Smart meters spark national electricity argument

Prime Minister Julia Gillard has elevated the humble electricity meter box on the side of the suburban house to the centre of the national political debate. She claimed on Sunday that installing so-called smart or interval meters could save households as much $250 a year on their annual power bill.

The Coalition both federally and in Queensland have responded with scepticism, arguing smart meters may actually push up prices.

“Today’s proposed $250 saving is a dishonest grab for a headline that is not backed up by any details,” said Queensland Energy Minister Mark McArdle. “It should be judged accordingly.”

In fact, the Productivity Commission report on which Ms Gillard based her claim does suggest that smart meters will save consumers $100 to $250 a year but it also says that done wrongly, smart meter technology and the related idea of time-of-use pricing could end up costing them money.

“The actual extent of the estimated benefits depends crucially on the manner in which demand management is implemented – for example, under some implementation scenarios, some initiatives are forecast to deliver net costs,” the commission said in its latest report on electricity networks.

Indeed, a cost-benefit analysis showed that smart meters matched with a system of “time-of-use” or peak tariffs for electricity could deliver anything from $7.60 of benefit for every $1 invested to a net cost of 70¢. It all depends how the scheme is implemented.

The key issues to be decided include how “smart” smart meters need to be and how the costs of power will vary between peak and off-peak times. The power companies are also arguing over who will get to install and monitor the meters. And most crucially, there is an argument over whether it should be compulsory or voluntary to have a smart meter at all.

The fundamental problem smart meters are designed to address is that demand for power spurts on a few hot days each year when households turn up air conditioners and other appliances.

To meet this peak demand, energy companies have to build expensive back-up gas generators and poles and wires that are used for less than 100 hours a year.

All consumers pay the cost of building this almost redundant infrastructure. About 25 per cent of power network spending is used only 1 per cent of the time.

Smart meters are a first step – and only a first step – to reduce this waste by providing some basic information. The “accumulation” meters on most houses today just say how much power you have used in the three months up to the meter reader’s visit and can’t tell when you used the power. But smart meters measure power use in five minute or half-hour intervals.

Once smart meters are in place, the next step is to change the pricing system so that households will pay higher prices at peak times of the day, which in turn should encourage households and businesses to reduce peak power use. To that extent, opposition environment spokesman Greg Hunt is right in saying that the Prime Minister’s embrace of smart meters amounts to increasing power prices at “dinner time”.

But the Productivity Commission says the new pricing should save individual households money because they can easily switch a lot of consumption to off-peak. Pool filters could be altered to work in the morning and air-conditioners could be switched to intermittent use at peak times.

In NSW, where smart meters have been installed in about 400,000 houses and time-of-use pricing already exists, off-peak power can cost about one-eighth that of peak-time.

Longer term, if this change in behaviour slows the growth in peak demand across the whole system, it will allow power network companies to defer billions of dollars of costly infrastructure spending, delivering an even bigger saving.

Frontier Economics has estimated that savings from peak demand reduction are likely to be between $4.3 billion and $11.8 billion over the next 10 years but the benefit will vary considerably from state to state.

In South Australia and Queensland the saving per household could be $500 a year, in NSW $350 but in Victoria only $120. That is because Victoria relies on brown coal power stations that tend to run whether or not there is demand, so the gap between off-peak and peak generation costs is considerably narrower.

That is the theory but it can go badly wrong and Victoria is the prime example. The former Labor government decided that all households would be fitted with smart meters and the cost would be added to their household bills.

Unfortunately, the cost of what was then fairly new technology blew out to over $2 billion or $800 a household. The government was also concerned that some disadvantaged households that did not understand the system or could not adjust their power use might face huge bills. To avoid an outcry, until next July Victoria refused to allow time-of-use pricing, which was the whole point of the exercise.

“It appears that the Victorian decision to roll out smart meters was premature and/or poorly planned, with inadequate knowledge about smart meter technologies, their costs and associated risks,” the commission said.

A swag of reviews has been commissioned to work out how to avoid a repeat of that debacle. Giving consumers more warning and better information about how they can save money by switching to off-peak use is the key. The reviews also call for a security net for low income customers such as age pensioners.

Another question is how to cut the cost of meters. Victoria had very tight specifications for its designs, which raised costs. Some say a more basic “interval” meter will cut the unit’s cost per household to $70. Others say the meters must have displays so people can see how much power they are consuming at any time.

Power companies in Victoria have opened web portals for people to study their consumption patterns and help them prepare for time-of-use pricing. But a trial by NSW power companies Ausgrid and Endeavour Energy found that people tire of the displays and most ignore them after the first two years.

Some say the smart meter should be linked to a switch, so that it can automatically turn off some appliances. And indeed, the Productivity Commission says some consumers may dispense with the meters and just install technology that turns off power at peak times.

Queensland network company Energex offers households $250 to fit new air-conditioners with a device that switches the power to intermittent on a signal from the power supplier. For the energy industry the two crucial questions are whether the roll-out of smart meters should be compulsory and whether it will be run by the network companies or by the electricity retailers such as Origin, AGL and TruEnergy.

A series of reviews has found that one of Victoria’s big mistakes was that it rolled out the meters to all consumers, including those who have little capacity to shift from peak to off-peak power.

The commission found that this sort of compulsory roll-out would in general be much less cost effective than a selective approach, because a lot of households would barely change their behaviour.

A key state and federal adviser, the Australian Energy Markets Commission, which on Friday released a review called “Power of choice” on how to manage demand peaks, has recommended a hybrid approach where smart meters are compulsory for large power customers, which almost always have some flexibility in their time of power use, but where they are optional for smaller consumers.

The latter may choose to stay with an average same-all-day tariff. Alternatively, power retail companies may make it a selling point to offer smart meters to allow consumers to benefit from low off-peak costs. “The onus will be on the retailer… to elicit consumer consent to a smart meter through offering appropriate retail pricing offers and value added services,” the AEMC said.

Ms Gillard seems to be backing this sort of voluntary approach. “No one should be afraid that they are going to be forced with a cost that they don’t want and no one should be afraid that they will be forced to do something they don’t want to do,” she said on ABC Radio on Monday.

Read the rest of the article here


Michael O’Brian, SP Ausnet, Jemena, Citi Power, etc are you listening – “No one should be afraid that they are going to be forced with a cost that they don’t want and no one should be afraid that they will be forced to do something they don’t want to do,”.

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16 Responses to Smart meters spark national electricity argument

  1. Sharron says:

    The U.K. has an opt-out on smart meters and at the very least, so should we! We all should be reimbursed the smart meter charges from our electric bills over the last 3 years as we DID NOT CONSENT TO THE PURCHASE OF ANY EQUIPMENT! End of Story.

  2. trevor says:

    Title Electricity: smart meters
    House ASSEMBLY
    Activity Petitions
    Members O’BRIEN
    Date 6 October 2010
    Page 3964

    6 October 2010 ASSEMBLY

    Page 3964

    Electricity: smart meters

    To the Legislative Assembly of Victoria:

    The petition of citizens of the state of Victoria draws to the Legislative Assembly’s attention the Brumby government’s mismanagement of smart meters, in particular:

    the Auditor-General’s finding that the project cost has blown out from $800 million to $2.25 billion, all of which will be paid for in higher bills;

    the Auditor-General’s finding that the electricity industry may benefit from smart meters at the expense of the consumers who pay for them;

    the unfairness of many consumers and small businesses having to pay for smart meters before they are installed; and

    findings by Melbourne University that many families will have to pay around $300 per annum in higher electricity bills as a result of Labor’s smart meters.

    • JBJ 4 Me says:

      Am I missing something here? Why aren’t they investigating this Victorian government for what is happening on a daily basis? Where is the accountability? Deceit and lies aside, they are wasting very large amounts of taxpayers money on scams such as myki, desalination plant and “smart” meter technology, which we are all paying for regardless of what we think. How Dare they! We have had ENOUGH.

  3. the cost that I’m afraid of isn’t measured in dollars but in health.
    How is ANY government going to factor this into a ‘nice equation’?

    • Gwen says:

      Yes David that is an immeasurable cost that we should not be forced to pay.
      Hi from Pam, who is unable to communicate with anyone because Telstra hasn’t managed to reconnect everyone yet after the big fire. Keep up the fight against
      money hungry people.

      • Anonymous says:

        I was getting worried there because I hadn’t seen any posts from Pam for a little while.
        It’s a relief to know she’s OK. 🙂

      • keith says:

        Pleased to hear you’re ok Pam; no doubt you’ll be pleased that the tide is starting to turn, with Qld. and NSW. making noises that smart meters may be optional. Anything that puts pressure on the Victorian Gov’t on this issue, has to be a good thing.

  4. Outraged in Melbourne says:

    How dare they? how dare they spend over 2.3 billion dollar of taxpayers money and say that
    we will make savings? Especially when these savings will be mostly due to NOT using electricity. What a stupid debate! Of course you will save a heap of money if you DON’T use electricity – due to prices in peak time going up. Most families cant afford to cook dinner at 10pm (non peak times).

    And how many light globes will we have to turn off to make a saving of over 2.3 billion dollars?

    Smart Meters are showing us just how irresponsible our government is. Over 2.3billion spent on Smart Meters is absolutely shameful considering their are little or no benefits for the consumers. Shame shame, and this should not spread to other states in Australia. Smart meters are just a bad idea from any angle which you look. Not only financially, but they also raise many health issues, with growing studies that they alter DNA, and cause many symptoms associated with EMS (electromagnectic sensitivity). Smart meters have already been banned due to health concerns in many of the States of America, such as the The city of Ojai, Santa Cruz, Marin, Lake, Mendocino, Capitola, Fairfax, Lake Port, Rio Dell, Ross, Seaside and Watsonville. Overall, more than 56 local governments in California have now officially declared their opposition to current smart grid policy, an overwhelming statement of democratic opposition to a flawed and dangerous system. And that is just the US, in Europe there is also much opposition, wireless radiation has recently been classed as a 2B carcinogen by the WHO (World Health Organisation).

    Financially if we are paying over 2.3 billion dollars for a smartmeter system in Victoria, then how many light globes will we have to turn off to make a saving? The population of Victoria is around 5.6 million – of which 2,886,100 are taxpayers (according to the B.O.S.). This means that each Victorian taxpayer will be contributing $830 each just so electrical companies can have minute to minute details of your electrical usage to more efficiently bill you with fluctuating tariffs. And who knows which third parties they will pass this sensitive personal information onto. It is in direct violation of privacy laws. And even though you will be billed over a $100 for the “smart” meter, the international distributors have full ownership of the devices. therefore after nearly $1000 of your money you don’t even OWN it!!

    One of the major electricity suppliers SP AusNet have shown profits of 169million for the 6 months to September 30 this year up from 146 million year before. How much will they be contributing? These profits are skyrocketing as fast as our astronomical electricity bills, yet somehow they find new reasons to increase tariffs.

    The Minister for the department of primary industries (Honerable Minister O’Brien) was invited along to hear the public concerns at a recent public forum but declined the offer. Its time the Victorian government wise up and take note of the growing number of states in the US who are stopping the roll-out of smart meters.

    • Ms Rebel says:

      Very well said! Why on earth should we be made to pay for a product that we will never own? Not just with money, but with our health, and that of our children?? Go TO HELL JEMENA, UNITED ENERGY & DOPEY O’BRIEN!!! You will never win this debate, the world is waking up to the nightmare of the so called smart-grid.. Halleluyah!!

      • Standing for justice says:

        Paul Adams, when this is all over, I guarantee you that Jemena will have come down like the Tower of Babel.

  5. TheBThing says:

    Don’t believe a word she says. Considering she’s a Fabian.

    She’ll do anything to forward Carbon-Communism.

  6. peter says:

    FEDERAL GOVERNMENT ON SMART METERS – Don’t be fooled You will pay more …

  7. Jo-Ann Markowski says:

    Don’t believe her “no-one should be forced” remember “there will be no carbon tax under any government that I will lead”.
    They think we are just a bunch illiterate convicts that they can walk all over. The next thing with these smart meters will be that they will be able to withhold power and turn of your appliances at will & monitor your life if you don’t comply. Avoid any technology with the prefix smart – they must thing we are really stupid to fall for their stupid smart speak. WAKE UP AUSTRALIANS!

    • Gwen says:

      Hi Jo-Ann. Yes they do think we are stupid. After all, look how the Politicians behave in front of us. Disturbing. In past posts, there is information regarding the power companies ability to turn off appliances as well as cutting supply if you can’t pay your bill. Total control.

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