WA flags higher network charges for solar households

The West Australian Coalition has flagged it may slug solar households in the state with higher fixed network charges as it seeks to reign in its massive budget deficit and deals with large subsidies to the main energy retailer.

WA currently subsidises the cost of electricity to consumers – which in WA is almost entirely fossil-fuelled – to the tune of more than $300 million a year.

It has flagged higher fixed network charges – or possibly the introduction of demand charges – to try to reduce the subsidy and address declining revenue caused by falling demand, the result of an increase in rooftop solar and energy efficiency.

But it is also flagging that those fixed network charges might be higher for households with rooftop solar. Right now, there are 175,000 homes with rooftop solar in WA, with a total of 430MW installed.

wa solar

Energy minister Mike Nahan, the former chief of conservative think tank Institute of Public Affairs, told parliament this week that a higher fixed charge would apply across the board, meaning some users – particularly those with solar panels or who use little power from the grid – would face higher costs.

“If we increase the fixed charge and decrease the variable charge, they [solar users] might be [facing higher charges],” Nahan said. “The balancing act hasn’t been decided. It’s premature to say that re-balancing will discriminate against solar cell owners.”

But there is speculation that the network charge for solar households will be higher, or least that the proportion of network costs will be increased.

Channel Nine in Perth said Nahan was looking at different network charges for solar, forcing them to pay a higher fixed tariff than other households.

Ray Wills, from Future Smart Energy, said if the government did that, they would have to extend higher fixed charges to users of air conditioners as well.

“If you started charging solar households for connecting panels to the network, you would have to start charging people for using LED light globes, because the effect on grid demand is the same,” he said.

In 2013, the Queensland Competition Authority (QCA) proposed exactly that – an increase in fixed charges of $210 per year on electricity customers who had installed PV. But it withdrew the proposal when some retailers said the measure might encourage consumers to leave the grid entirely.

Still, the electricity industry has been pushing for higher fixed charges, even though network charges can sometimes make up virtually the entire bill for some households. It has argued that solar is a big transfer of wealth from one consumer to another.

The Warburton report last year suggested the renewable energy target, which supports rooftop solar, was a transfer of wealth from coal-fired generators to consumers. Some retailers now offer smaller discounts to solar households.

A similar fight is going on in the US, where Arizona has introduced a fixed charge for solar households, but is being sued by SolarCity, one of the biggest installers of rooftop solar in the country.

Industry observers say that the WA government is between a rock and a hard place on electricity, because the true cost of the grid has never been passed on to consumers, as a result of the government subsidy that once stood at more than $600 million.

Indeed, the WA grid is described as one of the most unsustainable in the world, because of its reliance on coal and gas, both of which are becoming more costly, and on an ageing grid.

The issue was heightened by recent events from Cyclone Olwyn, where many commercial business suffered substantial losses because the grid was down for three days in some areas around Carnarvon. Stand-alone solar and battery storage systems, such as this one installed last year, continued to supply power unaffected.

It is not the first time the WA government has sought to recoup funds from solar households. In 2013, just before the federal election, it proposed reneging on solar feed-in tariffs to save $50 million, a move it quickly reversed following a backlash from consumers and the federal Coalition, as we documented in our story Dumb, dumber and conflicted: Behind WA’s solar shocker.

homes

Meanwhile, to reduce the subsidy that is paid to the state utilities out of consolidated revenue, the WA government would need to either increase tariffs or write off generation assets, and neither of these are politically palatable.

“Applying a capacity charge to residential consumers would probably apply across the board to all consumer, thereby not discriminating against houses with PV, but it seems the intention would be for houses that have low usage, maybe because they have PV, to pay more in the form of a fixed charge,” one industry insider said.

“If this goes through then it should be interesting when people with low usage get an electricity bill, and they divide total dollar amount by total kWh usage, we’ll start seeing some very high $/kWh figures out of the solar households.”

WA Premier Colin Barnett had promised at the last election in 2013 to peg any electricity price rises to inflation, but now says that promise only applied to the first year of office, not to the entire four-year term of government.

In any case, electricity prices rose by 4.5 per cent last year, and are forecast to rise 7 per cent in each of the next three years.

The WA government is expected to release the final report of its electricity review later this month. It was originally scheduled for last October.

However, the draft did not instill the renewable energy industry with much confidence. Despite claiming to be “technology neutral”, the report focused almost entirely on coal and gas, even canvassing the possibility of importing coal from Indonesia. The report did not mention solar once.

Comments

27 responses to “WA flags higher network charges for solar households”

  1. Paul Parker Avatar
    Paul Parker

    Not sure about WA, a while since lived there, but NSW charges for capability to access grid electricity a Supply Charge.

    Calculated daily on my last account period ( 91 days Peak and Off-Peak2 ) added up to $123.35 + $11.38 =

    $134.73

    Add then rates per kwH for usage recorded.

  2. JeffJL Avatar
    JeffJL

    And in other news Mike Nahan is to start to bill people for turning off their lights at night. Mike Nahan said “These people who are turning off their lights are just involved in a wealth transfer from other customers. We need to stop this theft!”. Mr Nahan was surrounded by power station owners who were all nodding during his tirade against light switcher offers.

    1. john Avatar
      john

      Seriously did he say that?

      1. JeffJL Avatar
        JeffJL

        Umm. Umm. Yes.

        (Should I have put a /S after that post?)

        1. Chris Fraser Avatar
          Chris Fraser

          Those ESAA nodders never understood the effect of technology and efficiency … until they read their income statements.

  3. john Avatar
    john

    The subsidy is to equalise power costs to all consumers.
    So they should be proactive in encouraging remote subsided consumers to provide their own power which then reduces the subsidy.
    Any type of punitive charge is only going to encourage use of backup power in the form of battery storage and disconnect from the grid.
    Demand charging is aimed squarely at those who have a very high demand at any one moment for instance those with high AC, large poor lighting systems and poor performing TV systems as well as for instance poor performing pool pumps.
    This profile of user is the reason that the grid has to be so capable of delivering a high load.
    The remote solar owner is actually a friend of the system as any export they deliver is highly prised by the network as it is delivering unsubsidized power without the transmission loss which is the reason for the subsidy in the first place.
    Targeting socially responsible people as some how culpable for the costs to other consumers is not exactly playing the truth with the situation.
    Those who are just a little bit literate will be infuriated with this attitude.
    I would counsel caution when dealing with this subject and explain clearly the problem reduced usage of power caused by 1 efficiency measures, 2 industry downturn and a very minor 3 solar with the explanation in some cases this is beneficial which is larger than the loss of usage.

    1. Andrew Woodroffe Avatar
      Andrew Woodroffe

      I would go further, and say that the real issue is not whether solar pays its way or not, or those with air conditioning, it is the charging of extremely expensive to serve rural customers the same rates as cheap city customers. Supplying electricity to the hundreds of thousands of people living in the City of Stirling or Melville, is massively cheaper than, say, 200 people living in Walpole, 120km west of their nearest substation (Albany).

      The greatest value for both solar and energy efficiency is in these rural areas.

      1. john Avatar
        john

        Yes you are correct.
        As I said there is a huge cost to supply power to remote areas so the help of RE is of huge benefit to the whole community especially those in inner suburbia.
        Progressive utilisation of RE will only benefit all within the network.

  4. Stan Hlegeris Avatar
    Stan Hlegeris

    I say bring it on. Let the hopeless governments stuck in the last century keep trying to preserve an industry designed in the century before that.

    I used to think our energy production could be cajoled into the present. Apparently not. We seem to have no choice but to push the electricity system to the brink of collapse in order to see any progress. So let’s get on with it.

    Just say no to network charges and get off the grid as fast as you can.

  5. bill Avatar
    bill

    And there is another thing that Nahan and his ilk never mention. Each householder is contributing to the electricity generating infrastructure – we never get any credit for this. We are off-seting the need for more power stations. But then that would mean less coal and gas and we all know who runs the show on St Georges terrace.

  6. Roger Brown Avatar
    Roger Brown

    Good news ! this means 175,000 pissed off solar powered households might vote with their wallets in the next election ? Households should start with a Solar Hotwater system , which is about 25-30% of electricity charges in a family home without being punished for NOT using dirty coal power .

    1. Miles Harding Avatar
      Miles Harding

      Is it time to disconnect yet?

      1. Alastair Leith Avatar
        Alastair Leith

        Sounds like WA government is looking to push that death spiral agenda along some, good for them.

        1. Barri Mundee Avatar
          Barri Mundee

          The turkeys are voting for Christmas!

      2. Ian Porter Avatar
        Ian Porter

        Coming soon: the $100/kwh battery. When that happens (its somewhere around $250/kwh at the moment), the present dilemma the government finds itself in will be a tiny squib in comparison to the nuke explosion of off-grid adopters on a street near you. Time of use metering, increased network charging and over-inflation cost increases will only drive everyone to battery storage and off-grid faster: so bring it on Mr Nahan. That day is fast approaching and will make the solar install business seem like a sideshow in magnitude and the speed at which it will arrive on our doorstep.

        1. wideEyedPupil Avatar
          wideEyedPupil

          I feel sorry for all the suburban trees that this will fell. people who even especially want solar because they have shaded roofs and buy GreenPower already will be pushed into solar and storage just to not be gauged.

          1. Miles Harding Avatar
            Miles Harding

            Sounds like a job for community power corporations!

            These are probably best built through cities and local councils that own considerable local land and have authority to re-purpose it.

            The next hurdle is to deregulate the power system and blow apart the exiting cosy monopolies, allowing flexible delivery and costing arrangements to be devised.

    2. Alastair Leith Avatar
      Alastair Leith

      Or solarPV plus an electric heat pump if they can afford it. BZE modelling in the ZCA Buildings Plan showed for most cities in Australia PV + HP better value than evacuated tube or other thermal HW units.
      bze.org.au/buildings

      1. Matthew Wright Avatar
        Matthew Wright

        In particular a Sanden CO2 heatpump – they’re a cut above everything else on the market.

  7. Miles Harding Avatar
    Miles Harding

    “However, the draft did not instill the renewable energy industry with much confidence. Despite claiming to be “technology neutral”, the report focused almost entirely on coal and gas, even canvassing the possibility of importing coal from Indonesia. The report did not mention solar once.”

    Technology Neutral…
    Yes, Mike Nahan hates all renewable sources equally!

  8. Andrew Woodroffe Avatar
    Andrew Woodroffe

    Excellent. Synergy pays me 7.13c/kWh for any solar power I spill into the grid. It is then absorbed by my neighbours who are charged 24.60c/kWh by Synergy. There is no transmisison for this electricity, and therefore no transmission costs. There are a few dozen metres of distribution line and there will need to be some balancing but that is a modest cost. There is a cost for supplying electricity overnight but this occurs and is paid for, regardless of any solar. So who is getting this 16.5c/kWh ($165/MWh)?

    1. Roger Brown Avatar
      Roger Brown

      You should charge them a infrastructure charge for looking after your power station and a supply charge should even it up .

      1. Ian Porter Avatar
        Ian Porter

        +1 … and back-charge them for providing required overnight/off peak loading which if not applied to the grid results in load shedding and .. shudder to say it .. thermal cycling resulting in boiler tube stress a la Muja power station (stress corrosion cracking of boiler tubes – a big part of that now forgotten $270m hit a while back).

    2. Ian Porter Avatar
      Ian Porter

      Short answer: The fat cats in Synergy (joking). It’s going to partly subsidise the mess created by foolhardy investment in network infrastructure and out of date generation builds that did not consider the forward trends resulting in an unsustainable debt burden which is passed on… to you my friend!

  9. Ian Avatar
    Ian

    Here is a site regarding WA’s electricity market
    [PDF]4 beyond the national electricity market – Australian Energy Regulator
    https://www.aer.gov.au/…/Chapter%204%20%20Beyond%20the%20nation…
    5134 megawatts (MW) of installed generation capacity,. 6000 kilometres of transmission lines and 85 000 kilometres of distribution lines. Western Australia.

    One imagines that WA has a huge problem transmitting electricity to outlying rural areas, not so, the SWIS is a small percentage of the state and huddled in the SW corner of the state. Coal provides just 35% of their power, the majority of the rest is gas. A lot of new fossil fuel capacity has come online recently and that must be the reason for vilifying solar. Not so much poles and wires , probably more boilers and turbines. The problem is not so much the quantity of solar but the timing of it which detracts from the lucrative daytime peak consumption period.

  10. Chris Drongers Avatar
    Chris Drongers

    Interesting. The government is 6 months late releasing its review; the SWIS is hugely oversupplied with generators either owned by the government or with contracts for capacity; all being challenged by private generators whose rooftop solar (soon with batteries) is close to undercutting the present or near future grid price); rooftop solar owners who need to stay connected to the grid for evening peak and for security of supply; contracts already let to develop skills and experience in isolated and fringe of grid hybrid power supplies. Nahan has a powerful wedgey going on.

    1. Miles Harding Avatar
      Miles Harding

      This is the real problem that drives the State Government into policy comedy territory.
      As a taxpayer, I would prefer to see the mistakes admitted to so that policy, compatible with the current world can be implemented instead of the farce we are experiencing.

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