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The strange case of NSW’s disappearing solar tariff rates

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Solar Choice

Solar feed-in tariff rates have been removed from MyEnergyOffers, the website associated with NSW’s Independent Pricing and Regulatory Tribunal (IPART), which sets retail electricity prices for the state. MyEnergyOffers is a free website that allows NSW residents to easily and instantly compare different retailers’ electricity rates by entering electricity usage data. A call to IPART revealed that there is no set deadline for the retailers to submit their solar feed-in tariff rates for display.

Why were the solar feed-in tariff rates removed?

The ‘Solar Feed-in Tariffs’ page of the MyEnergyOffers website currently reads:

Electricity retailers are currently reviewing their solar feed-in tariffs. We have temporarily removed the solar feed-in tariff display from the myenergyoffers search results. Once retailers have advised us of their solar feed-in tariffs we will update our website. In the meantime, we recommend that you check the retailer’s website or contact the retailer directly for information about the solar feed in tariffs are available with an offer.

The removal of the information comes in the midst of changes to the contribution electricity retailers are required to make to the NSW Solar Bonus Scheme, which, although closed to new applicants, continues for existing customers until 2016. From 1 July 2012, NSW electricity retailers are required to contribute 7.7c per kilowatt-hour (kWh) towards the cost of the state’s Solar Bonus Scheme, which pays either 60c/kWh or 20c/kWh to grid connected solar system owners, depending on their date of application.

Electricity retailers are not, however, required to pay customers who install solar systems after April 2011 (when the offering of the 20c/kWh rate ended) for power they export to the grid. Instead, IPART determined in a report released in March 2012 that the determination of solar feed-in tariff rates should effectively be left to market forces, with no mandatory minimum to be paid by retailers.

In the place of a fixed, state-wide standard rate, a ‘benchmark rate’ range is to be set every year. (For the financial year 2012-2013, this rate is 7.7c-12.9c/kWh.) The benchmark rate is in place for the reference of potentially solar-going electricity customers, to enable them to negotiate with their retailers with some idea of what their exported solar power is ‘actually’ worth to electricity distributors.

Although it had been technically possible for customers to collect and weigh information on electricity and solar feed-in tariff rates from different retailers, prior to their listing on the MyEnergyOffers site, it was not convenient or possible to do so in one single location, and would have required multiple website visits and phone calls. The MyEnergyOffers website was to be the go-to source for transparency in an otherwise murky market conditions, making comparisons quick and relatively simple.

Given this context for the original inclusion of feed-in tariff rates in on MyEnergyOffers, the removal of the rates from the site for an apparently indeterminate period of time is somewhat unexpected. The explanation for their absence received from IPART/MyEnergyOffers over the course of several telephone conversations essentially lies in the retailers themselves.

The retailers have said that they need time to recalibrate the rates they will offer new customers in light of the new 7.7c mandatory Solar Bonus Scheme contribution, and IPART/MyEnergyOffers did not want to display incorrect information, so rates were removed entirely.

One related explanation suggested in a conversation with a MyEnergyOffers representative was that displaying feed-in tariff rates was not possible because retailers offer different rates to different customers, depending on the bargain struck in individual cases.

It is also worth noting the fact that the statement on the MyEnergyOffers website is a blanket one that covers all of the state’s energy retailers, not just 1 or 2. This, in combination with the other factors mentioned above, hints at a general reluctance among the electricity retailers to have set prices listed on MyEnergyOffers, or to keep them up to date and accurate once they are listed.

It is not the job of IPART to chase up the retailers to update their pricing, but rather the responsibility of the retailers themselves to ensure that their data is up-to-date. IPART seems to have thrown up their hands at the situation.

Whether this reflects an unwillingness among retailers to show any material support for solar PV is unclear, but given the at-odds nature of a high penetration of distributed solar PV systems on the grid with the state’s electricity industry’s business model, this may be the case.

Earlier this year the Australian Energy Market Operator (AEMO) released a report saying that 1) electricity demand forecasts had dropped significantly across Australia and 2) solar PV played a role in this decline. Generally speaking, as demand falls, so does electricity industry revenue. Recent and future projected electricity price rises are seen as due in great part to over-investment in grid infrastructure to keep revenues growing, an issue which came to the forefront of the clean energy debate last week, with Prime Minister Julia Gillard publicly addressing the need for electricity market reform in the states.

This article was originally published on Solar Choice’s blog. Reproduced with permission.

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  • Warwick

    Given that none of the retailers own network businesses and many of the licensed retailers don’t own generation why is it that the “at-odds nature of a high penetration of distributed solar PV systems on the grid with the state’s electricity industry’s business model” exists? i.e. the author suggests that retailers benefit somehow by excluding PV.

    It is important to understand that the regulated network businesses make greater returns if there is “gold-plating”. It is just as important to understand that retailers do not gain any of this benefit. It may be simple to conclude that retailers want to sell more electricity and somehow if there are fewer kWh’s sold they are less profitable but this glosses over the complexity of electricity pricing.

    The retailers may be able to a better job to allow their rates to be compared but given the uncertainty about wholesale prices and the myriad of possible combinations of solar PV systems, it is not unreasonable to expect that this may take some time. That said, a retailer that posts its rates may have a competitive advantage…perhaps an opportunity for a specialist PV retailer to step into the fold and offer a generous feed in tariff?

  • Robert Johnston

    I suspect this is a more complex issue than many have realised. The Electricity Act stipulates that a retailer cannot discriminate against someone on the basis that they are a generator of electricity – it may be that this means they cannot pay a different amount to someone who is part of the Solar Bonus Scheme in NSW to someone who does not get a FiT at all. In clawing back part of their costs by forcing retailers to pay them 7.7c for customers getting a FiT the NSW Govt may have unwittingly (or is that half-wittingly) caused no-one to be paid for what they export from their PV in NSW.

  • colin

    The IPART report says that the solar bonus rate has increased to 7.7c due to higher wholesale prices for electricity. Wouldn’t higher wholesale prices reduce the rate due to the shrinking margin between the fit and the wholesale price? If so, they should be investigated

  • Sam

    Thanks James. I went to myenergyoffers today in order to assist a customer compare tariffs, and almost found a spare minute to contact IPARt myself to see whence they went. Saved me a lot of time.

  • David Rossiter

    Surely the retailers have a vested interest to not pay for the electricity supplied by domestic solar PVs or at least minimise the amount they pay.

    So in the period while they decide on new tariffs they can receive solar PV electricity for free or at lower prices.

    Sounds like a market that IPART needs to regulate but probably has no powers to do so??

  • Brett

    It’s actually worse than that. Some of the offers on the myenergyoffers website (and the retailers own website)are actually UNAVAILABLE to Solar PV Retail Customers! Take the AGL 10% $175 credit Offer that comes up when I input all my details into the site…both on the IPART Site AND AGL’s Website, it is not shown that its not available for Solar customers. The best they will offer is a 7% discount with no Cash back. By discriminating against Solar PV customers and not making mention of which offers are or are not available to them, Retailers are breaking the IPART guidelines on providing Pricing Offers to Small Retail Customers and which is a condition of them having a licence to sell electricity. It is becoming increasingly obvious in all manner and guises from all sources that Solar PV customers are an evil to ALL the incumbents be they government, regulator or the retailers and quite frankly, it should not be allowed and says a lot about the total lack of conviction and vision from all quarters towards renewables and how serious they are in regards to clean sustainable energy and changing the status quo from the subsidized Coal generation they seem to want to keep,m whatever the cost…