Smart meters are currently being installed in all Victorian homes and small businesses as part of a joint initiative between the State Government and Victorian electricity providers. Media reaction to the Smart Meter Program has been mixed, with some questions being raised around whether the expected benefits outweigh the costs to consumers.

We’ve put together some information to help you understand the issue and how it will affect you.

Read part 1 of this article series: What is a smart meter and how much does it cost?

What are the benefits of the Smart Meter Program?

Smart meters will provide the ability for electricity providers to remotely read meters, identify outages, restore power and connect and disconnect supply, making for a much more efficient system and reducing the need for estimated bills.

In homes and businesses, smart meters will allow consumers to regulate their own electricity usage by providing real time readings. Of course, the ability to monitor electricity usage is not, in itself, a particular advantage - consumers need to take action to reduce energy consumption in their home or business. It is also important to note that smart meter consumption rates are generally slightly higher than current rates.

The key to reducing consumption with smart meters taking the opportunity to improve the energy efficiency of your home or business. Implementing energy saving tips - such as turning off appliances at the wall and taking shorter showers - will enhance efficiency; smart meters will allow you to keep a close eye on your usage and show you the impacts of the changes you make.

Looking ahead, there are a number of potential future benefits associated with smart meters, including the option of “time-of-use” pricing, which would vary electricity charges according to the time of day, week or year the power is used. Plans for this new pricing system are currently being reviewed by the State Government.

Also under consideration is the possibility of using power rationing to assist in credit management for consumers who are having trouble paying their energy bills. “Supply capacity control” electricity plans would allow for power supply to be restricted as an extra step in preventing - or an alternative to - disconnection. Some consumers who may otherwise have had their electricity cut off completely would instead have access to enough power to run, for example, a few lights and a refrigerator.

Ultimately, the Smart Meter Program seems to be a positive step towards regulating energy use and reducing the greenhouse gas emissions associated with electricity consumption. The installation of smart meters offers some clear, immediate benefits, as well as putting in place the necessary technology for future initiatives that will potentially change the way we use electricity and the way we’re charged for it.

Saving money on electricity

It remains to be seen when - and to what degree - smart meters will reduce the energy bills of Victorians; certainly, any significant changes to pricing systems are unlikely to occur until the completion of the installation phase at the end of 2013.

In the meantime, Victorians can reduce their electricity bill by improving the energy efficiency of their household or business, and ensuring that they are on the best electricity plan available to them. The electricity market in Victoria is open to competition, which means that there are several providers and energy plans to choose from. Victorian consumers can find the cheapest energy rate - either with their current provider or a competitor - and make the switch without affecting their actual electricity supply.

The switching process is surprisingly easy; fast, free electricity comparison services like GoSwitch can arrange the whole thing for you, from comparing all available plans to organising a new connection. In the last year, GoSwitch saved its Victorian customers an average of $340 per year on electricity - enough to offset the cost of installing your smart meter several times over.

The mandatory introduction of smart meters in Victoria has attracted a fair amount of controversy since the project began in late 2009. A joint initiative by the State Government and Victorian electricity providers, smart meters – rechristened “dumb meters” by some political opponents – have drawn criticism from those who question their value and are angered by what is perceived to be a cost “blow out” in the delivery of the program.

On the other side, consumers are assured by the Electricity Networks Association (ENA) – the representative of the electricity supply industry in Victoria – that the Smart Meter Program is essential in managing the State’s energy use into the future and developing an effective response to climate change. Such a vital and complex project, the ENA argues, inevitably requires money, time, and a general societal shift in thinking and behaviour. After the rollout of smart meters has been completed, the ENA predicts improvements in the reliability and quality of electricity supply for Victorians, as well as more accurate billing and better customer service.

How will the introduction of smart meters affect you?

For Victorian consumers - who have watched their electricity bills climb rapidly in recent years - the politics of the smart meter issue can quickly become tiresome and confusing. While most of us are advocates for a more sustainable future, it is more than reasonable to feel that you need some more information about the program and how it will impact your household or business. What exactly is a smart meter? How does the system work and why is it better? How will it affect your electricity usage, and how much will it cost?

To help you wade through the political rhetoric, here’s a bit of background on the Smart Meter Program:

What are smart meters?

Over the next four years, smart meters are to be installed in all Victorian homes and small businesses. Smart meters – also referred to as Advanced Metering Infrastructure (AMI) – provide two-way communication between the meter and your electricity provider, and allow consumers access to accurate electricity usage information every 30 minutes.

Current metering technology – which involves usage estimates and sporadic on-site meter readings – is not capable of providing timely consumption information to the consumer or the electricity provider. Smart meters will enable electricity companies to identify and respond to outages as they occur, and - by allowing you to monitor your electricity use in real time - will give you the tools to manage your consumption more effectively.

Smart meter costs

The cost of implementing the smart meter program is being charged to consumers over the four-year installation period, from 2010 until the end of 2013. These charges – around $70 to $80 per year, per customer - are included in your electricity bill, and usually itemised separately, or bundled in with other supply charges.

The practice of billing consumers for equipment associated with electricity supply is not a new thing; Victorians already cover the costs of supplying and operating the current meter system and other electricity infrastructure as part of their monthly bills. When you consider that most current meters are decades old and in need of replacing, coupled with the fact that smart meters are set to become the standard worldwide, the extra monthly charge is a little more palatable.

Once the installation of smart meters has been completed, consumers will continue to pay the costs of operating and maintaining smart meters over the long term. Again, this is already the standard practice with the current meter system; consumers should be aware, however, that the long term supply charges associated with smart meters are likely to be higher.

Read part 2 of this article series: Smart meter benefits and saving money on electricity

June and July are the coldest months of the year in Australia, and August is not much better; in fact, most Australians states don’t start to warm up again until well into September. Chances are, then, that - other than those lucky enough to be in the warmer northern regions this winter - many Australians are currently struggling through chilly days and icy nights.

Most of us deal with the winter cold by cranking up the heater; there aren’t too many things nicer than escaping from the freezing outdoors into a warm and toasty home. Unfortunately, winter heating is one of the major contributors of domestic energy consumption, making it both an environmental concern and a significant household expense. With the price of electricity at an all-time high, many Australians are looking for ways to make their home heating more efficient in winter.

Here are some winter energy saving tips to help you reduce your energy consumption during the colder months:

• Keep the heat inside - make sure your ceiling, floors and wall spaces are well-insulated and cover bare floors with rugs where you can. If you’re confident with ‘DIY’ projects, you might be able to tackle the insulation yourself, otherwise you’ll need to bring in the services of a contractor.
• Open curtains during the day to let in the sun’s heat, and close them at night to keep out the cold.
• Set your thermostat to the lowest comfortable temperature. If you’re feeling cold, try putting on a jumper or wrapping yourself in a blanket before turning up the heat.
• Seal gaps around doors and windows, unused chimneys and chimney dampers and turn off rangehoods and exhaust fans to keep warm air leaking out.
• Close the door to cold and unused rooms.
• Maintain and clean heating equipment regularly and replace filters in heating vents.
• If you spend most of your time in one room, use a space heater to heat this room only.
• While a long, hot shower in winter is tempting, aim to keep your shower time no longer than around three to four minutes.

Start implementing these winter energy saving tips around your home and you’re likely to see a difference in your energy bill straight away. Have a look at GoSwitch’s Energy Saving Tips section for some further advice on how to increase your household’s energy efficiency all year round.

Of course, one of the easiest ways to save money on electricity – at any time of year – is to use GoSwitch’s free price comparison service. GoSwitch compares the energy providers operating in your area and their available plans to find the best deal on energy for you; if you decide to switch to a better deal, they’ll even arrange your new connection.

The GoSwitch service is impartial and obligation-free; compare today and you could save hundreds of dollars by the next time winter rolls around.

While unlikely to make national headlines, events like Rose City’s “Energy Saving Day” – active community initiatives that provide practical energy saving ideas – can act as an important reminder to the rest of Australia, perhaps even a source of inspiration.

Implementing energy saving tips in our homes and businesses is not only important for environmental sustainability; it can also help to significantly reduce energy costs. At a time when electricity and gas bills are predicted to increase by as much as 60 per cent within the next ten years, tips on how to save energy have never been more valuable.

There are energy savings to be made in every room of a household, with the kitchen, bathroom and living room generally the biggest sites of consumption. If you are looking to give your house an overhaul, you can make a big difference by replacing energy-guzzling appliances with more efficient ones – the savings made over time will more than offset the initial expense.

Most domestic appliances are required by law to carry an Energy Rating Label, which will give you a quick comparative measure of the model’s energy efficiency. You can view and compare a comprehensive list of appliances and their energy ratings at the Australian Government website www.energyrating.com.au.

If you’re not looking to make any new purchases, there are plenty of other energy saving tips that you can put into practice without having to spend a cent. Turning off appliances at the wall - rather than leaving them in stand-by mode – can reduce your energy bill by up to around 10%. Another major contributor to household energy consumption is hot water; keeping an egg-timer in the bathroom – a common energy saving tip – will help you cut down your shower time (around three minutes is ideal).

Energy saving tips that relate to household temperature control will be particularly pertinent over the next few months of the Australian winter - approximately 50 per cent of household energy costs are attributed to heating. Sealing draughts, closing doors to cold rooms and letting in sunlight during the day can help you cut your expenses. Also, try reducing the temperature of your heater by one or two degrees to make further savings.

Applying these energy saving tips is a good start, but if you’re keen to do more, have a look GoSwitch’s full list of Energy Saving Tips for numerous other ideas on how to save energy.

Beyond reducing your home’s energy consumption, you can make huge savings on your bills by using GoSwitch’s free price comparison service to find the best deal on energy. Most households are overpaying for the energy they use – sometimes hundreds of dollars more than they need to. GoSwitch is a free service and will compare the available rates in your area and arrange the switch to an energy plan that suits you.

Basically, this means that people all over the world are moving house more often. In Australia, more than a third of us (6.6 million people) changed addresses between 2001 and 2006. As this trend develops, it seems that the many trials associated with moving house will be faced by more Australians, more frequently.

Beyond the emotional strain of moving house – packing and transporting belongings; arranging new gas and electricity connections; organizing ‘change of address’ notifications – are some significant financial burdens. Beyond the ever-increasing price of property, house-buyers will need to prepare for legal charges, insurance, stamp duty and agent commissions, among other expenses. Renters can expect to encounter various up-front fees on top of general cleaning and moving costs.

Moving house is expensive, stressful and increasingly common. Unsurprisingly, people moving house in Australia are hunting for ways to ease the pressure and reduce expenses. Gas and electricity connections have been a particularly popular focus – using free, impartial energy comparison services like GoSwitch, home-movers can arrange a new connection in a few minutes, and save money while doing it.

In addition to the convenience of having their new gas and electricity connections organised, many people who are moving house are finding that they can make significant savings on energy bills at their new address.

In most Australian states, the energy market is deregulated, which means that energy retailers must vie for customers by offering competitive rates. People are allocated a default retailer and charged a default rate; most customers don’t realize that they are probably paying more than they need to.

Moving house can be a perfect opportunity to find a cheaper energy plan. The amount a consumer pays for energy is determined by a number of factors, including where they live; a new address might bring further potential to save money on electricity and gas. The supply of energy to a residence or business remains the same regardless of the retailer, so less expensive energy doesn’t mean reduced quality.

If you are one of the many Australians who will soon be “on the move”, it is worth considering using a service like GoSwitch to help you arrange your new gas and electricity connections, and put some money back in your pocket. The GoSwitch service is quick, impartial and – unlike most other elements related to moving house – it won’t cost you a thing.

Origin Energy CEO Grant King is one of the latest industry heavyweights to comment on the issue, explicitly predicting a significant increase in electricity prices over the next ten years. Mr King said he believed that by 2020, the price of electricity to consumers will be two or three times what it is today.

This forecast and others like it have prompted a new wave of anxiety around the impact that mounting energy expenses will have on the community. Of particular concern is the issue of public health, with fears that many people will not be able to afford to heat their homes in winter.

In response, many energy consumers are taking advantage of the benefits of market deregulation, by choosing to compare electricity prices from different providers to find the best deal on energy. Indeed, over the last year, users have been turning to independent price comparison services like GoSwitch.com.au in unprecedented numbers in an effort to save money on electricity.

Companies like GoSwitch.com.au offer consumers a free and independent comparison of the energy packages available in their area. GoSwitch.com.au will compare electricity prices to find the cheapest rate, and then arrange the new connection.

The cost of electricity is controlled by a different regulatory body in each state, so energy prices in Australia vary according to location. Last month, GoSwitch.com.au released details on the average annual electricity savings made by their customers in several states.

By choosing to compare electricity prices through GoSwitch.com.au, South Australian customers saved an average of $150 annually. Queensland customers saved $220, and in Victoria - the least regulated market - the average customer saving was an enormous $340.

New South Wales customers - perhaps the hardest hit by rising electricity expenses - saved around $220. This news is particularly timely for consumers in NSW, with the state’s Independent Pricing and Regulatory Tribunal (IPART) announcing price increases of up to 64 percent over the next three years.

A further surge in electricity prices is undoubtedly on its way; users will need to prepare themselves for extra pressure on household budgets. Consumers who are nervous about meeting the increasing demand of their monthly bills are likely to find some relief by using the GoSwitch.com.au service to arrange cheaper electricity. By contacting GoSwitch.com.au through the website or by phone, customers can compare electricity prices and switch providers within minutes, without disrupting their electricity supply in any way.

With energy usage set to soar as winter approaches, the time is right for consumers to start saving money on electricity.

While many consumers are aware that they could be saving money on gas and electricity, the task of researching energy providers and organising the switch can seem overwhelming. Not knowing where to start, or whether switching is even worth the trouble, might be holding you back from making significant energy savings.

With gas and electricity prices continually on the rise, it is worth taking a moment to consider the benefits of comparing gas and electricity providers. You might be surprised – not only at how easy it is, but also at just how much money you can save.

“Savings” is a word that is overused by many businesses; as a consumer, it is easy to become a little skeptical about what it actually means. To help consumers wade through the marketing jargon, GoSwitch – Australia’s leading energy comparison website – recently released details around exactly what “saving money on energy” means to its customers.

South Australian, Queensland, Victorian and New South Wales GoSwitch customers are saving as much as several hundred dollars every year. Here’s an indication of approximately how much you can expect to save per year on energy in your state, simply by using the GoSwitch service:

South Australian GoSwitch customers currently make average annual savings of $150 on their gas and electricity. That’s an average of $150 dollars back in your pocket every year, with no extra effort or cost.

Queensland customers come in next with an impressive average annual saving of $200.

Customers in New South Wales are the second highest savers on the list, paying an average of $220 less on their energy bills each year.

In Victoria, where there are the most energy retailers to competing for business, the average savings come in at a whopping $340 per year, per customer.

How does it work?

GoSwitch provides customers with all the information they need regarding how to save money on electricity and gas. In just a few minutes, GoSwitch will compare all plans and providers available in your area and provide you with a tailored list of recommendations. They will even arrange a new connection for you. The service is completely impartial and costs nothing; it really is as easy as it sounds.

There’s nothing stopping you from starting to save money on energy today. The actual supply of energy stays the same regardless of the energy provider, so the only difference you’ll notice will be the extra cash in your wallet.

This fact sheet aims to demystify what is driving this.

Investment in infrastructure and network improvements

Investment in infrastructure to improve network security and reliability of supply is proving essential and costly, especially for electricity suppliers who have been operating in the market for a long time, such as State-run organisations.

In NSW, for example, consumers will experience price increases of between 16% and 35% by July 2013 just as a result of infrastructure spending. (Source: IPART media release 15 December 2009.)  In QLD, electricity prices will increase by 13.8% from 1 July 2010.

The Federal Government’s Proposed Carbon Pollution Reduction Scheme (CPRS)

The CPRS aims to reduce our carbon footprint by making the things we currently do cost prohibitive.  Essentially, the CPRS will tax energy companies according to the fuel source and technology they rely on and how much energy their consumers use.  These costs will flow directly on to consumers.

The workings of the Scheme mean that people in Victoria can expect to be hit with  disproportionate price increases because providers in that State process lower-quality brown coal and their infrastructure is older.

The Federal Government’s Mandatory Renewable Energy Target (MRET) Scheme

This scheme will come into effect on 1 January 2010, and is aimed at increasing investment in renewable energy, thereby reducing greenhouse gas emissions from the electricity sector while the CPRS comes into full effect.  By 2020, electricity suppliers must source 20% (up from 10% currently) of their electricity from renewable sources such as wind, solar, hydro, wave, geo-thermal, wood-waste and waste coal mine gas. If they cannot meet these targets directly, they must purchase credits in the form of Renewable Energy Certificates (RECs) from other suppliers that ensure these targets are met by the industry as a whole.

This legislation will have a profound impact on electricity prices because as with any new technology, electricity from renewable sources is comparatively very expensive to produce.  These costs will be passed directly on to consumers.  For more information on the MRET Scheme go to www.climatechange.com.au

Changes in supply and demand increased prices to the wholesale market

Heat waves, cold snaps and unusual events create spikes in electricity demand which places pressure on the network.  Conversely, outages at individual power stations, or sustained supply issues, for example, related to droughts, reduce electricity supply. In both cases the wholesale price of electricity increases, and over time this price rise is passed on to consumers.

Deregulation

Deregulation removes Government subsidies and ensures that the price that consumers pay for energy is set by the market.  On the positive side, deregulation encourages competition, and provides consumers with a choice of providers.  Like any product, retailers will offer discounts and special offers from time to time, and savvy shoppers can take advantage of rates that offer a discount of 10% or more off regular, ‘default’ rates.

Our aim is to collate and analyse data about electricity prices and usage based on publicly available information and our own data about the maximum and minimum prices consumers are paying for electricity.

Introduction

This update is the first of a series we intend to publish every quarter, at the end of each Australian season - Spring, Summer, Autumn, and Winter.  Our aim is to collate and analyse data about electricity prices and usage based on publicly available information and our own data about the maximum and minimum prices consumers are paying for electricity.

If there is something that you feel is missing, or you would like more detail on a specific issue or a media comment from our CEO Ben Freund, please contact Anne Wickham at Boxing Clever on 0419 185 664 or awickham@boxingclever.net.au.

Current Hot Issues

1/         1 January price increases in Victoria:

-       Victorians will receive another hefty price increase on 1 January 2010, with the default rate for electricity rising between 17.8% and 27.7% depending on where consumers live.  We are waiting for retailers to confirm price offers and discounts that will be available to savvy shoppers.  If you contact us over the Christmas break we’d be happy to provide details of the options available.

2/         A look behind price increases announced in NSW and QLD

-       While debate around the impact of the Federal Government’s Carbon Pollution Reduction Scheme (CPRS) has been the subject of heated discussion, it has masked what is a potentially bigger issue in the short term, that is, the rising cost of providing a reliable supply of electricity.

-       In NSW last week IPART released a draft determination recommending price increases ranging from 44%-62% between July 2010 and 2013 for all NSW consumers. A look behind the numbers shows that “investment in infrastructure, (to) … improve network security and reliability of supply in line with the new licence conditions imposed by the NSW Government” accounts for price increases of 31% for EnergyAustralia customers, 16% of Integral Energy customers and 35% for Country Energy customers. (Source: IPART media release 15 December 2009.)

-       Also last week, the Queensland Competition Authority recommended electricity price rises of 13.8 per cent from July 1 for a year.

-       We believe that these price rises are only the beginning for customers in NSW and Queensland, who have some serious catching up to do compared to what people are paying in other states.  It is our opinion that IPART’s recommended price increases, in particular, fell considerably short of what the industry had been hoping for.

Retail electricity use Winter ‘09 v Spring ‘09

-       Across the four states where a choice of electricity provider is available, Queenslanders used the most electricity per head during Spring, and they also enjoyed the lowest default rates.

-       Summer can be a real trap for consumers because air conditioners chew through electricity more than any other appliance in the home.  Use them with discretion and set thermostats as high as is comfortable.

-       Summer is also a good time to make sure that you are not on a default plan and paying maximum rates.  Spending five minutes seeing what options are available to you can save households as much as $200-300 a year in many cases.

References and sources

-       Default prices are based on actual published rates charged by electricity suppliers within the 11 network distribution areas in NSW, ACT, Vic, QLD and SA.

-       NSW information includes ACT data because it is not separated by the Australian Energy Market Operator (AEMO).

-       Average annual bills listed in this document are based on the default rate for electricity multiplied by average consumption of 8MWh per annum and based on an all-day metre.

-       Per capita data was calculated using population figures sourced from ABS Publication 3101.0 - Australian Demographic Statistics, June 2009

Referencing information

If you wish to print any of the data provided please reference it as follows: Source: www.goswitch.com.au

About GoSwitch

www.GoSwitch.com.au is the leading price comparison service for electricity and gas. It allows households and businesses to conduct a customised search for the best energy provider for their needs, and to change plans free of charge.

Retail electricity price rises in 2009 (based on default rates)

Victoria

Victoria has borne the brunt of electricity prices rises this year.  Four of the most five most expensive default prices are based in Victoria.

NSW

NSW does not have full deregulation, but nonetheless most consumers do have a choice of plan.  NSW consumers will pay up to 62% more for electricity over the three years from July 2010 unless they shop around for a better deal. This is over and above increases already being felt in 2009 of 11%.

QLD

The default price for electricity has risen by 15.67% in Queensland this year, but the average household is still only paying about $1,595 per annum compared to as much as $2,020 in some areas of country NSW and Victoria.

SA

South Australian residents, who are the most frugal electricity users per capita began the year paying the highest rates, but benefited by having the lowest annual increase of all the deregulated states of just 4%.