AGL presents case for time-of-use tariffs

Energy supplier AGL has boosted the case for smart meters in Australia with research showing adopting time-of-use tariffs would lead to economic gains of about $1.6 billion.

The AGL study aimed to show the government that the “case for reform tariff” is clear, according to the energy company’s chief economist Paul Simshauser.

Mr Simshauser said he believed adopting time-sensitive tariffs, made possible by smart metering technology, would deliver gains for householders and businesses, The as reported by The Australian.

AGL data, based on 2.8 billion readings from 160,000 smart meters in Victoria, found almost two thirds of households were better off after a shift to flexible tariff pricing. The worst affected households, according to the study, were wealthier families using more power during peak times, as reported by metering.com.

“The most surprising result from our analysis of winners and losers are that households classified as ‘in hardship’ are overwhelmingly better off after tariff reform,” Mr Simshauser said, noting working couples and pensioners also did well out of flexible pricing.

“It would make better policy sense to shift people to the new system and give them the option of opting out.”

Mr Simshauser also acknowledged US data suggested a fifth of households choose flexible pricing if given the choice.

“Industry shouldn’t fear the rollout of smart meters in terms of profitability,” he said, noting the overall fall in consumption was only 1-2 per cent and energy regulators would still permit ?certain rates of return,” he said, as reported by metering.com.

Victoria is currently the only state so far to have rolled out the devices, with the 2.8 million smart meter rollout nearing completion.

The state government has passed new regulation to penalize electricity distributors that have yet to upgrade all customers, as well as to address the issue of manual meter reading fees. This means any electricity distributor that has not attempted to install a smart meter in a Victorian home or small business is required to pay the customer a rebate to compensate them for potential savings that would have made through using the energy-saving technology.

Meanwhile, energy companies that don’t have remote meter reading in place by March 31, 2015, will be required to pay consumers a one-off payment of $125, as compensation for not having access to the energy saving benefits of smart meters.

The Victorian government has also issued regulations to clarify how electricity distributors can recover costs associated with manually reading meters for customers who refuse smart meter installation, as reported by metering.com.

“The Australian Energy Regulator must approve the amount of a manual meter fee before it is charged, to determine it is set at a reasonable level, and that it is cost reflective,” the Victorian Government smart meter website states.

The approval process to determine the amount of the fee is due for completion by the end of this year.