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Queensland pushes through massive rises in fixed electricity charges

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A victory for McMansions? Fixed charges to households surge, while small business may pay two-thirds of their bill on fixed charges, as government owned utilities move against solar and energy efficiency.

The Queensland government managed to get some sympathetic coverage on the ABC and in the local mainstream media – and even some specialist websites who should know better – about the supposed “fall” in electricity bills in the upcoming year.

But what they did not mention – presumably because it wasn’t in the Queensland Competition Authority press release – was a huge jump in fixed charges that will penalise households and small business, and reduce the incentive to install rooftop solar.

electricity-meter

Fixed charges for households will jump more than 20 per cent to $1.07 a day, meaning that with GST, households will pay a minimum $428 a year on fixed charges, no matter how little electricity they consume.

The consumption rate has been cut to 22c/kWh but this means nothing for households that consume around 7kWh a day – pensioners and single person households for instance, and others who pay attention to energy efficiency.

Their annual bill will now be more than $1,050 – which equates to a rate of 42c/kWh, probably the highest in the world. And their ability to offset that with solar is greatly reduced because so much of the cost is unavoidable.

But small businesses – butchers, restaurants, takeaway food installations, or anyone using refrigeration and cooking – face an even greater proportion of fixed charges under the new scheme.

qca tariff 44

According to the new tariff 44 (above) – which will now be compulsory for businesses consuming more than 100MWh a year (275kWh a day) – the fixed charge will be $50 a day, or $8,000 a year including GST.

The consumption rate is slashed to just 10.6c/kWh, or around $27 a day, which means that if a business uses just over 100MWh a year, its bill will be two-thirds unavoidable fixed charge, and one-third on consumption.

But it gets worse. If, on just one day a month, the business’s consumption goes over 30kW on average in any one 30 minute period, the business will be hit with a “demand charge”. If it uses 40kW in that time period, for instance, it will pay another $400 for that month, even if that day’s consumption was a one-off.

And to top it off, all consumers will face as-yet unspecified “metering charges”.

As we reported last year, fixed charges for the biggest consumers have jumped even more extravagantly to nearly $500 a day.

Steve Madson, from Country Solar, says the new tariffs will penalise anyone “who has done the right thing”, such as install energy efficient appliances and LED lighting, and installed solar.

“It goes in direct opposition to the marketing of these companies about being sustainable, turning down air conditioning, using pool pumps more wisely.”

Madson says it also kills the case for rooftop solar in many incidences, because it removes the ability to reduce bills. Businesses that last year paid 30c/kW for electricity will now pay 11c/kWh plus unavoidable fixed charges of twice that.

Madson says many consumers are furious. “They’re telling us they just want to cut the line. They say ‘just give me a back-up generator’, because they don’t want to pay those charges.”

The warnings about using fixed charges as a response to solar have been countless; from the CSIRO Future Grid study, to numerous studies in the US – even former US Energy Secretary Stephen Chu.


But it seems even the new state Labor government isn’t listening. It has already delayed a move for deregulation on energy prices, so these tariffs will apply in all parts of Queensland.

Energy Minister Mark Bailey said in his press release, unquoted by any mainstream media: “While the majority of households would benefit from lower power bills, some customers may still see an increase.

“The QCA’s increase to the supply charge will impact on some customers using a small amount of electricity, but this will be offset by a significant reduction in consumption charges, which are the main component of bills for most customers.”

Yes, but they are not the main component for the people directly impacted by these changes, those who use a small amount of electricity. Mark up a victory for Queensland McMansions, and the government-owned utilities.

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  • Tim Forcey

    So you pay for electricity whether you use it or not. Similar to what was done in Victoria with water, post the desalination plant…

    • John Bromhead

      No you don’t. Wholesale price of electricity in Queensland is 5.3¢/kWh. There is still a fair amount of network charge contained in the consumption charge of 22¢/kWh.
      I fail to see why solar users do not want to pay a fair share for their use of the grid. After all, grid connected solar systems are dependant on the grid for their operation.
      There won’t be to many of those receiving a feed-in tariff of 44¢/kWh who will be giving that up by leaving the grid.

      • Sorry John but you have been deceived, how can our grid cost 22c per kWh to run when Canada, America and China pay less than 12c a kWh total?

      • Alastair Leith

        What about the grid service that distributed solarPV provides which curtails grid fortification and upgrades to meet ever higher (gross) demand from ever more houses and A/C installs. Add a million EVs to that over the next decade and the more distributed power we have the better for the networks. That’s why many new mixed use housing/retail/commercial developments are investigating running their own grids with mid sized PV arrays for generation and batteries for storage. They figure they can do it themselves for less cost than the existing paradigm using current off the shelf technology.

    • Alastair Leith

      Yeah it’s like the fixed water treatment service fee imposed in the last few years at Daylesford by Hepburn Water. I don’t recall the exact amount but the fixed fee for water treatment is so much higher than the water supply fixed fee that when they introduced it I calculated that in the first quarter flushing the toilet was costing us around $10 a flush because family members only spend a couple of days in the shack that quarter.

      Hepburn Water obviously didn’t want to have their large water users (best clients) object by raising Tarif on consumption and no way to measure waste usage except as a function of water consumption.

  • Neil_Copeland

    They are proving the death spiral prophecy, they have just made it so much more attractive for Queenslanders to go off grid.

    • Barri Mundee

      If this lunacy and unfairness spreads to my state of Victoria I will add storage even if it is not economic.
      And I am more than a little disappointed that this is happening under a LABOR government!

  • BsrKr11

    Cut the tie to the grid- it can be done and at 42c/kWh it is highly cost effective… F&*#k you Energex and Ergon!

    • JayJ

      Well go ahead & do it instead of whinging & then come back and tell us how you’re coping.

  • Engineer Malcolm

    The Courier Mail also reported this morning that residential “off-peak” tariffs also increased. Now how much extra network do they have to build for off-peak times ? They are still being their own worst enemy. This is about revenue recovery, not cost reflectiveness.

    • Chris Fraser

      A bad year only has about 10 hours of maxed-out grid capacity and none of that during off-peak times.

      • David Costin

        Bring on battery storage.

  • Chris Fraser

    The increase in fixed costs is concerning, and strategically, inimical to years of Government exhortation to save energy. All those consumers will be coming up with ideas to “get off” this grid.

  • Andrew Thaler

    watch as large numbers of people cut the grid and go self-reliant with solar, batteries and a back-up generator. THEN, the government will realised just how much they f’d up and legislate a ‘property charge’ for electricity just like we have for water and sewer. Capital charges for water and Sewer are applied to any property (payable as part of the annual rates fees) within cooee of these services, whether they are connected to them or not.
    I do not like the direction the state government/s is taking property owners.. it is nasty and going to be very ugly.
    How many power-poles are going to be chopped down before the govt realises that free-people are entitled to free-choice?

    • Mike Dill

      It does not take very long for a power saw to cut a 12 inch pole in half. Sad that it might go that way.

      • Phil Davis

        where I live – the electricity supply is buried – but just up the street – it’s poles and wires – expect those to be attended to by some {unfortunate;y I don’t have a chainsaw – but Coates hire is nearby}

  • Math Geurts

    Stop this childish complaining. Cut the lines or pay the fair price for staying connected. The fair price for the connection is fixed and comparatively high.

    • Alastair Leith

      Evidence based assertion making, Math.

  • Goldie444

    Good reporting Giles.
    Two big subjects are raised in this bog.
    The main point is the rise in fixed rate charges. An outrageous way to run their business.
    The other is poor service ‘main stream’ media gives the public as Giles notes
    “what they did not mention – presumably because it wasn’t in the Queensland Competition Authority press release” bah bah.

    • Alastair Leith

      much of the MSM uses Media Releases for 90% of their stories. The only way to counter it is have competing media releases with factual information and campaigners paid to address these issues within various NGOs and consumer representative groups. as the power of PV grows it’s important to get campaigners in jobs educating the media and counter the spin. MSM also relies on pundit based reporting to get sizzle into their stories. So the established gentailers have PR people paid to generate “expert” opinion that makes for a cheap story to write and easy headlines.

      Oh and to have excellent micro-publishers like RenewEconomy and genuine “expert” Op Eds from Giles of course!!

  • Ken Dyer

    Nobody said that moving to solar was going to be easy. The fossil fuellers, aided and abetted by Governments, are not taking the gutting of their businesses lying down. If anyone wants to enjoy the benefits of solar PV, they are going to have to pay for it.

    The cost of solar is coming down so fast that payback is now measured in a few short years. You can get a pretty good system for the same price as an upmarket TV, and when the battery market ramps up (Mercedes Benz, Tesla, Panasonic, etc), you can install a battery system for a similar amount, and go off grid.

    Further down the track, talk with your neighbours and when they install panels and batteries, it is a simple matter of hooking up together, and installing metering equipment to monitor the minigrid. It is the future.

    And as an incentive, just look at what the Government in Spain are doing

    http://cleantechnica.com/2015/06/18/spain-nuclear-spillage-not-nearly-as-bas-as-solar-energy-storage/

    • Alastair Leith

      What are the legal impediments to running a mini-grid? I remember trying to find out if it’s legal to run a 240VAC line across your boundary to neighbours and think I got told it’s not legal unless in a strata type of situation.

  • Brad Sherman

    Can anyone advise me regarding the actual basis for the cost of providing electricity, i.e. how much is amortization of infrastructure plus salaries, etc, and how much is the cost of generation plus transmission? I wonder if what we are seeing is a move to more transparent pricing that better reflects the cost of providing the service?

    Most of what is mentioned in the article seems logical to me: if you use more power you need a bigger cable which costs more to provide – that’s why our prices went up so much in the 90’s when everyone decided they needed aircon. I don’t use aircon and have always resented the fact that I subsidise those who do have aircon because I have had to pay for hardening of the grid just the same as the other people whose added demand required the upgrade.

    My hunch is that this will ultimately serve to accelerate the move off-grid and force a rethink regarding what the best way is to provide electricity to greenfields developments.

    • john

      brad you can go to the QCA site and download the final determination pdf it sets out the various cost inputs into the tariff schedule.
      link
      http://www.qca.org.au/Electricity
      on right hand side is a link to final decision

    • Alastair Leith

      “if you use more power you need a bigger cable which costs more to provide”
      Note that none of the retailers and networks do not provide capacity billing in Australia. A more transparent billing system would be to have fixed fee and tariff value set according to the maximum power demand (capacity) permitted for the premises/site at any given period. Also grid service discounts (demand management) are only available to very large users of energy.

  • Jacob

    Can there be an ACCC case or court case where they decide to stop the rort.

    • Alastair Leith

      would ACCC even understand it? they tend to have reductive views on most things.

  • The reason for the separation from charging on the kWh or commodity to fixed prices is because the networks like Ergon are given a fixed revenue from the AER. When you are given a fixed revenue rather than charging for a good or service how can you hoodwink the consumer when volumes fall and maintain the revenue?

    This pricing in qld has let the cat out of the bag, our electricity prices are a tax and have no relation to a real cost of electicity!!!

  • JohnRD

    The QCA report on the solar feed in tariff was a scandal. (See: http://pragmatusj.blogspot.com.au/2013/12/comments-on-qca-report-on-feed-in.html). Looks like this one is no better.
    Labor – bringing higher power prices to pensioners!!!

    • I don’t think labour are to blame it is just a lag of previous policy to sell the grid, though if labour don’t act quickly to rectify the issue it will show that they are no better.

  • After working on a solar project in Victoria 4 years ago, heard about ZEN solar based in Adelaide, saw really good documentary about the new off grid solution recently. Watch this space. http://www.zenenergy.com.au/home/energy-storage/zen-off-grid-solutions/

  • Ben Courtice

    Making it as attractive as possible for the privateers and carpetbaggers who buy up public assets?

    • Alastair Leith

      Fattening the cow in a grain lot.

  • Russell Davis

    Why did Labour gift this arrangement to the power utilities? Adding value before privatization, union putting on pressure to protect jobs or maybe utilities convinced the Government with intelligent, maybe expensive and luxurious argument to protect them at expense of consumers. Or was it just the treasurer “If we have to pay them $500 for a feed-in Tariff they can bloody well give it back.”

  • Leigh Ryan

    Ok that blows my argument to waiting for battery storage costs to come down, i just asked for 3 quotes for battery storage and back up generator, i am going offgrid i expect many will follow my example.

  • Leigh Ryan

    Oh and sorry but the fixed charges are already the major component and sometimes the only component of my electricity bills.

  • “But it gets worse. If, on just one day a month, the business’s consumption goes over 30kW on average in any one 30 minute period, the business will be hit with a “demand charge”. If it uses 40kW in that time period, for instance, it will pay another $400 for that month, even if that day’s consumption was a one-off.”

    It’d be good if the author provided a pathway for networks to raise revenue required for the service they provide in a cost reflective way. The above paragraph goes to show how the author is simply going down a path of all out criticism.

    The use of fixed charges is, in my opinion, a cop out by both the regulator and the network in believing that they can appropriately cost allocate the network costs to their customers. The shift to a capacity based network tariff (something that the author fails to cover too is the delineation between the different aspects of the electricity bill a person faces: energy, network, market operations, meter fees, environmentals and retail service fees) should be lauded as a shift by networks away from the legacy of cost recovery by volume towards a value more representative of the burden that that customer places on the network.

    The author makes good points about the inequity of small energy users facing such large fixed costs, but goes on to claim inequity for those who place a large burden on the network facing higher costs too (see above quote).

    The pathway that the AER should be undertaking is to guide networks to a more cost-reflective pricing scheme – one which therefore does not benefit generation sources, centralised or distributed, in unequal ways. Capacity pricing, where the vast bulk of network costs are based on the customers demand on the network, would provide the greatest incentive for customers to maximise the utility of their connection and present a continuous load to the network to maintain, as opposed to the exceedingly peaky loads presented now without penalty and those who do not providing cross subsidisation.

    • We’ve written a fair amount about cost reflective tariffs, and why they have to actually be cost reflective, not just because the utility or the regulator says so. So it has to reflect demand at network peaks, not individual peak cos everyone is different and it just becomes a grab for money.

  • JayJ

    I am afraid Madson doesn’t have much credibility with me. He’s made stupid comments in the Townsville Bulletin in the past re Ergon showing he does not understand the industry or state government pricing subsidisation that occurs. He’s just pushing his own barrow as usual.

    • Hi JayJ, I underatand the electricity market reasonably well including subsidies and would be happy to explain it to you anytime. I am not pushing any barrow my goal is reduced electricity prices for all which will help cost of living pressure in increase economic growth by allowing our manufacturers and farmers have an equal cost basis as far as energy as their international competitors. I would argue that no where else in the world has more energy than QLD and we are being slugged for it…… Unfairly!