• 01 DEC 12
    • 0

    Smart meter article in The Sydney Morning Herald: Smart move – but consumers pick up the costs

    Smart move – but consumers pick up the costs

    November 26, 2012
    Michael West
    Business columnist


    DO WE really want to check our smart meters every time we turn on the dishwasher, take a shower or toast a slice of bread?

    Has anybody wondered why almost every power company and lobby group in the country is pushing for the introduction of smart meters? It is worth pondering, for government, it seems, is about to fail the public again over energy policy.

    First it was a faulty regulatory system which gave rise to ”gold-plating”, or overspending on networks, and spiralling power bills. The increase in ”peak demand” remains the industry catch cry to rationalise its rampant spending, even though peak demand has actually been falling for three years.

    But as the myth of peak demand is now harder to propagate, industry is pushing for smart meters. The smart meter is the next big ruse.

    Smart meters and ”flexible pricing” merely shift the business risk from the company to the consumer. Like mobile phone bills, their sheer complexity will enable the promoter to game the customer.

    Who will pay for the devices? Who will pay for the software upgrades? Where should the metering company sit, in an offshore structure? Should the device be company-specific?

    The power lobby has done a first-rate job of spruiking the smart meter regime to governments so far, despite the issues in Victoria, the only state where they have been installed.

    ”In my view, smart meters combined with flexible tariffs are the next ‘gold-plating’,” says Bruce Robertson, the industry critic from consumer activist group Manning Alliance who exposed the ruse of overspending.

    ”The generators already game the NEM (National Electricity Market) by withholding supply at peak times and so on. Smart meters combined with time-of-use pricing open up a whole new range of gaming possibilities.”

    The consumer takes on all the business risk for a start, says Robertson. If a power station, for example, suffers an outage for whatever reason, consumers pick up the cost.

    Wholesale electricity prices can be extraordinarily volatile (they can be as high as $12,500 per megawatt; although, perversely, the price per megawatt-hour can also be negative). Under a flexible pricing regime the customer pays for this, says Robertson.

    ”Just how much fun is it to get the family together to eat a turkey at Christmas only to find it will cost $50 to roast it because some technician at a power station dropped a spanner in the works?”

    This story really only deals with the economic and market aspects of the smart meter. There is a human cost. In lifestyle terms, the implications of constantly checking, or worrying about not checking a meter, will affect a lot of people.

    Who wants this hassle, when a simple peak and non-peak regime could be introduced? The customer would simply know that taking a shower at peak periods costs more.

    Smart meters don’t come cheaply, as Victorians have discovered. Originally slated to cost $800 million, the state rollout is now shaping up at a cost of $2.3 billion.

    Instead of seeing how things turn out in Victoria, however – and there have been a host of other concerns raised, from safety issues to privacy – the government seems intent on rushing headlong to push them into every part of the country.

    A leaked letter to the Prime Minister from Martin Ferguson’s standing committee of energy and resources last week eulogised the smart meter as the solution to high energy prices.

    ”A confidential draft of a blueprint for Julia Gillard to take to next month’s Council of Australian Governments meeting reveals the Commonwealth is proposing to encourage a rollout of smart meters and other advanced systems so that consumers could sign up to packages with ‘time-of-use’ tariffs,” said a newspaper report.

    There is little evidence yet that smart meters lead to lower energy bills. While we don’t know if they work, we do know that they are expensive – and that expense is borne by the consumer.

    As IPART (Independent Pricing and Regulatory Tribunal) says in its submission to the Senate inquiry, the logical thing to do, before rolling them out to the entire market, is to wait and see the results in Victoria. The rollout is scheduled to finish in 2013 and flexible tariffs will be introduced. What is needed is a cost/benefit analysis. What is the rush?

    ”The rollout of time-of-use meters should be at the discretion of the customer or their retailer rather than being mandated by governments or distributors,” says the submission. It is worth noting that, when it comes to the furore over electricity prices, IPART has consistently been on the right side of the debate.

    For industry, smart meters promise enormous returns – and not just via tricky pricing opportunities and the transfer of risk to the customer.

    As it is likely the devices will spur a fall in consumption at times of peak demand, the power companies can expect a rise in profit margins.

    The smart meter is a golden opportunity for electricity retailers in particular, says Robertson. The customer pays for the metering, not the retailer. And as the device can be read remotely, labour costs are reduced, bills are more regularly produced and the retailer can quickly terminate supply to customers who are unable to pay, hence lower bad-debt charges.

    ”Demand management” initiatives and energy efficiency are the answers to lower power bills, not smart meters. There are plenty of savings to be gained from reducing consumption – it is already happening in fact – rather than installing millions of superfluous bits of hardware.

    The report by the Senate committee into electricity prices says smart meters enable ”the use of in-home displays, dashboards and web portals so that consumers can access detailed information about “ electricity consumption”.

    Do we really want our lives to be run by an industry that simply can’t control its costs and can’t deliver a product at a reasonable cost?

    The Australian Energy Regulator (AER) has already said Australians are paying more than they should for a safe and reliable electricity supply. Soon, it seems, we may be paying, both with our dollars and our time, for the cost of uneconomic investment.

    Read more: http://www.smh.com.au/business/smart-move–but-consumers-pick-up-the-costs-20121125-2a1i1.html#ixzz2DI6w4FOd

    Leave a reply →