NSW networks canvass “solar tax” for households, as well as storage and EVs

The three state-government owned electricity networks in New South Wales are canvassing the possibility of hitting solar households with extra network charges, purportedly to recapture the “cost” of households exporting solar to the grid.

The proposal – included in a document “Electricity Tariff Reform in NSW” – is sure to outrage the solar sector, which already believes that households are being penalised by being paid so little, and in some cases nothing at all, for their exports back into the grid.

The distribution networks – Ausgrid, Endeavour and Essential – are inviting comments on if there should be “separate network charges for customers who have the ability to use power from the network, and also have the ability to feed surplus power back into the grid.”

It says this charge, effectively a network tax on export, could be extended to households with battery storage and electric vehicles.

“An export generation tariff for network usage could be technology neutral, and could be charged to residential or small business customers who export electricity to the grid to reflect the costs imposed on the network. This could include householders with photovoltaic solar panels, battery storage, or electric vehicles.”

It follows their extraordinary move in taking the Australian Energy Regulator to court after the AER rejected their submissions to spend billions of dollar more on network upgrades. The NSW government is seeking to sell down its stakes in Ausgrid and Endeavour, and needs high revenues to maximise the asking price.

A similar proposal – for an additional network tax on solar households – was made by South Australia Power Networks.

It wanted to charge solar households an extra $100 a year for the privilege of exporting power back to the grid. The proposal was greeted with howls of protest and rejected by the Australian Energy Regulator. But SAPN is still keen to try and implement the change, and has taken the issue to the Federal Court.

Australian solar households – apart from those with discontinued premium feed-in tariffs – are paid little for their exports to the grid.

In NSW, the payment is voluntary, but the recommended level has been cut to 4.8c/kWh, partly due to the falling price of wholesale electricity, and in part driven by the increase in rooftop solar. The pricing regulator says it is cutting tariffs because it wants to encourage battery storage.

The payments for exports do not include any consideration of benefits to networks (in delaying and in some cases avoiding peak demand events), and to the environment (in the form of reduced emissions).

Utilities can then sell that power exported to the grid to other users for the full retail price, which includes the network charges. Now, it seems, the state-owned networks want to pocket that network fee, and charge the solar households an additional fee.

It is similar to the “solar tax” imposed in Spain that is causing outrage in that country, and part of a general push-back by utilities to defend their business models against the rising threat of household solar, battery storage, and the move to decentralised energy.

The networks justify this by saying that they need to be able to meet the “peak demands of consumers”. But as this report released today highlights, networks have already spent $75 billion on upgrades in the past decade to meet peak demand forecast that never eventuated.

The grid has been built bigger than needed, and the costs have already been passed on to consumers.

Muriel Watt, from the Australian PV Institute, says the grid should be seen as a service provider to facilitate a whole range of transfers, and if networks want to remain relevant in future, they need to provide a platform that suits what customers want to do.

“It would seem that having a grid which facilitates customer generation, storage and load is an essential, if they want to remain in business – otherwise customers will drop off, or new grid equivalents will be built (EVs are a good example of being able to transfer power from one site to the next).

“If provision of grid services is transparent, then customers would be in a much better position to be able to decide whether they want the grid service or not.  However, networks would certainly need to pay customers for the benefits they provide.”

The networks could address this with truly “cost reflective” tariffs, but seem determined to ignore the issue of air-conditioning that is responsible for high grid costs paid by everyone (and a massive cross-subsidisation from people who don’t own A/C).

Indeed, the paper also canvasses “declining block” tariffs – where the cost of electricity actually falls the more the consumer uses. The networks says this is good, because the more the consumer consumes, the easier it is for the networks to meet their revenue caps.

“Under capped revenue regulation, increasing electricity consumption reduces network charges and declining network consumption increases network charges,” the networks argue.

Watt says the networks are operating in isolation, without taking account of the whole picture. “Less use of, or need for the grid is seen by them as a negative, so we have EE and PV, which reduce grid use, as something to be prevented.”