The strange case of NSW’s disappearing solar tariff rates

Solar Choice

Solar feed-in tariff rates have been removed from MyEnergyOffers, the website associated with NSW’s Independent Pricing and Regulatory Tribunal (IPART), which sets retail electricity prices for the state. MyEnergyOffers is a free website that allows NSW residents to easily and instantly compare different retailers’ electricity rates by entering electricity usage data. A call to IPART revealed that there is no set deadline for the retailers to submit their solar feed-in tariff rates for display.

Why were the solar feed-in tariff rates removed?

The ‘Solar Feed-in Tariffs’ page of the MyEnergyOffers website currently reads:

Electricity retailers are currently reviewing their solar feed-in tariffs. We have temporarily removed the solar feed-in tariff display from the myenergyoffers search results. Once retailers have advised us of their solar feed-in tariffs we will update our website. In the meantime, we recommend that you check the retailer’s website or contact the retailer directly for information about the solar feed in tariffs are available with an offer.

The removal of the information comes in the midst of changes to the contribution electricity retailers are required to make to the NSW Solar Bonus Scheme, which, although closed to new applicants, continues for existing customers until 2016. From 1 July 2012, NSW electricity retailers are required to contribute 7.7c per kilowatt-hour (kWh) towards the cost of the state’s Solar Bonus Scheme, which pays either 60c/kWh or 20c/kWh to grid connected solar system owners, depending on their date of application.

Electricity retailers are not, however, required to pay customers who install solar systems after April 2011 (when the offering of the 20c/kWh rate ended) for power they export to the grid. Instead, IPART determined in a report released in March 2012 that the determination of solar feed-in tariff rates should effectively be left to market forces, with no mandatory minimum to be paid by retailers.

In the place of a fixed, state-wide standard rate, a ‘benchmark rate’ range is to be set every year. (For the financial year 2012-2013, this rate is 7.7c-12.9c/kWh.) The benchmark rate is in place for the reference of potentially solar-going electricity customers, to enable them to negotiate with their retailers with some idea of what their exported solar power is ‘actually’ worth to electricity distributors.

Although it had been technically possible for customers to collect and weigh information on electricity and solar feed-in tariff rates from different retailers, prior to their listing on the MyEnergyOffers site, it was not convenient or possible to do so in one single location, and would have required multiple website visits and phone calls. The MyEnergyOffers website was to be the go-to source for transparency in an otherwise murky market conditions, making comparisons quick and relatively simple.

Given this context for the original inclusion of feed-in tariff rates in on MyEnergyOffers, the removal of the rates from the site for an apparently indeterminate period of time is somewhat unexpected. The explanation for their absence received from IPART/MyEnergyOffers over the course of several telephone conversations essentially lies in the retailers themselves.

The retailers have said that they need time to recalibrate the rates they will offer new customers in light of the new 7.7c mandatory Solar Bonus Scheme contribution, and IPART/MyEnergyOffers did not want to display incorrect information, so rates were removed entirely.

One related explanation suggested in a conversation with a MyEnergyOffers representative was that displaying feed-in tariff rates was not possible because retailers offer different rates to different customers, depending on the bargain struck in individual cases.

It is also worth noting the fact that the statement on the MyEnergyOffers website is a blanket one that covers all of the state’s energy retailers, not just 1 or 2. This, in combination with the other factors mentioned above, hints at a general reluctance among the electricity retailers to have set prices listed on MyEnergyOffers, or to keep them up to date and accurate once they are listed.

It is not the job of IPART to chase up the retailers to update their pricing, but rather the responsibility of the retailers themselves to ensure that their data is up-to-date. IPART seems to have thrown up their hands at the situation.

Whether this reflects an unwillingness among retailers to show any material support for solar PV is unclear, but given the at-odds nature of a high penetration of distributed solar PV systems on the grid with the state’s electricity industry’s business model, this may be the case.

Earlier this year the Australian Energy Market Operator (AEMO) released a report saying that 1) electricity demand forecasts had dropped significantly across Australia and 2) solar PV played a role in this decline. Generally speaking, as demand falls, so does electricity industry revenue. Recent and future projected electricity price rises are seen as due in great part to over-investment in grid infrastructure to keep revenues growing, an issue which came to the forefront of the clean energy debate last week, with Prime Minister Julia Gillard publicly addressing the need for electricity market reform in the states.

This article was originally published on Solar Choice’s blog. Reproduced with permission.