I raised concerns about the use of smart meters, highlighting that they are being used by some companies to gouge customers without informed consent. Customers are often switched to punitive plans and charged excessively based on their peak usage, even if it occurs infrequently.
Ms. Savage clarified the distinction between network and retail tariffs and explained that the Australian Energy Market Commission (AEMC) is proposing new rules to protect consumers. These rules would require customers to opt into time-of-use tariffs and provide a three-year period during which they cannot be automatically switched to such tariffs.
I asked what were the tangible benefits of smart meters for consumers and was told smart meters help manage peak demand and reduce the need for network investment, ultimately benefiting consumers by keeping bills down. That seems to be a hollow promise given power bills have only gone up for many people who have had smart meters installed.
Transcript
Senator ROBERTS: Thank you for appearing again today. We’ve discussed at length—I think it was with you, Ms Savage—smart meters. You’ve regularly touted that they are a good thing, and you’ve spoken about the Australian Energy Regulator’s need to have them rolled out as widely as possible as quickly as possible.
Ms Savage: That’s not us. That would be the Australian Energy Market Commission who’s talked about that.
Senator ROBERTS: What’s actually happening is that smart meters are being used to gouge customers. Many companies are not getting informed consent from consumers before changing customers over to incredibly punitive plans. Then those smart meters are being used to pinpoint the exact time someone is using their maximum amount of power, and the companies are charging the customer as if they’re doing that the entire period. What we’ve heard of is, for example, a family might be away on holiday for a couple of weeks. They come back near the end of the month, and they throw everything in the dryer and the washing machine. Their demand goes way up, and they’re charged at that rate for the whole month. That’s clearly gouging them. Are there no protections for the consumer who wants to have their smart meter removed, and what are you doing to crack down on those predatory power companies?
Ms Savage: Thank you for the question. I think there’s just a distinction I’d like to make between a network tariff and a retail tariff. The electricity rules require network tariffs to become increasingly cost reflective, but a retailer’s job is to manage the risk on behalf of customers. As you can imagine, the price of power in the wholesale market fluctuates every day between minus $1,000 and $17,000.
Senator ROBERTS: It does these days, yes.
Ms Savage: It always has, actually. The cap has been different, but it’s always been highly volatile in the NEM. A retailer’s job is to package up a product for a customer that manages that risk for them. Networks have a set of cost-reflective tariffs that they show to retailers as well because of the way in which the cost of a network is really about the maximum use of the network. If all of us in this room decided to turn everything on at exactly the same time, the network has to be built big enough to accommodate that. I’m sure you can appreciate that. What the network is doing is giving to the retailer a signal about when they’ve got more or less capacity available in their network, and then retailers package up that network signal and that wholesale signal and give it to a retailer. The Australian Energy Market Commission has recognised that, with the rollout of smart meters, more and more customers are being put on to tariffs that they may not understand, the sort of tariff you just described, so they’ve actually got a draft report out at the moment which is suggesting that there should be a longer period of time for customers. Three years I think is what they’ve proposed, and Mr Duggan might want to talk a little bit more about this, given it’s not my agency, but they’re giving customers a three-year window where retailers can’t put them on to a time-of-use tariff. Even if they get a smart meter, they couldn’t go automatically on to one of those time-of-use tariffs. Did you want to add to that?
Mr Duggan: Just two additional things. It must be an opt in. Under what’s being proposed by the AEMC, you must opt into a time-of-use tariff, not be forced on a time-of-use tariff. The other element is, if you choose not to opt in, then you continue to face the flat tariff you would’ve before—building in additional consumer protections.
Ms Savage: For the three years.
Mr Duggan: For the three years.
Senator ROBERTS: What protections are available in the National Electricity Rules for consumers against power companies that are using the smart meters you’re encouraging to be installed to gouge people?
Ms Savage: This rule change that Simon has just referred to I’ve referred to will put that protection in place.
Senator ROBERTS: Is that what’s it’s designed to do? Is that why you’re bringing it in?
Ms Savage: Yes.
Senator ROBERTS: What tangible benefit are consumers supposedly getting out of smart meters?
Ms Savage: It’s a really great question. I’m going to give you a bit of a techie answer, but in Victoria, where we’ve had smart meters for some time, when we look at the rate of asset utilisation and the distribution system and compare to jurisdictions that don’t have smart meters, there is actually much higher utilisation. We see utilisation rates in the high 70s, whereas the average utilisation rate across the National Electricity Market is more like 43 per cent. Part of that is because the smart—
Senator ROBERTS: How do you measure utilisation?
Ms Savage: How much network is built to meet peak demand versus how much latent for the rest of the day.
Senator ROBERTS: Is the idea to try and decrease the amount of peak network capacity?
Ms Savage: It’s to try to ensure that, basically, we ‘ve got loads filling up the holes in the day so we’re not building too much network, that’s right. What you see in Victoria is the level of utilisation is much greater, so the overall network cost is much smaller. Customers are really benefitting from the reduced need to invest in networks, because of improved utilisation, so that’s one benefit. We also—
Senator ROBERTS: Excuse me, Ms Savage. Is that because consumers know when to utilise the network?
Ms Savage: That’s part of it, and it can be the visibility the network has over some of these assets as well. I know you and I have talked before about some of the different types of tariffs that exist in Queensland, like controlled load tariffs et cetera, particularly with pool pumps and things like that. Being able to move these types of discretionary loads—not heating, cooling, dishwashers or lights, but some of those moveable loads through the day—can actually avoid investment in the network, which is a great thing for consumers in keeping bills down.
Senator ROBERTS: Last question related to smart meters. I raised at a previous session the issue of air conditioners being throttled by power companies. You seemed unaware of that issue when I raised it. Have you had time to review the article I supplied confirming that actually did happen at an alarming frequency? I think it was six times in a matter of months.
Ms Savage: I think that was a question about the PeakSmart device. You gave it to us on notice, and we’ve responded on notice. Is that correct, Steph? Yes.
