Tasmanian Energy Prices July July An update report on the Tasmanian

Transcription

1 Tasmanian Energy Prices July July 2014 An update report on the Tasmanian May Mauseth Johnston July 2014

2 Disclaimer Theenergyoffers,tariffsandbillcalculationspresentedinthisreportandassociated workbooks should be used as a general guide only and should not be relied upon. Theworkbooks are not an appropriate substitute for obtaining an offer from an energyretailer.theinformationpresentedinthisreportandtheworkbooksisnot providedasfinancialadvice.whilewehavetakengreatcaretoensureaccuracyof theinformationprovidedinthisreportandtheworkbooks,theyaresuitableforuse onlyasaresearchandadvocacytool.wedonotacceptanylegalresponsibilityfor errorsorinaccuracies.thestvincentdepaulsocietyandalvissconsultingptyltddo not accept liability for any action taken based on the information provided in this reportortheassociatedworkbooksorforanyloss,economicorotherwise,suffered as a result of reliance on the information presented. If you would like to obtain informationaboutenergyoffersavailabletoyouasacustomer,gototheaustralian Energy Regulator s comparison website ( or contact theenergyretailersdirectly. TasmanianEnergyPricesJuly2013 July2014 AnUpdateReportontheTasmanianTariffPTrackingProject bymaymausethjohnston MayMausethJohnston,July2014 AlvissConsultingPtyLtd ABN StVincentdePaulSocietyandAlvissConsultingPtyLtd Thisworkiscopyright.ApartfromanyusepermittedundertheCopyrightAct1968 (Ctw),nopartsmaybeadapted,reproduced,copied,stored,distributed,published or put to commercial use without prior written permission from the St Vincent de PaulSociety Contacts:GavinDufty SocialPolicyUnit,Victoria Phone:(03) or StVincentdePaulSociety LockedBag4800,BoxHill,VIC

3 Acknowledgements TheSocietyofStVincentdePaulVictoriaisgratefulforthefundingprovidedbythe NationalConsumerAdvocacyPaneltoundertakethisproject. Theviewsexpressedinthisdocumentdonotnecessarilyreflecttheviewsofthe ConsumerAdvocacyPanelortheAustralianEnergyMarketCommission. 2

4 TheTasmanianTariffJTrackingProject This project has tracked electricity tariffs in Tasmania from July 2009 to July 2014, anddevelopedaspreadsheetpbasedtoolthatallowsconsumeradvocatestobuildon theinitialanalysisandcontinuetotrackchangesastheyoccur. Wehavedevelopedfourworkbooksthatallowtheusertoenterconsumptionlevels andanalysehouseholdbillsforelectricityoffersfromjuly2009tojuly2014,aswell ascurrentpublishedgasandelectricitymarketoffers. Workbook1:RegulatedelectricityoffersJuly2009PJuly2014 Workbook2:PayasyougoelectricityoffersJuly2009PJuly2014 Workbook3:ElectricitymarketofferspostJuly Workbook4:GasmarketofferspostJuly2013andJuly2014 The four workbooks can be accessed at the St Vincent de Paul Society s website: ThisreportpresentssomeofthekeyfindingsproducedbytheTariffPTrackingtoolto date. 1 AsnonewretailershaveenteredtheTasmanianresidentialretailmarketinJuly2014(asof thefirstweekinjuly)andauroraisnotofferingnewtariffstructures/pricesformarketoffer customers,thisworkbookdoesnotcurrentlycontainanydata. 3

5 NoteregardingtheRepealofthecarbontaxbill On23June2014theGovernmentreintroducedtheCleanEnergyLegislation(Carbon TaxRepeal)Bill2013[No.2]intheHouseofRepresentatives.Thebillrepealsthesix Actsthatestablishedthecarbonpricingmechanism.TheSenatepassedthebillon 17July2014andwecanthussoonexpectchangestoTasmanianelectricityandgas prices. As the methodology of the Vinnies TariffPTracking project is based on providing annual price updates as of July every year, we do not believe the repeal of the carbontaxisareasontodelaythisproject.rather,weseepricechangesduetothe repealasaseparateprojectintheshorttermandnotethatitsimpactshouldalsobe evidentinthefollowingtariffptrackingupdatefortasmania. 4

6 TableofContents Acknowledgements 2 TheTasmanianTariffJTrackingProject 3 NoteregardingtheRepealofthecarbontaxbill 4 1.Introduction 6 Overview Assumptions 2.ElectricitypricechangesfromJuly2013toJuly RegulatedandmarketofferspostJuly Electricity:RegulatedandmarketofferspostJuly GasmarketofferspostJuly EnergycostsfordualfuelhouseholdspostJuly Supplycharges Electricitysupplycharges Gassupplycharges 17 5.NetworkchargesandthebillJstack 18 5

7 1.Introduction Overview Tasmania implemented the National Energy Customer Framework(NECF) on 1 July 2012 and the Australian Energy Regulator (AER) thus became the jurisdiction s regulatorinrelationtocustomerprotections.thetasmaniangovernment s Energy forthefuture reformpackageischangingthetasmanianelectricityretailmarket. SinceJanuary2014,AuroraEnergyhasbeenofferingvariousmarketofferproducts to Tasmanian households. Prior to January 2014, Aurora s Pay as you go (prepayment meter) product was the only deregulated electricity offer available to residentialconsumers.theelectricityretailmarketopenedupfornewentrantson1 July 2014 but there are currently nonew retailers offering contracts to residential consumers. 2 Auroradoesofferoneproductdifferentiation,however,aDirectDebit discount of 5.5 cents a day is available to customers that agree to Direct Debit arrangements. Tasmania has approximately 228,000 residential electricity connections and approximately14.5%(or33,160)ofthosewereonpaygproducts(downfrom16% last year). 3 Aurora Energy is currently the only electricity retailer that supplies residentialconsumersandwhiletheregulatordeterminesthepricesforcustomers onthestandardrateitdoesnotregulatethepaygtariffs. The average gas consumption (40,000Mj per annum) for Tasmanian households is lower than in Victoria and the ACT but greater than in South Australia, NSW and Queensland. However, there are just over 10,000 households connected to reticulated gas in Tasmania. 4 Gas retail prices are not regulated in Tasmania and there are currently two retailers offering gas to residential customers: Aurora and Tas Gas (the latter having the greater market share). The Tasmanian gas retail market has been open to full retail competition since its gas reticulation network was completed in 2007 but two out of four retailers have surrendered their retail licencessince Assuch,itmaynotbesurprisingthatthebilldifferentiation betweentheretailersislow.anaverageconsumptionhouseholdwithtasgaswould pay 1,355 per annum and only 34 less if with Aurora. Furthermore, none of the published gas market offers include discounts or other incentives that typically characterisemarketoffersinothernemjurisdictions. Assumptions Consistent with last year s report, we have assumed a typical household consumption of 9,060kWh per annum for allpelectric households, 40,000Mj per annum for gas, and 6,400kWh per annum in electricity consumption for dual fuel 2 Therewerenonewentrantsornewmarketoffersasof4July OTTER,Energy'in'Tasmania'-'Performance'Report' ,January2014,141 4 OTTER,Energy'in'Tasmania'-'Performance'Report' ,January2014,p208 5 CountryEnergyandTRUenergysurrenderedtheirretaillicences.SeeElectricitySupply IndustryExpertPanel,Tasmania s'energy'sector' 'an'overview,discussionpaperapril

8 households on a single rate tariff for the analysis presented in this report. 6 In relation to the various offppeak and hot water tariffs we have allocated the consumptionaccordingly: 7 Table1Assumptions:consumptionsplitsforstandardtariffs Tarifftype Tariffcombination Consumptionsplit(%) Hotwater :40 Hotwater :60 Hotwater41withoff :30:30 peakboost(61) Hotwater42withoff :40:20 peakboost(61) Tariff62(nightoffPpeak)hasnotbeenincludedinanalysisduetoverylow customernumbers Forcustomers with TOU metering (Aurora s PAYG product) we have assumed an annual consumption of 9,060kWh with 40% of consumption allocated to summer rates and 60% to winter. 8 Table 2 below shows the time of week and day consumptionassumptionsusedfortheanalysispresentedinthisreport. 9 6 OTTERstatesthatatypicalTasmaniancustomerusesaround9,055kWhperannum.Otter, Comparison'of'2013'Australian'Standing'Offer'Energy'Prices,April2013(page19forgasand page10forelectricity).toestimatethecombinedenergybillfordualfuelhouseholdswe haveassumedthattheyuseapproximately30%lesselectricitycomparedtoallpelectric households.notethatthetariffptrackingtool(theworkbooks)isdesignedsouserscan inserttheirownconsumptionlevels. 7 TheseallocationsarebasedonanalysispresentedinOTTER,Information'Paper,'Typical' Electricity'Customers,September OTTERstatesthatthesummer/wintersplitvariesbetweenthePAYGtarifftypes.For mediumconsumptionhouseholdstheseasonalsplitis40:60forcustomersontheoffppeak orhydroheattariff,whilecustomersonthestandardtariffhaveanevenconsumption throughouttheyear(50:50).forthepurposeofthisanalysis,wehaveassumeda40:60split forallpaygtarifftypesbutnotethatthisassumptioncanbevariedinthetariffptracking tool(workbook2). 9 BasedonfigurespresentedinOTTER,2013'Aurora'Pay'As'You'Go'price'comparison'report, August2013.Notethatoursummereveningproportionis1%lessthanthatusedbyOTTER inordertoensurethatitaddsupto100%. 7

9 Table2Assumptions:TOUconsumptionproportionsforPAYGtariffs Timeofweek/day Summer Winter Weekdaymorning 16% 15% Weekdayarvo 17% 14% Weekdayevening 23% 18% Weekdaynight 15% 24% Weekendmorning 6% 5% Weekendarvo 8% 7% Weekendevening 9% 7% Weekendnight 6% 10% Sum 100% 100% 8

10 2.ElectricitypricechangesfromJuly2013toJuly2014 Intermsofgeneraltrends,thetariffanalysishasfoundthat: Households annual electricity costs have typically decreased by13% since July2013. Annual electricity bills for allpelectric households with average consumption havedecreasedbybetween290p370sincejuly2013(dependingontariff type).seechart2below. As the majority (83%) of standard rate electricity customers are on tariff 31+41or31+42,mosthouseholdswouldhaveexperienceddecreasesof300 P330since2013.Seechart2below. The annual cost of electricity for average consumption households on Aurora s pay as you go (APAYG) time of use tariffs have decreased by between310p340sincejuly2013.seechart4below. Annual gas bills for average consumption households have increased by between50p80sincejuly2013.seechart5below. Chart 1 Regulated electricity prices 2013P14, annual bills for households consuming 9,060kWhperannum(inclGST) 10 Annual&bills&()& 3,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 Jul-13 Jul SeeTable1forabreakdownoftheconsumptionsplitsusedforthesecalculations 9

11 Chart2DecreasestotheannualbillfromJuly2013toJuly2014,regulatedelectricityprices forhouseholdsconsuming9,060kwhperannum 400 Decreases&()&to&annual&bill& T31 T31+41 T31+42 T T Chart3ElectricitypricesJuly2013 July2014,Payasyougomarketoffers,annualbillsfor householdsconsuming9,060kwhperannum(inclgst) 11 2,800 2,600 2,400 Annual&bills&()& 2,200 2,000 1,800 1,600 1,400 1,200 1,000 Standard Off-peak Hydroheat Jul-13 Jul SeeTable2forabreakdownoftheconsumptionsplitsusedforthesecalculations 10

12 Chart4DecreasestotheannualbillfromJuly2013 July2014,Payasyougomarketoffers forhouseholdsconsuming9,060kwhperannum 400 Decreases&()&to&annual&bill& Standard Off-peak Hydroheat Chart5GaspricesJuly2013 July2014,asannualbills,40,000Mjperannum(inclGST) 1,400 1,350 Annual&bills&()& 1,300 1,250 1,200 1,150 1,100 1,050 Jul-13 Jul-14 1,000 Aurora TasGas 11

13 3.RegulatedandmarketofferspostJuly2014 AlthoughTasmaniahasnowintroducedfullretailcompetition,residentialelectricity customerscancurrentlyonlychoosebetweenaurora sregulatedstandardratesand PAYGproducts. Therearethreemaintarifftypesforthestandardrates:theflatrate(tariff31),flat ratecombinedwithahotwatertariff(tariff41or42)andflatratecombinedwithan offppeaktariff(tariff61).thecombinationofaflatrateandhotwatertariffismost common(83%ofcustomers).only6%ofcustomersareonaflatrateand11%areon anoffppeakcombinationtariff Electricity:RegulatedandmarketofferspostJuly2014 Chart 6below shows that households using 9,060kWh per annum will have an annual electricity bill of between 2,025 and 2,560.The tariff combination that is most likely to produce the lowest annual bill for households with a typical consumptionpatternisflatrate(t31)combinedwithoffppeak(t61)andahotwater tariff(t41). Chart6Regulatedelectricityoffersasannualbills,postJuly 14,9,060kWhperannum(GST inc) 13 Annual&bill&()& 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 Chart7belowshowsthattypicalconsumptionhouseholdsonAurora spaygtariffs will have an annual electricity bill of between 2,160 and 2,320, and that the Hydroheat tariff is the PAYG product that produces the lowest annual bill for householdswithtypicalconsumptionpatterns. 12 OTTER,Comparison'of'2013'Australian'Standing'Offer'Energy'Prices,April2013,p7.Note: Thereisalsoatariff62butasveryfewcustomersareonthistariffithasnotbeenincluded inthisanalysis. 13 SeeTable1forabreakdownoftheconsumptionsplitsusedforthesecalculations 12

14 Chart7Electricitymarketoffers(PAYG)asannualbills,postJuly 14,9,060kWhperannum (GSTinc) 14 2,400 2,200 Annual&bill&()& 2,000 1,800 1,600 1,400 1,200 1,000 Standard Off-peak Hydroheat 3.2GasmarketofferspostJuly2014 TherearenoregulatedgasoffersinTasmaniaandonlyAuroraandTasGascurrently have gas market offers for residential consumers. As of 2013 Aurora had a gas marketshareofapproximately36%andtasgasheldtheremaining64%. 15 Chart 8 below shows that a household with average gas consumption will pay between 1,320P1,355 for gas per annum and that Tas Gas rates are somewhat higherthanaurora s. Chart8GasofferspostJuly 14,asannualbills,40,000Mjperannum(inclGST) Annual&bill&()& 1,400 1,300 1,200 1,100 1, Aurora TasGas 14 SeeTable2forabreakdownoftheconsumptionsplitsusedforthesecalculations 15 OTTER,Energy'in'Tasmania,'Performance'Report' ,January2014,p207 13

15 3.3EnergycostsfordualfuelhouseholdspostJuly2014 Householdswithreticulatedgaswilltypicallyhavehigherenergybillscomparedto allpelectrichouseholds. 16 Chart9belowshowsthatadualfuelhouseholdconsuming 6,400kWhofelectricityperannum(approximately30%lessthananaverageallP electrichousehold)and40,000mjofgaswillhaveanannualenergybillof3,240. Chart9AnnualbillfordualfuelhouseholdspostJuly 14,6,400kWh(standardrate)and 40,000Mj(inclGST) 17 3,500 Annual&energy&bill&()& 3,000 2,500 2,000 1,500 1, ,901 1,338 Electricity Gas 0 16 Itshouldbenoted,however,thatmanyallPelectrichouseholdshaveotherheating expensessuchasfirewoodorliquefiedpetroleumgas(lpg) 17 AnnualgasbillcalculationisbasedontheaverageofAuroraandTasGas rates 14

16 4.Supplycharges 4.1Electricitysupplycharges Thesupplychargeisafixeddailychargethatispaidinadditiontotheconsumption chargesforelectricityused.intasmaniathesupplychargeforresidentialelectricity hasdecreasedby13%sincejuly2013(boththeregulatedratesandaurora spayg offer).asofjuly2014,customersontheflatrate(tariff31)pay320perannumin fixedsupplychargeswhilecustomerswithhotwaterrates(tariff41and42)payjust over 380. The greatest supply charge of 460 per annum is applied to those who have a hot water tariff as well as an offppeak boost (T31+T41/42+T61). Chart 10 belowshowsthechangestothedailysupplychargesforregulatedelectricityrates from2013to2014. Chart10Dailysupplycharge,regulatedelectricityoffers,2009P2014(inclGST) Cents&per&day& T31+41/42+T61 T31+T41/42 T Jul'09 Jul'10 Jul'11 Jul'12 Jul'13 Jul'14 CustomersonAurora spaygoffers,however,payfrom480to500perannumin fixedcharges.customersonthestandardpaygratepay160moreinfixedcharges per annum than customers on the standard regulated rate. Chart 11 below shows thechangestothedailysupplychargesforpaygoffersfromjuly2009tojuly

17 Chart11Dailysupplycharge,Aurora spaygelectricityoffers,2009p14(inclgst) Cents&per&day& Standard Off-peak Hydroheat Jul'09 Jul'10 Jul'11 Jul'12 Jul'13 Jul'14 High supply charges result in low consumption households paying a proportionally higher cost per unit of energy than high consumption households. This has significant equity implications as some customer classes characterised by low and fixedincomealsouselesselectricitythanthetasmanianaverage.pensionersmake uponeoftheselowerconsumptiongroups. 18 Chart12belowshowsthedifferencebetweenhouseholdsconsuming5,000kWhper annum(bluebar)andhouseholdsconsuming15,000kwhperannum(redbar)when it comes to the proportion of the annual electricity bill that goes to cover fixed supplycharges.thefixedsupplychargeiscurrentlybetween27p33%oftheannual electricitybillforalowconsumptionhouseholdwithanoffppeakrate(tariffs41/42 and41/42+61)and21%ontheflatrate(tariff31).ahighconsumptionhousehold ontheotherhand,wouldpaybetween8p13%oftheirannualbillinfixedcharges. 18 ConcessioncardholdersonAurora spaygoffersdonotpaythefixedsupplycharge. 16

18 Chart12Supplychargeasproportionofannualelectricitybills,highVs.lowconsumption, July Proportion&(%)&of&bill& Low(5,000kWh) High(15,000kWh) 4.2Gassupplycharges The gas supply charge, at just under 22 cents/day, is significantly lower than the electricity supply charges. Tasmanian households currently pay up to 79 per annuminordertobeconnectedtonaturalgas.thisamountisquitesimilartothe additionalsupplychargeelectricitycustomerswithoffppeak/hotwatertariffsincur. Aurora (21.5 cents/day) and Tas Gas (21.76 cents/day) charge very similar fixed supplychargesforresidentialcustomers. 17

19 5.NetworkchargesandthebillJstack TheTasmanianelectricitynetwork,Aurora,introducesnewNetworkUseofSystem (NUOS)chargesasof1Julyeveryyear.TheseNUOSchargescompriseTransmission UseofSystem(TUOS)andDistributionUseofSystem(DUOS)andtheretailerscan, andgenerallywill,buildchangestothenuos(inrelationtobothshapeandprice) intotheirretailtariffs. The chart presented in this section shows that while Aurora s NUOS charges have increased for average consumption households over the last 5 years, network chargesasproportionoftotalbill(incl.gst)declinedin2012(to50%)butjumpedto 62%inJuly2014partlyduetolowerretailprices. 19 Seechart13below. Over this same period average energy prices (and demand) has consistently fallen and thus resulted in a decreasing energy value. The Energy Supply Association Australia(ESAA)statesthat: In the 2008P09 financial year energy value was recorded as 10.2 billion, meaningthatrevenuesareover40percentdowninthreeyears. 20 Itmustbenotedthatthespotpricerevenueisonlyanindicatoroftotalgeneration revenueasthemajorityoftheelectricitysoldiscontractedinadvance.however,the spot price will impact on the price retailers negotiate for new contracts and you wouldthusexpecttoseeafallingwholesalecostcomponentofthetotalbillstack overthis5yearperiod.thefallingenergyvaluementionedaboveisnemwide,but Tasmania specific indicators showwhyelectricity generation costs are falling in Tasmania. The reserve plant margin, which is the amount of excess generation available within a given region, is significant in Tasmania. In 2010/11 the reserve plantmarginwasjustunder65%andin2011/12thisfiguredecreasedsomewhat(to justover61%). 21 TheTasmanianregulator,OTTER,alsohighlightedthehighcapacity 19 Note:TheAustralianEnergyMarketCommissionestimatedthatnetworkcostswould accountfor56%ofcustomers billsin2014/15basedonthenetworkcostsaccountingfor 16.18centsoutofatotalof28.66cents/kWh.SeeAEMC,2013ResidentialElectricityPrice Trends,FinalReport,13December2013,p104.Toaccountforthedailysupplycharge,the AEMC sanalysismultipliedthedailysupplychargeby365daysanddividedbyannual consumption(kwh).thevariablecharge(cents/kwh)wasalsomultipliedby365daysand dividedbyannualconsumption(kwh)andthesumofthesetwovaluesrepresentthefinal averageunitprice(c/kwh).seeaemcreport,p3,fn19.aemcalsoassumesanannual consumptionof8,800kwhperannumforthetasmania.seeaemcreport,p4.our methodologydiffersfromtheaemc s.wecalculatenuoscostsasannualbills(excluding GST)basedoncentsperkWh(includinganystepchanges)andcentsperdayforthesupply charge.wecalculateretailcostsasannualbills(includinggst)basedoncentsperkwh (includinganystepchanges)andcentsperdayforthesupplycharge.ifweexcludethegst fromthejuly2014billcalculation,thenuosproportionis68%. 20 ESAA,ElectricityGasAustralia(EGA)2013,p36 21 ESAA,ElectricityGasAustralia(EGA)2013,Table2.9,p25 18

20 of Tasmanian generation in its most recent the performance report. 22 The report showedthatthereserveplantmarginishigherintasmaniacomparedtoallofthe othernemjurisdictions. 23 Furthermore,asTasmaniahassomeofthehighestNUOSchargesintheNEM,itis notsurprisingthatthenuosproportionofbillsisrising.chart13showsannualretail bills(solidline),nuoschargesasannualcost(dottedline)andnuosasproportion ofannualbill(columns). Chart13Aurora:Retailbillperannum(incl.GST),NUOSchargesandNUOSasproportionof totalbillfrom2009to2014(incl.gst).basedontheregulated/standingofferretailtariff, singlerate,9,060kwhperannum 24 &per&annum& %&of&annual&cost& NUOSproportion(%) NUOS() Retail() 22 OTTER,Energy'in'Tasmania,'Performance'Report' ,January2014,p39 23 Ibid,p41.TheNEMjurisdictionsare:Victoria,NSW,Queensland,SouthAustralia,theACT andtasmania. 24 Basedontheregulatedofferratesfrom2009to2014,presentedasannualbillsfor householdsusing9,060kwhperannum(flatrate).theannualnuoschargeshavebeen calculatedbyallocating2,265kwhperquarter(againbasedonannualconsumptionof 9,060kWh)tothestepchargesstipulatedintheNUOS.TheannualNUOScostalsoincludes fixedcharges. 19