In the ever-evolving landscape of energy consumption, Australian households have been introduced to dynamic pricing structures, such as time of use and demand tariffs, with the promise of cost savings and more efficient energy use.
However, a new report by Energy Consumers Australia suggests that many consumers have yet to fully realise the anticipated benefits of these pricing models.
The report, titled Consumer Energy Report Card: Consumer knowledge of electricity pricing and responsiveness to price signals, aims to shed light on the actual impact of dynamic pricing on household energy habits.
Time-of-use tariffs, introduced as part of Australia’s energy market modernisation, charge different rates for electricity depending on the time of day.
Typically, electricity costs more during ‘peak’ periods (usually 3 pm-9 pm) and less during ‘off-peak’ times (usually overnight). The idea is to encourage households to shift their energy usage to times when the power grid is under less strain.
However, according to the report, while some consumers have adjusted their usage patterns, the majority are not making the changes necessary to capitalise on the potential savings.
According to the report, heating, cooling, and water heating are the primary energy consumers in a household, accounting for approximately 35% to 75% of total energy use. Adjusting usage times in these areas could lead to the most significant cost savings.
However, the report also found that many households on time of use tariffs were instead altering the use of less energy-intensive appliances, such as dishwashers and washing machines. This suggests that the financial benefits of dynamic pricing may be modest for many.
Energy Consumers Australia CEO Brendan French expressed concern over the findings, stating, ‘This report shows dynamic pricing structures are yet to incentivise the kinds of consumer behaviour that the market hopes to see.’
The report, which analysed data from over 4,000 Australian households, also identified a large group of more engaged consumers, making up 46% of the survey participants. These consumers, typically higher-income homeowners with solar power systems in place, expressed interest in having greater choice and control over their energy consumption.
‘We need to encourage these people by providing more innovative products and services so that consumers with the means to shift large energy loads can provide benefits to the system and help everyone,’ Dr French said.
The report also highlighted a worrying trend among low-income households: these consumers, often living in energy-inefficient housing, may be cutting back on essential heating and cooling to save money under time of use and demand tariffs.
‘These consumers should be provided with basic electricity plans with simple pricing,’ said Dr Brendan French.
‘We need minimum energy efficiency standards for rental properties and help for low-income homeowners to improve the energy efficiency of their homes so they don’t face high energy bills.
‘Victoria and the ACT already have minimum standards and this should be taken up by the rest of the country.’
So, YourLifeChoicers: How do you think innovative solutions like time of use tariffs and dynamic pricing could strike the right balance between affordability and efficiency for all consumers?
Energy standards for rental housing sounds like it is a fine way of pushing up rents. People in our childhood lived in uninsulated and unairconditioned houses and got by just fine. All these restrictions just make housing so much more expensive than the 2 bed one bath uninsulated fibro of the past. We are short of housing largely because governments and schoolteachers have driven students to universities to earn dubious arts degrees instead of trades where they can have fulfilling careers and earn fairly big money and also because the more complex buildings demanded by current building regulations demand much more and more skilled labour and more and more expensive materials than houses of the past
‘Shocking’ implies we’ve just discovered the fact that time of use tariffs are not working. Everyone who pays the bills knows that these tariffs are laughable – however no ordinary consumer sees the ‘joke’.
When are most members of a working household at home together? That would be after school hometime, after work, and before bedtime. And when are most households then completing homework, cooking, doing housework, using appliances, trying to keep warm or cool? Answer – between 3ish and 11pm .. and peak pricing sits perfectly within that period. Energy companies are not dumb. But people who think we can easily stop or lessen our power use at these times either have only half a brain, or don’t care because ‘they’re alright, Jack’ and don’t have to worry about their pennies.
Is this what we should say or ask:
‘Sorry Boss. I can’t come in tomorrow morning because that’s when I have to cook and clean.’
‘Sorry Teacher. I have to study/do homework/ finish my project in the morning ‘cos we can’t afford to use much power after 3pm.’
‘Sorry Kiddies. No heating/cooling today as it’s costing too much.’
‘Please Ms Meteorologist, could you ensure temperatures between 3 and 9pm stay no less than 12 and no more than 26 so we don’t have to use heating or cooling appliances?’
‘Yes, Darling, I know it’s the third millennium and we have progressed massively from prehistoric times and we are so technologically advanced but … times are tough and getting tougher.’
It’s time everyone who talks big – Government Ministers especially – about reducing energy costs actually DOES something urgently to rectify our woeful energy supplies, and inequitable and unsustainable pricing structures.
Continual Government rhetoric aka ‘hot air’ is not a power source!
Dynamic Pricing only benefits the Operator not the Customer.