NSW cuts solar tariffs, Qld lifts network costs

The pricing regulator in the Australian state of New South Wales has again cut the recommended (but voluntary) level of feed-in tariffs for rooftop solar, as network operators in Queensland won approval for tariff increases.

In NSW, IPART (the Independent Pricing and Regulatory Tribunal) announced on Monday that it has further cut its recommended tariffs for rooftop solar that is fed back into the grid.

Last month in a draft determination it suggested a benchmark price range of 5.0c/kWh to 9.6c/kWh at peak times. It has now cut that further to 4.9c/kWh to 9.3c/kWh.

This compares to recommended retail tariffs of around 30c/kWh and peak tariffs of more than 52c/kWh. The FiT is entirely voluntary, meaning that retailers do not have to pay anything for exports back into the grid. Some utilities insist that commercial scale installations have a mechanism that prevents exports back into the grid.

IPART chairman Dr Peter Boxall said the benchmark range is slightly lower than the draft decision because of a further reduction in forecast wholesale electricity prices due to likely repeal of the carbon pricing mechanism.

Boxall encouraged consumers to “look at the best overall deal, which includes consumption charges, and other terms and conditions as well as the feed-in tariff”.

“Solar customers should shop around for the best deal,” Boxall said. “Feed-in tariffs are only one component of a retailer’s market offer and the retailer with the highest feed-in tariff may not be providing the best deal overall.”

As we wrote last month, the determination by IPART represents the lowest FiT recommended by pricing regulators in Australia, and contrasts dramatically with regulatory rulings in the US, where in the state of Minnesota, for instance, the solar tariff is nearly as high as the retail tariff.

As we discussed in our story “Are Australian solar households getting ripped off?“, in Australia the state pricing regulators are only concerned with the impact on retailers and the so-called “avoidable” costs of delivery – the cost of wholesale generation, transmission losses, and some minor ancillary services.

But the regulators in Minnesota – and other US states – take into account not just the avoided fuel cost, but various transmission and distribution capacity costs, avoided generation capacity costs and, most tellingly, the avoided environmental cost.

The position of state-based regulators on feed-in tariffs has caused the solar industry to consider establishing “peer-to-peer” pricing mechanisms, and to call for changes to the way electricity tariffs are structured.

The decisions come as IPART and its Queensland equivalent announce large rises in gas prices and its impact on electricity prices.

Meanwhile, the Australian Energy Regulator has approved network price rises for residential customers in metropolitan and regional Queensland of 4 per cent and 6 per cent respectively.

AER said the increased charges reflect the cost of network investment.