More power to the people

The Australian Energy Market Commission (AEMC) has proposed that smart meters be installed in all homes to help reduce demand on the electricity network, especially at peak times. Smart electricity meters use the internet to send information about our power consumption to power suppliers and retailers, which is used to work out our energy bill. There is good and bad news about these meters.

Those old-fashioned meter readers will be a thing of the past and with it the risk of being bitten by pet dogs and hiding spiders, hopefully reducing the cost to households. 

Smart meters will supply consumers with insights into their power use, potentially helping save money by encouraging greater power consumption during times of the day when electricity is at its cheapest. 

Smart meters could, therefore, be a useful tool in cutting power bills and carbon emissions, and in better managing an increasingly complex distribution network of poles and wires in an age of renewables.

Smart meters are coming whether we want them or not. However, their impact on electricity billing and energy use has not been explained adequately to consumers. 

The new tariffs and billing arrangements enabled by smart meters are complex and difficult to understand, and even the regulator acknowledges there are inadequate consumer protections. 

Savings are dependent on when we use electricity. 

For many, that will be difficult if not impossible to manage. Think about changing your patterns, for example, when you eat your evening meal or shower. 

If you can’t make changes and you don’t have household technologies, such as solarpowered batteries, to manage your power use, you could end up paying more for your electricity as a result of smart meters.

A smart meter is a device that measures your electricity use digitally and sends data back to your electricity provider, allowing retailers to charge different rates at different times of the day, supposedly to better mimic the price they pay for energy on the wholesale market at different times. 

This is necessary because as energy production changes, the times at which energy is cheaper will also change. 

Surplus energy is being produced during the day as more solar and renewable energy is generated, and energy is not as cheap at night as it once was when coal-fired power stations churned out surplus energy, whether we needed it or not. 

Added to this, demand at peak times continues to rise, meaning more work is needed to smooth out energy production and consumption. 

In the absence of large-scale batteries or other energy storage technologies (for example, pumped hydro), it is becoming harder to provide round-theclock, consistent, at-call power. 

The energy grid must be carefully managed to preserve the electricity network from strong demand, especially at peak times. 

The AEMC’s proposal to roll-out smart meters is part of the solution and would include all households across the National Energy Market (NEM) by 2030 (excluding Western Australia and the Northern Territory), with no ability to opt out. 

In theory, higher prices at peak demand times will encourage consumers to shift their electricity usage to times of the day when electricity prices are cheaper— making more efficient use of the poles and wires network.  

However, few customers appear to be aware of smart meters or plans to make them mandatory, and the impact these might have on the price they pay for energy. 

They are not aware they can be put on ‘cost-reflective’ tariffs that change according to the time of day and/ or on how much energy they use or what this means for their bill. 

A ‘cost-reflective’ tariff (as opposed to a flat-rate tariff) is meant to reflect the cost of providing different amounts of electricity at different times. 

The new cost-reflective tariffs that smart meters enable can be detrimental to consumers. For example, a demand tariff uses the single highest point of demand for power from the grid—measured in 30-minute blocks—to calculate how much you pay for a whole month. 

This is not ideal for those who could be away from home for all but one day in a month and return on the final day with heavy power needs. 

This high usage would form the basis of the demand charge for the entire month!

Recently, the AEMC, which sets the rules for the NEM, servicing about 10 million homes on the eastern seaboard, proposed an accelerated roll-out of smart meters to hasten the transition to cost-reflective tariffs. 

Belatedly, and after actively promoting smart meters, the AEMC has raised a red flag (but stopped short of calling for a halt in the accelerated smart meter roll-out). 

A mandatory roll-out could undermine the work of the government in lowering energy costs and reduce public support for further investment in the energy transition.

AEMC Chair, Anna Collyer, suggests slowing the roll-out of tariff reform as the commission undertook a review of the rules around electricity pricing and looked to strengthen consumer protections. 

“It’s critical to the success of the roll-out that we work through these concerns raised about how retailers might be applying demand or time-of-use tariffs in unexpected ways. And we expect we may need to push back the final determination to do this well,” she says, while emphasising the rollout would proceed. 

National Seniors wants the AEMC to further consider whether a mandatory roll-out of smart meters to all households, regardless of whether they can use them, is the right approach.

National Seniors wants to hit the pause button on smart meters by calling for a rethink. 

While smart meters will help some households to be more energy efficient by enabling them to monitor their energy consumption, they will not benefit all consumers and may see some financially worse off.  

Simply, not enough is known about the impact and cost of the reform on consumers in general and vulnerable people in particular. 

However, there is evidence of take-up of time-of-use tariffs in locations where smart meters have already been rolled out and it’s not promising. 

In Victoria, where there has been a full roll-out of smart meters, most households do not use the cost-reflective tariffs available to them. 

This indicates that people are not benefiting from them in the way the AEMC and retailers envision. It’s fine if you have solar and batteries and can manage your consumption, but that is not the reality for most people.  

National Seniors CEO, Chris Grice, says that despite the objective of the reform to encourage people to change their behaviour, not all consumers can do so. 

“Rolling out smart meters to households that cannot realise the benefits and face increased power prices, as a result, is highly inequitable and undermines the logic of a mandatory roll-out,” Mr Grice says. 

“We are particularly concerned about the potential impact on seniors on low fixed incomes, who may depend on home heating and cooling and have limited capacity to invest in technologies that enable behaviour change or mitigate energy consumption in peak times.” 

Smart meters and new cost-reflective tariff regimes are complicated and can require a high level of technical knowledge. Households must be given more time and resources, otherwise, there is the risk some people will be disadvantaged.  

A mandatory roll-out could undermine the work of the government in lowering energy costs and reduce public support for further investment in the energy transition. 

Why, at a time of high inflation, are we seeking to gold-plate the energy network when many will not be able to use such technologies? 

National Seniors is calling for the roll-out of smart meters for all households to be reconsidered and restricted to households that can utilise them.