Solar homes facing meter bill shock, delays as premium tariffs end

(Ed: This story has been updated to include response from EnergyAustralia).

More than 150,000 households in NSW are facing the prospect of hefty bills, lengthy delays  and unexpected losses on the value of their rooftop solar output when they have to change meters at the end of the year when the premium solar bonus tariff concludes.

The industry is fearing a train crash of massive proportions because the around 150,000 households will need to change meters, but there may not be enough electricians to do the job.

On top of that, households are facing a $700 fee to change those meters, and on current estimates will face lengthy delays and even higher electricity bills because of those delays.

The issue is a big one for consumers, the government and for the electricity industry; the consumer because of the potential bill shock and the frustration of delays, and the government and electricity because of the push-back from those households.

Some 150,000 households have been enjoying a 60c/kWh gross feed-in tariff for the last few years – that is 60c/kWh paid for entire output of their rooftop solar systems, and which is sometimes augmented by a further payment from their retailer. Many households have been receiving electricity bills rather than paying them.

However, that comes to an end on December 31,  when those households will go back to the market tariff, which they will have to negotiate with their electricity provider. These range from zero to around 6c/kWh – but that is paid only for the excess solar power exported back to the grid.

That new tariff means that households will have a strong incentive to consume as much of their output as they can – or possibly to add battery storage and store that excess power for use in the evening. That is why NSW is considered one of the prime markets in Australia – indeed the world – for domestic battery storage.

However, to do all this households need to change their meter. That could cost them $700 – a $350 fee for the meter (many say this is way over market cost) and the same again for installation. If they can get it installed.

Under current rules, there are not enough qualified electricians to do the job. NSW legislation stipulates that only “level 2” electricians can change the meter, and it is estimated that all of those qualified did this and nothing else for a year, they could still only change 50,000 meters.

If the remaining households cannot get their meter changed, then they will receive only a meagre feed-in tariff for their entire solar output – say around 6c/kWh – while paying the retailer rate – between 22c/kWh and 30c/kWh – for any electricity consumed in the home. Some may not receive any tariff at all.

Industry insiders admit it is a disaster waiting to happen. “It is a shocker. I don’t think they (the electricity retailers) realise how irate those customers are going to be.”

Indeed, it is not clear what the strategy from the retailers is or will be. Some may welcome the prospect of selling smart meters to customers, and using the offer of a free smart meter to lock in customers under longer term contracts, reducing the high “churn” rates that plague the industry.

But there is a separate issue on smart meters. The botched roll-out in Victoria has resulted in push-back against the technology. Some households will simply want “net meters” to replace their gross meters – if they can obtain them.

Sources say a meeting was convened late last year by the NSW government to address the issue. One proposal was that the state-owned networks could facilitate a change of rules that would increase the number of people able to change the meters.

It is still not clear if and when that can be done. RenewEconomy approached the government, the major retailers, and the network operators, but none could get back before publication. Either they do not have a plan or they are just not telling.

(Ed: Post publication, we received a statement from EnergyAustralia which read:

“Like all retailers with solar customers in NSW, we are investigating a range of possible solutions. That includes smart meters. But it’s too early to speculate on the final approach. Ultimately our aim is to ensure customers are fully informed on what their options are so they can get the best possible outcome.”)

For consumers wanting to change from net meters to gross meters, timing is everything. A change of meter too early will mean a loss of the premium bonus tariff, a change too late will mean loss of revenue under the new system.

Here are a few numbers to consider:

For a household with 3kW of rooftop solar, the average daily output is around 12kWh.

That means under the current solar bonus tariff, they are receiving $7.20 a day for their output. Depending on how much electricity they use, they might be receiving a cheque in the mail, rather than a bill, each quarter.

Under the new tariff arrangements, these households will receive a “net tariff”, of around 6c/kWh.

If they don’t change meters, then they will receive 72c a day, rather than $7.20. And they will still have to pay for their consumption at the normal rates. They will almost certainly be paying a big bill, depending on their consumption.

With a net meter, those households will only receive the 6c/kWh for solar energy they export, so they have a strong incentive to consume their own solar power, and to offer the grid-based electricity costs of around 26c/kWh. That may inspire some to install battery storage.