Power Of Choice Meter Reforms Result In Powerful Conflicts Of Interest

electricity meter

A new scheme called “The Power Of Choice” has moved responsibility for meters to the retailers.

On the first of December 2017 responsibility for electricity meters in the National Energy Market or NEM changed hands1.  The NEM is a National Electricity Market that apparently thinks Western Australia and the Northern Territory are other countries because they’re not included.

The job of installing and maintaining electricity meters was taken from Distributed Network Service Providers or DNSPs and given to Electricity Retailers.  In other words, it was taken from the people who distribute electricity from long distance transmission lines to homes and businesses and given to the people who bill you for electricity.

This has resulted in huge delays in electricity meter installations, unethical behavior from electricity retailers, has made a lot of people very upset, and — according to the comments I keep receiving — is generally regarded as a bad move.

The change is part of the NEM’s “Power of Choice” reforms that were put in place by the AEMC, which stands for Australian Energy Market Commission.  They are the body that makes rules about energy and advises governments, both state and federal.  I decided I’d look into these reforms to find out why the change in electricity meter responsibility was made.  This was in the hope of understanding why we’re in this mess.

Power Of Choice Reforms Are Mainly About “Demand Side Participation”

The main goal of the Power of Choice reforms is to increase “Demand Side Participation”.  This means they want to change the way people pay for grid electricity so they will be discouraged from using it during periods of peak demand and reduce the stress on the grid.  This has the advantage of reducing grid operating costs but has the disadvantage of making people’s lives more complex because they have to worry about a whole new set of options when it comes to paying for electricity.  In Queensland, New South Wales, Victoria, and South Australia where people have to decide between electricity retailers, it’s already quite complex enough and much more confusing than it needs to be.

Time-Of-Use And Demand Tariffs

There are two types of Demand Side Participation electricity plans in use at the moment.  They are:

  •  Time-of-use tariffs
  •  Demand tariffs.

Time-Of-Use Tariffs

Time-of-use tariffs have the advantage of at least being understandable by most people.  With them, households pay more for electricity during peak periods when demand is high and less during off-peak periods when demand is low.  They don’t do a great job of reducing stress on the grid because stresses are only serious less than a dozen times a year on average and time-of-use tariffs usually have peak periods every week day of the year.  Also, periods of stress don’t always occur during time-of-use peak periods.

Demand Tariffs

Demand tariffs are common for businesses but very rare for households.  Besides being charged for the electricity they use, households are also hit with a fee based on the maximum amount of power used, as measured by the average over a half hour period.  Like time-of-use tariffs, they are not that great at their stated purpose and difficult for the average householder to understand.  They’re so bad I could complain about them all day.  Wait a minute, I already have.

Demand Side Participation Requires Smart Meters

The new methods of charging for electricity all require smart meters.  As a result, all new electricity meters are required to be smart — provided the mobile phone reception in the area is strong enough for them to work reliably.  (Otherwise the naked pictures they take of you with their x-ray cameras will turn out all fuzzy.)

On one hand, rather than have DNSPs in charge of electricity meters, it does seem reasonable to put the people responsible for the new retail electricity plans in charge of meters so they can quickly and easily deliver the new plans without having to worry about dealing with the DNSPs.  On the other hand, we will need to trust the Electricity Retailers to behave ethically and not abuse the power that control over meters gives them.  Personally, I feel we can trust electricity retailers to behave in an ethical manner, but that’s probably because I haven’t slept in 52 hours and I’m on a lot of painkillers.

Conflicts Of Interest

There are some potential conflicts of interest in putting retailers in charge of electricity meters.  And I mean conflicts beyond putting the people who charge us for electricity use in charge of determining how much electricity we use:

  1. Retailers have a financial incentive to delay the installation of new meters when households install solar panels because the longer it takes for the meter to be changed and the solar power system to be switch on2 the longer the household will spend consuming only grid electricity.  While some people have been able to claw compensation out of electricity retailers because of the long delays they have suffered in getting new meters, many aren’t even aware this is a possibility.
  2. Some meter replacements will cost more than others and so a retailer may decide they’d rather not do it and leave it to another retailer.  Taken to its logical conclusion this could result in some people finding it very difficult to get new meters.
  3. Retailers can abuse their power over electricity meter replacements to give an unfair and unethical advantage to their own solar installation businesses and attempt to steal the customers of solar installers when they are forced to call them to arrange a meter change.

While the first two conflicts of interest are potentially serious, it’s the third one that really gets my goat, drags it away, and does terrible things to it before turning it into goat pies.  A concerned citizen told me when they contacted Origin Energy to arrange a meter change because they were getting solar installed, they were told they couldn’t be given a date unless they bought a solar power system from Origin.  Another person claimed when they rang to arrange an electricity meter change, Origin told them they could beat the price their solar installer had given them.

This blatant abuse of the power that control over meters gives them is simply wrong.  If a door-to-door salesperson ignores my “DO NOT KNOCK” sign their company can be fined $50,000.  Can we have a similar fine each time an electricity retailer abuses the monopoly power they have been granted over electricity meters to solicit business for themselves?  It’s like a police officer pulling you over to give you a ticket and then trying to sell you Tupperware.  Except of course if your car is fast enough and you are a really skilled driver, you have a chance of getting away from the police.

Are We This Stupid?

It’s possible someone might say:

“Relax Ronald!  These problems with meter installation delays and the abuses of monopoly power people keep telling you about are just teething problems that will soon be solved.  They won’t be left unaddressed.  After all, we’re not completely stupid in this country.”

I certainly hope things will improve rapidly.  But considering in this century Australia’s grid electricity prices have gone from among the lowest in the world to among the highest, I’m not seeing a lot of support for this, “not completely stupid” theory.

What I Suggest

If we are going to have retailers in charge of electricity meters, which is something I am not currently convinced is a good idea, then we need a strong set of rules in place with unavoidable and significant financial (and potentially other) punishments in place for retailers that abuse the power they have been granted.

We need a system of compensation that is automatically given to anyone whose electricity meter is not installed in a reasonable period of time.  This way neither the consumer’s time or retailer’s time will be wasted by compensation claims and no one will miss out on compensation simply because they were polite.  Punishing politeness is probably not a good thing for society.

If the electricity sector wants households to engage in Demand Side Participation, they should start by making electricity bills easier to understand.  This will give people a reasonable chance of being able to understand the new retail plans they want them to use.  I suggest getting rid of electricity bill discounts as this adds a layer of complexity that confuses people about how much they are actually paying for grid electricity – and I definitely suggest getting rid of supply charges.

I look forward to all these changes being made and as soon as they occur I will take a two week holiday so I can hunt flying pigs in Hell’s icy landscape.3

Footnotes

  1. The rumor that the phrase “changed tentacles” would be more appropriate than “changed hands” can certainly be denied.
  2. Solar systems are now generally required to be left switched off until a new meter is installed.
  3. This footnote has nothing to do with anything.  I just wanted to say that it’s totally Laurel.
About Ronald Brakels

Many years ago now, Ronald Brakels was born in Toowoomba. He first rose to international prominence when his township took up a collection to send him to Japan, which was the furthest they could manage with the money they raised. He became passionately interested in environmental matters upon his return to Australia when the local Mayor met him at the airport and explained it was far too dangerous for him to return to Toowoomba on account of climate change and mutant attack goats. Ronald then moved to a property in the Adelaide Hills where he now lives with his horse, Tonto 23.

Comments

  1. Ronald, data providers are in on the ground floor with this latest revolution. They are in haste to get their meters installed so that no matter the retailer they get a cut too. of course at no EXTRA cost to the consumer!! Just another example of non governing of this country for the people.

  2. Stewart says:

    I agree, Discounts should be outlawed and supply charge just part of the rates usage but possibly with a minimum set fee that everyone pays and is the same price.

    My concern is changing retailers, what’s to stop them colluding so that when changing your supplier they can just say… “Sir we will will have to install Meter type X at your property because we won’t read meters of type Y”. The meter installation will probably be at the customer’s expense. So 3 months down the track If decide to move again and get the same line except this time “we only read meter types Z”. Fork out another $300+ every time I change supplier and end up with hundreds of holes in my Meter board like an infestation of termites and mice invaded it.

    Terrible idea having the retailers in charge of the meter readings and the type they might insist you must have.

    While we are at it when are residents in SA going to be allowed to change retailers every month instead of being forced to wait for the next scheduled meter reading to occur?

    And when moving from an existing retailer I’m sure they will co-operate and come and do a final meter reading before you move.

    If you have a Solar Net meter that is owned by SA Power then don’t let new retailers try and change it so that they can play games and do time of day usage charges which I’m sure will only mean more profits for them (
    I hate that word Profits) and more you end up paying?

    Give them time and I’m sure they will get their way in the end.

  3. Nice article. Question – What happens when a consumer, having recently installed solar and finally managed to get a new meter installed by their current provider (that will allow excess solar power generated that is fed back into the grid to be captured), decides to swap electricity providers? Is the meter removed? Or is the cost of the meter written and it’s installation written off or passed on to the new provider? Or something else?

  4. Bibnicks says:

    Well what do you think about this? We are (were) with Origin and had solar installed independently. We had a standard quarterly bill read about 20 days later by Energex and it was roughly the same as our standard quarterly average for the period. Then 10 days further on (so about 30 days after solar install) we had an Origin tech visit and remove our old meters and replace them with digital meters. Then we got an amended bill from Origin to include those extra ten days of usage. Except it was hundreds and hundreds of dollars more than the cancelled bill. It took ages to sort this out, with threats of involving the ombudsman. Eventually I asked for a photo of the old meters on the change over day and grudgingly they agreed there was a ‘read error’. I put that in inverted commas because I am a cynic. They blamed it on Energex. However I had a couple of Energex techs out for a different matter recently and asked them about it and they told me the swap over was totally Origin and nothing to do with Energex at all (they are Origin meters), so it appears it was a ‘fib’. We are in the process of changing retailers now but are expecting a big whack from Origin for the meters even though we have a card from the technician doing the changeover saying there is no charge for the meter. I suppose we will have to go to the ombudsman to fight this if they charge for the meter. Retailers should NOT be in control of meters and meter reads!

    • Stewart says:

      My new meter last year when I had Solar installed cost over $300 to have changed over by PowerSA (before the new rule had come in). My understanding is PowerSA own the meter and are responsible for it’s maintenance and readings. The $300+ was just for 15 minutes work to install it.

  5. Owning a caravan park, we have to be registered as an electricity retailer because we charge some customers on the basis of energy consumption, yet unlike all other retailers like the State Owned Ergon (Qld), we are not allowed to make a profit because electricity is a utility. Ergon on the other hand make enough to keep the State running. ie: It’s perfectly fine for them to make huge profits from us. We have to on-charge the same as what we pay, despite having to incur the costs of building and maintaining a network within our boundaries, which is very expensive I can assure you. Whilst there might be a “national” regulator for household meters, there are also strict guidelines for meters we have to use. One assumes this is to build in a high level of accuracy, so that we are charging 100% of what it costs us, not 100.5% or 99.5%. Hence, the cost of meters to get this accuracy goes from say $25 to over $200. In essence, legislation is there to make us lose money! We recoup it in other ways of course, which completely nullifies
    the need to have 100% accuracy in the meters! Ah, the Guvment. You’ve gotta love their fantasyland.

  6. Mike Gardiner says:

    Another concern with putting the power to provide meter installation into the hands of the retailers is that once their smart meter is installed they may make switching retailers difficult by restricting or refusing access to the meter data. A case in point is AGL which own Active Stream (a metering services business). Should you wish to switch to another retailer, they need to have a data access agreement with Active Stream to obtain your meter reading. While in theory I am sure that there is likely a regulation that compels metering service companies to grant access to the data collected. I doubt it will be a level playing field with regards to the cost involved when the retailer owns the metering company. Especially is a consumer decides to switch energy providers after a nice new smart meter has been installed.

  7. Dudley Marks says:

    Make electricity free after say 2 weeks from request for installation until meters are installed. Then we will see how fast they can be installed!!
    Seriously, what a mess has developed from the first sale of generators in Victoria to the present day. A tale of gaming the system followed by gaming and yet more gaming with a lot of regulator incompetence thrown in.
    The latest bit of “gaming” the system reported in The Australian a few days ago concerns prices being set some years ago based partly on the expected taxation paid by the retailers. No-one will be surprised that the tax used in the calculations was much larger than the actual tax paid. Seems some $400 million has been overcharged.
    Would we have heard of this if the Federal government did not need to be seen trying “to drive prices down”? I doubt it.
    What can be done about it? Short of some very comfortable regulators being drummed out, and some large fines, probably nothing will happen within this so called free market system.

  8. Ronald, love your wit, and agree with you, but did you know metering competition has been deferred in Victoria? It seems not. Vic has avoided most of the problems upsetting you. Vic smart meters were rolled out to everyone efficiently, if grudgingly to some. They have better hazard detection functionality than some NZ/NSW/Qld smart meters. Their firmware is remotely upgradable. The Vic meter mesh comms can even get into some terrain that mobile phones can’t.
    Pity it can’t do my tax (correctly).

  9. Stewart says:

    We need a Royal Commission to investigate the whole energy supply chain.

  10. FrugalDougal says:

    The prospect of the combination of widespread battery introduction (at a time when there’s still some way to go in their development) plus ‘unexpected adverse’ consequences from ill-conceived and not properly thought through pricing methodologies doesn’t fill me with any joy at all.

    We keep getting told that electricity and energy prices will reduce, stabilise, or rise less than inflation etc etc. ‘in the near future’, but it never really happens, or if it does its only short-lived.

    Frankly, I don’t believe at all that energy prices will reduce, for what I believe to be good reasons, (think ‘Middle East’, for just one of them, and I’m sure many of us can also think immediately of 1 other reason)TotalUtterShambles), but perhaps I’m just a crusty curmudgeon.

    Meanwhile… despite living in one of the more energy rich countries in the entire world; pensioners, hospitals, war veterans, the disabled and the poor now genuinely need subsidies or concessions to meet their energy bills so they can buy food, and the Australian army, airforce and navy maybe worry a little about their role in an future emergency situation because apparently the entire country only has petrol reserves equivalent to 20 days national supply (the recommended minimum is 3 months I think), which doesn’t leave much for them.

    Especially, if they have to fight off an influx of desperate refugees from New Zealand where petrol prices reached $2.31 a litre on 14th May amidst somewhat apocalyptic predictions that while a future price of $5 a litre is unlikely, how much less than that is totally unknown.

  11. Rick Burnard says:

    Excellent article. After being treated like CRAP by AGL in SA after having a 10KwH system installed last December and then waiting just over 3 months for a meter, we understand the BS going on some what. This article has put more information in as well. Even though ACTIVE STREAM are AGL’s meter company, the surprising thing WAS that when the meter was eventually installed, it was done by another company called ENERVEN.

    In looking up this company, Surprise, surprise. It is majority owned by SA Power Networks which is wholly owned by POWERCORP which is wholly owned by Hong Kong Electric, Which is wholly owned by China.

    The political BS going on is absolute smoke and mirrors to an Australian population that just cannot give a damn, or our Government is making it so complex that the population just cannot understand it.
    Wake up Australia: This is part of the takeover.

  12. Had solar installed 11th April 18 our retailer Red Energy (Snowy Mountains Hydro outfit) are installing new meter on 31st May 18 (appointment made), at zero cost. Probably delayed a week by Red misunderstanding the message sent by our installer. Have been them for a few years and found them to be an extremely honest business to deal with. By way of example I recently missed paying a bill on time by 3 days so paid in full. In my next bill they gave me a credit for paying on time even though I didn’t. How good is that in this day and age.
    My only concern for the future (as someone mentioned above) is if I want to change retailer, will have to get another meter?

    • Stewart says:

      That’s the big question with all this meter nonsense debacle. Who actually knows what the law states in this regard and whether it’s a state by state law?

      There’s a challenge for you Ronald… Can you let us know what the LAW actually stipulates with meters and changing retailers? (i.e: force meter changes) Your in SA, you could contact Leon Byner of Radio station 5AA. He loves stuff like this.

      You might find on your next bill with an adjustment for the late payment from the last bill. Hope not for your sake but would not put anything past them.

  13. What most people in NSW don’t know, is that there is an increased cost of supply charge per day with a smart meter. Different retail companies are charging different amounts. Some companies are charging an extra $0.30 per day for the privilege of having a smart meter – that will go on for ever. Ridiculous.

    Effectively now that this idiot government has changed energy policies again, we will actually pay more, not less. Dim wits.

    None of the changes that have been put forward by our idiot politicians, with their privatisation ideology, will every solve our energy and cost problems. Private companies are there to make profits, not to help us.

    To suggest that competition or more privatisation will improve things, is just plain ignorant of reality. I guess we can’t expect to much form politicians who are financed by corporate interests.

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