced to Victoria and the resulting public backlash derailed the metering reform
agenda. We cannot afford to make similar mistakes with the network tariff reform process. Owners
of distributed generation could be enthusiastic advocates for tariff reform or they could become
trenchant opponents. Their response will be shaped by the process for introducing the new tariffs
and whether they are characterised as part of the problem or part of the solution.
Automation technology versus behaviour change
Cost-reflective pricing will be more successful the less it relies on consumers, themselves,
responding to changing price signals and the more it relies on automation technology for electricity
demand management.
Following the publication of ActewAGL’s TSS the ACT Government announced it would accelerate
the introduction of battery storage and plans to support the installation of 36 MW of battery storage
in more than 5,000 Canberra homes and businesses over the next four years, as part of a next
generation renewables auction program that will start in 2016. The ACT Government program is an
ideal opportunity to offer peak period demand tariffs on an opt-in basis, with support for
automation technology and new customer engagement strategies. Canberra is already the home of
a pilot program trialling the option for households to trade energy with the grid. The program is
being conducted by Canberra-based Reposit Power. Building on this approach would keep the ACT at
the cutting edge of innovation in its continued support of renewable energy.
In order to build strong public support for the proposed peak period demand tariff we recommend
that ActewAGL adopt an opt-in approach to network tariff reform that is integrated with the ACT
Government program that will result in 36 MW of battery storage being rolled out in more than
5,000 Canberra homes and businesses.
2. ActewAGL’s opt-out approach
We understand that the key features of ActewAGL’s proposed transition to cost-reflective tariffs are:



Existing customers with accumulation or non-remote read meters remain on their existing
tariff.
Existing residential customers who have their meter upgraded will be automatically assigned
to the demand tariff and may opt-out for the duration of the regulatory period under
consideration (ie. until December 2019).
After December 2017 new customers will be automatically assigned to a demand tariff with
no opt-out provision.
Proposed tariff feature
Existing customers with remote
read interval meters may optout of the demand tariff
After December 2017 new
customers will be automatically
assigned to a demand tariff
with no opt-out provision
Consistency with CEC principles
for tariff reform
Customer-driven, does not
discriminate against solar,
storage or smart meters
Does not discriminate against
solar, storage or smart meters
CEC response
Support in principle
Recommend ACT Government
consider impact on tenants and
rental properties
The proposal to allow existing customers to opt-out is supported insofar as it customer-driven and
does not discriminate against owners of solar, storage and smart meters. Allowing opt-out for
existing customers also avoids devaluing investments they might have made in new or emerging
technologies.
Assigning new customers automatically to a demand-based tariff with no opt-out provision has the
advantage of not devaluing investments of existing customers and not discriminating against owners
of solar, storage or smart meters. However, it is worth noting that this approach will
disproportionately affect certain groups of customers. A higher than average proportion of renters
and small businesses might be adversely affected because those customer groups are more likely (on
average) to be new customers. Residential and small commercial tenants are often constrained in
their ability to invest in technologies such as solar and storage due to the tenant-landlord split
incentive. The impact of the proposal for residential and commercial tenants should be given further
consideration. The ACT Government might wish to consider programs to assist adversely affected
customer groups with the transition to the new tariffs. It would assist efficient program design and
delivery if ActewAGL were required to provide data on the groups of customers it expects will be
most adversely affected by its proposal.
In order to build strong public support for the proposed peak period demand tariff we recommend
that ActewAGL adopt an opt-in approach to network tariff reform that is integrated with the ACT
Government program that will result in 36 MW of battery storage being rolled out in more than
5,000 Canberra homes and businesses.