APVI slams Australian Energy Market Commission over unfair, ineffective tariff structures

The Australian Photovoltaic Institute has issued a scathing critique of proposed guidelines for electricity network pricing and tariffs, arguing that instead of reducing consumer bills, the new regimes will simply act to further protect network revenues.

In a submission to the Australian Energy Regulator, APVI is highly critical of the recent pricing deliberations by the Australian Energy Market Commission.

“It is likely that tariffs will be put in place that aren’t particularly effective at reducing peak demand, but are effective at increasing income for network operators and possibly also retailers,” it writes.

One of APVI’s primary concerns is the determination of the networks to recoup the spending on past infrastructure investments – including the $50 billion spending binge that many have dubbed as network “gold plating.”

“Customers should not be forced to pay for investments they did not choose and do not need,” the APVI notes in its submission.

And, it notes, the networks should not be allowed to pass on the costs of inappropriate or over-investment, nor be allowed to use a high-risk borrowing cost, when in fact they operate in a low-risk borrowing environment.

APVI is also scathing of modeling used by the AEMC and prepared by NERA, noting that it does not take account of the ability of rooftop solar PV to benefit the grid, by reducing peak demand.

APVI says the modeling also misunderstands how battery storage would be used by a household and the benefits it could bring to the network and other consumers by reducing peak load.

And it says the modeling over-estimates the peak electricity demand of some households.

NERA puts it at 25kW, which the APVI says is extraordinarily high, describing it as a “lazy calculation” that could lead to misleading results.

The APVI also says the modeling under-estimates the benefits of rooftop solar PV for the network, and under-estimates the cost of air-conditioning, which has been the primary driver of peak demand.

Top image: Melbourne Terminal Station, via Wikipedia

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Giles Parkinson

Giles Parkinson regularly contributes unique content to Solar Choice News. Giles is the founder and editor of clean energy industry news service RenewEconomy. He is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the founding editor of Climate Spectator.
Giles Parkinson