Tariffs in Energex for smart meters households. WTH is going on?

tariffs in energex
Some households in South East Queensland with smart meters installed since 2017 are discovering something is happening with the tariff attached to their meter. Previously their power bills had a flat rate but now most retailers are only making available demand tariffs these smart meter households. We’ll break down why this is happening, the available tariffs and a quick hack to figure out what tariff type your (smart) meter is configured to.

Old meters still get you a flat rate

If your household has an old-fashioned accumulation meter that just counts the amount of energy used, then energy retailers can only offer you an Anytime (8400) tariff. However, if a household’s meter was updated in the last five years, it’s a different story.

Rise of the smart meters.

To comply with Energex’s network rules that started in 2017, a smart meter will have been installed if you have added solar, built a new property or had a meter upgrade. Smart meters give networks more ways to provide price signals about energy use – because they measure electricity use in 30-minute intervals. With the Energex network under stress from high peak demand and a fast-growing solar surplus and low daytime demand, the Energy Regulator put in place rules to help manage this. Smart meters would be installed. The Network Operator Energex in SE QLD, would bill retailers on one of two cost-reflective tariffs – Time of Use or Anytime Demand. The objective is to discourage peak use by households through higher network rates, and to encourage off-peak use through lower network rates. This move to cost-reflective network tariffs is happening across Australia.

Somebody has to pay the network

Energy retailers pay the network charges on behalf of their customers. When a customer has a smart meter in Energex, the energy retailer has to pay the network charges associated with either a time of use or anytime demand tariff. The table below (all rates include GST) shows the charges the Energex network requires electricity retailers to pay based on the usage of each residential property. These charges include costs to cover both the local distribution and high voltage transmission networks.
TariffTariff CodeAnytime Network Charge (per kWh)Peak TOU Network Charge (per kWh)Shoulder TOU Network Charge (per kWh)Off Peak TOU Network Charge (per kWh)Demand Charge (per max kWh, paid daily)
Anytime (legacy)84008.7c
Anytime Demand37002.54c28.7c
Anytime Demand39003.61c15.24c
TOU Energy (solar sponge)690017.53c3.86c3.12c
TOU (legacy)890020.59c8.07c6.04c
Note: legacy tariffs are closed to new entrants ie. if you’re not already on this tariff you won’t be able to switch to it.

Let’s compare tariffs

The table shows the key pros and cons of each tariff, namely:
  • TOU tariffs have low off-peak and high peak network charges, which if passed through to consumers, reward or penalise them for when they consuming power from the grid
  • the solar sponge 6900 TOU tariff has lower usage rates than the legacy overnight off-peak aka coal sponge tariff, encouraging consumers to change tariff and move their loads to the middle of the day
  • Anytime demand tariffs offer substantially lower network charges (2-3c per kWh versus 8.7c for an anytime tariff) for using electricity. However the demand charge which is levied based on the maximum kW demand measured as a single peak over a 30-minute period during the peak demand charging window/timeframe (4pm-9pm every day).  For a household with a peak of 2kWh for 30 minutes on the Anytime Demand 3700 tariff, the demand charge would be 2 x 2 x 28.7c = 114.8c per day. To be better off versus an anytime tariff, they would need to consume more than 114.8c/(8.7c-2.54c) = 19kWh per day.
Note: the Time Of Use Periods are as follows:
  • TOU Energy tariff 6900 => Peak = 4pm-9pm, Shoulder = 9pm to 9am and Off-Peak = 9am-4pm
  • TOU (legacy) tariff 8900 => Peak = 4pm-8pm weekdays, Off-Peak = 10pm-7am, Shoulder = all other times

Nobody likes Demand Tariffs

We’re not big fans of demand tariffs unless the household has a battery which allows households to minimise their consumption in the peak window shifting consumption to the 19 hours of the day when the lowest network charge applies (and there is no peak demand window). We think charging households every day for their maximum 30 minute consumption period in a month is unfair especially when that period may not coincide with the network peaks that actually drive network costs and most households would not have the means to monitor their usage in real-time to avoid them.

Time of Use is a better option

We are however fans of the solar sponge “6900” tariff which offers off-peak rates from 9am-4pm every day and we would strongly encourage households to consider changing to this tariff and move any shiftable load to the middle of the day when energy comes primarily from low cost solar – rooftop or utility solar farms. With little hydro and wind resources in Queensland the grid is heavily reliant on coal and gas overnight. With abundant cheap solar available during the day, often, more than the grid can use, it makes no sense to be incentivising consumers to shift their loads to the middle of the night when coal and gas are dirty and more expensive than solar. It’s important to note that peak network charges are high and usage during these times need to be minimised, however the charges are not as punitive as the peak demand charges that apply to the anytime demand tariffs.

Retailers are now passing on the network tariffs

Most retailers in South East Queensland have decided to pass on the network costs directly to customers. Retailers that present Anytime Demand tariffs to new customers in line with their meter include AGL, Alinta, EnergyAustralia, Momentum, OVO, Sumo and others. Retailers want to match their offer to the tariff on the meter. When they do this, the retailer can be confident that their pricing will cover the network costs. Otherwise, they are taking a risk on a customer, who may be unprofitable if their household has “peaky” energy use that incurs high network demand charges.

When the retailer’s tariffs aren’t what you expect

Some households with smart meters still get power bills with classic ‘flat rate’ costs and no demand charges as the retailer has chosen not to apply the separate demand charge. For these households, based on their power bill, it’s reasonable for them to assume that other retailers will offer them a flat rate. But when they shop around for a better energy deal and enter their address into retailer’s websites, the tariff returned differs from what they expect. Retailers use the MSATS database to confirm the meter type and available tariff at the property. So these households are finding that;
  • most retailers only offer an anytime demand tariff reflecting the smart meter tariff configuration
  • one retailer only returns plans with a Time Of Use tariff for the same address (the retailer will presumably request a switch of the meter tariff to align the retail and network time of use periods)
  • one or two retailers continue to offer a classic anytime tariff with no demand charges (however the anytime rates and/or supply charges are higher because the retailer still has to cover the network peak charges incurred by the property’s anytime demand tariff attached the meter).
In this situation, the household will have to choose between the tariff types offered by each retailer. If they wanted to avoid demand charges and have a wider choice of retailers in the future, they could consider requesting their existing retailer (or new retailer) to change their tariff to Time Of Use (6900).

How to change your tariff

Here are the general rules for switching between tariffs in Energex.

NetworkTariff SwitchingDefault tariff for new meterOptional tariffs for new meterTariff change frequencySource
EnergexAnytime tariff (8400) and Time Of Use tariff (8900) are closed to new customers and cannot be switched to.
Switching permitted from Time Of Use to Demand tariffs.
Switching permitted from Demand tariffs to Time Of Use (6800).
Switching from Anytime to Time Of Use (6900) or Demand tariffs permitted (likely requires smart meter upgrade).
Demand (3900/3700)Time Of Use (6900)Only one tariff
reassignment per 12 months is allowed.
Link

Contact your current retailer if you wish to switch tariffs. They will request the network operator to make the change and inform you when it’s completed.

If you’re thinking of switching retailers and tariffs at the same time, there are two ways to go.

1. Switch retailer first. Then, when the transfer is complete, ask your new retailer to change to your preferred tariff (using the rules below to guide you).

2. Alternately, you can change tariff with your current retailer. After the tariff change has been completed, then make the retailer switch.

Trying to sign up to a new retailer AND a new tariff type (not available to your current meter) upfront will be difficult. You’ll find that retailers online signup will only display plans with Tariff types available to your existing meter according to the rules of the network.

A final thing that’s important to note. In most networks, if your existing tariff is “closed to new customers”, and you change to another tariff, you will not be able to switch back to your old tariff.
You can find more information on Switching Tariffs here.

How do I check my tariff type if I have a smart meter?

The real question is, what tariff type will retailers offer me today. The quick hack is to input your address into major energy retailers’ websites. This taps into the MSATS national meter database and the retailer’s business rules and will instantly return the available rates for your property, including the nature of those rates – anytime, anytime with demand or time of use.

Decisions, decisions

You need to consider what’s right for your household’s situation. But consider this. The energy regulator requires that a networks cost-reflective tariff charges for households are at a lower rate. In regulator speak, “annual prices will be set so that no less than 90% of small low voltage tariff class customers can find lower network charges by opting-out of the flat/block tariff to at least one of the transitional demand, demand or seasonal TOU tariffs*”. One way for networks to achieve this outcome, is to increase their flat-rate network charges at a greater rate than the cost-reflective tariffs. This is the case in Energex for the ’23-24 network charges. Over time as this plays out, most households will see a cost-benefit from moving away from flat tariffs. It’s up to the retailers to pass on the  lower network usage charges attached to cost-reflective tariffs. For some retailers that unfortunately doesn’t seem to be happening, but that’s another story…

* ref. Endeavour Energy 2023-24 network pricing proposal section 3.1.3, p.15

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