Smart meters/Advanced Metering Infrastructure (AMI)
VCOSS briefing paper
Monday 30 August 2010
Background
Advanced Metering Infrastructure, or ‘smart meters’, are currently being installed in all Victorian households over the next three years.
This new technology enables energy companies to communicate remotely with the electricity meter, allowing them to measure energy use in half hourly intervals, read meters remotely and connect, disconnect and control the flow of energy without visiting the property.
Measuring energy use every half hour enables companies to charge according to the time of day that energy is used, with higher prices at times of higher demand (peak) and lower prices at times of lower demand (off-peak). This is known as ‘time of use’ pricing.
While recognising that smart meters and associated tariff structures, such as time of use pricing, can benefit some households, VCOSS is concerned that there may be other households which can’t shift their electricity consumption without a loss of comfort or wellbeing, such as older people, those with a disability or chronic illness, the unemployed or those at home with small children. These households may face disproportionate price increases, exacerbating financial hardship.
The moratorium
The Victorian Government has announced a moratorium on energy distributors automatically transferring customers from a flat tariff to a time of use tariff when the smart meter is installed. The moratorium does not apply to the installation of meters and meters are still being installed across the state. The moratorium on the change to time of use tariffs is in order to manage the roll out of these tariffs and their impact on vulnerable households. VCOSS and other community organisations are working with the Department of Primary Industries to better understand the impacts of time of use pricing on Victorian households.
The meter costs
On average in 2010 the cost of these new meters is $68 and will rise to $76 in 2011, however this charge may be higher or lower depending on where you live. Ongoing charges will be reviewed by the Australian Energy Regulator in the coming years. All Victorian households are currently paying these costs through their electricity bill, however only one company is listing it as a separate charge on the bill. The reason that people are being charged now is that this allows costs to be spread more evenly, rather than in one large bill when the meter is installed. This is the same way that households have been charged for their old meters in the past.
The Victorian Government has also conducted a cost benefit analysis of installing smart meters
The impacts of time of use pricing
To date there has been little investigation of the impacts of smart metering and time of use pricing on low income households in Victoria. Previous cost benefit and impact analyses have focussed on overall costs and benefits to the whole community rather than investigating the individual household characteristics of those who may be worse off.
As part of the moratorium the Victorian Government has committed to undertaking a customer impact study to investigate which households may be better or worse off under a shift to time of use pricing. This study will inform future concessions, and enable a more thorough analysis of whether a mandatory shift to time of use pricing is desirable. Until this initial customer impact study is finished it is difficult to assess what other assistance is required to make sure low income households are not negatively affected.
Financial hardship and concessions
In our 2010 State Election Platform, VCOSS called on parties to commit to additional support to ensure that concession households are not disadvantaged by a shift to time of use pricing.
The platform also calls on parties to fund a transitional rebate to concession card holders for the cost of the meters, and to introduce minimum rental housing standards to ensure that tenant households are protected from rising energy costs.
These initial measures are important in the transition to new pricing models, however ongoing monitoring and review of the impact of time of use pricing will be required to ensure the adequacy of concessions as more and more households take up new pricing products.
Regulatory protections
In addition to the concessions and financial hardship assistance, this new technology requires new regulation. The Essential Services Commission has conducted a regulatory review of smart meters. This review has covered basic information provision and procedural matters, however a number of issues have been deferred until policy decisions are made by the Victorian Government.
VCOSS believes that the smart meter regulations should:
· ban retail offers that ration a household’s energy use;
· make sure that all households are able to get information about their energy use patterns free of charge;
· make sure that the information provided to households is clear and easily understandable; and
· ensure that no hidden fees and charges are applied to new time of use energy offers.
Existing consumer protections
A number of existing consumer protections will become increasingly important in a smart metering environment.
Wrongful Disconnection Payment
Smart meters allow households to be disconnected and reconnected faster than before. With the existing meters energy distributors must send a technician to a house to disconnect power. With smart meters, disconnection can occur at the push of a button. The Wrongful Disconnection Payment will continue to make sure that retailers take all necessary steps before disconnection and that no one is disconnected wrongfully or solely because they’re unable to pay their bill.
Ban on late payment fees
As electricity businesses get energy use information more frequently, they may move to bill customers more regularly (i.e. monthly rather than quarterly). While smaller, more regular bills will help many low income households to manage, there will still be instances where these households are unable to pay on time. If the current legislative ban on late payment fees was lifted, this penalty may be applied up to 12 times a year to households who cannot pay.
VCOSS Submissions
ESC Regulatory Review of Smart Metering
ESC Regulatory Review of Smart Metering – letter to the chair
National Smart Metering Program Customer Protection and Safety review
VCOSS Media
VCOSS welcomes Victorian Government move to investigate impact of smart meters on low and middle income Victorians, 22 March 2010
Roll out review of ‘smart’ meters welcomed, 4 February 2010
VCOSS heat on Winter energy concessions, 24 August 2009
Other resources
Department of Primary Industries
Victorian Auditor General
St Vincent DePaul
Melbourne University Social Justice Unit
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