Energy supplier AGL has boosted the case for smart meters in Australia with research showing that adopting time-of-use tariffs would lead to economic gains of about AUS$1.6 billion (or USD$1.5 billion), The Australian newspaper reports.

The AGL study aims to show the government that the "case for reform tariff" is clear, according to the energy company's chief economist Paul Simshauser. The Australian utility industry struggles with fixed charges and a flat variable charge that does not account for the much higher cost of delivering power during peak periods.

Mr Simshauser believes adopting time-sensitive tariffs, made possible by smart metering technology, would deliver gains for householders and businesses.

Tariffs to help householders

AGL data, based on 2.8 billion readings from 160,000 smart meters in Victoria, the only state so far to have rolled out the devices, found that almost two thirds of households were better off after a shift to flexible tariff pricing, with the worst ­affected households being wealthier families using more power during peak times.

Simshauser said: “The most surprising result from our analysis of winners and losers are that households classified as ‘in hardship’ are overwhelmingly better off after tariff reform,” he said, noting that working couples and pensioners also did well out of flexible pricing.

Poorer householders had relatively high off-peak usage, which Mr Simshauser said might be because of less energy efficient appliances or poorer-quality housing requiring constant heat or cooling.

“It would make better policy sense to shift people to the new system and give them the option of opting out,” Simshauser said, pointing to US data that suggested a fifth of households choose flexible pricing if given the choice.

Smart meters not a threat

The study also aimed to reassure energy companies that they wouldn't lose revenue with the adoption of flexible tariffs.

“Industry shouldn’t fear the rollout of smart meters in terms of profitability,” he said, noting the overall fall in consumption was only 1-2 per cent and energy ­regulators would still permit ­certain rates of return.

2 COMMENTS

  1. Could the author please provide an indication of whether or not marketing spin has been deployed by AGL in its reference to “smart meters”.

    Interval meters are not necessarily smart and have the ability to achieve the claimed outcomes.

    “Smart Meters”, for all the hype, have disappointed me in the Australian scene. The requirements for them have barely shifted from interval meters with comms (aka Type 4 in the Australian NEM) with scant regard for future requirements by networks, small retailers or third parties.

    When I see real reform in this space – zealously guarded by the incumbent large retailers and vendors – I might hold the vision of Australian utilities management with a higher regard. Until that happens, I’m afraid the idea that what has been reported above represents benefits of “smart meters” (which don’t currently come close to delivering the vision originally intended for the idea of smart).

  2. nergy supplier AGL has boosted the case for smart meters in Australia with research showing that adopting time-of-use tariffs would lead to economic gains of about AUS$1.6 billion (or USD$1.5 billion), The Australian newspaper reports.

    The above statements interpreted for the masses, Time of use billing would allow the Utility to more effectively screw the hydro customer.