Increase cost for families running an airconditioner
January 24, 2015
FAMILIES face a $700-a-year increase in the cost of running an airconditioner and snap price rises of as much as 15,000 per cent under little-known changes to electricity laws.
To beat the changes some households may have to surrender control of their aircon to their power provider. Others could be forced to fork out for more energy-efficient coolers.
Those who can’t afford that investment — or spiralling running costs — may have to flee to more community “cooling centres” such as libraries.
About three in four Australian homes have aircons — double the rate 20 years ago.
In NSW, 64 per cent of households have coolers and in the ACT, more than 70 per cent. In Victoria, 78 per cent of homes have an aircon. Queensland reflects the national average. In South Australia, more than 90 per cent of households have coolers. In Tasmania, less than half of homes have air-conditioning.
The rise of airconditioners is blamed for growth in “peak demand”. There has been about $8 billion of network upgrades in the past decade to deal with this growth and that investment has been recouped through big price rises for all households.
Charges for network services now account for half of a bill. The actual power is just
20 per cent.
The Australian Energy Markets Commission (AEMC) says the way to curb future increases in peak demand is to give households “signals” to change power use.
The AEMC claims rule changes it made last month to send these signals will deliver modest savings of over the medium term to most households.
But not everyone will benefit.
“If you use a lot of electricity relative to the average at … tea time and if you don’t change your behaviour in any way, shape or form, you may pay more,” AEMC CEO Paul Smith told News Corp Australia.
Geographically, those who will contend with the biggest potential increases are households on the inland fringes of Sydney, Melbourne, Adelaide and Brisbane, where homes tend to be larger and there is more temperature variation, leading to a greater need for cooling and heating. Demographically, the heftiest hits will likely be to households with a stay-at-home parent, according to AGL research, along with those where both parents work.
The AEMC’s Mr Smith said: “This is about consumers taking … more of an ownership for their outcomes.”
Still, research for the AEMC’s own “consumer advocacy panel” has questioned the basis of the changes, finding they could hurt “customers who are least able to manage their consumption”.
Tariffs based on the rule changes won’t start until 2017 and no retailer or network has yet revealed pricing plans.
But energy policy expert Tony Wood of the Grattan Institute said the starting point would be removing “cross-subsidies” that have kept the annual cost of running a 5 kilowatt airconditioner to about $300 when the burden on the network is $1000.
Owners of such coolers “will lose”, Mr Wood said.
“People who are currently subsidising them will win,” he said.
Other research for the AEMC into how the rule changes may affect tariffs says a “critical peak surcharge” of $47 per kilowatt hour could be applied. The average price paid by households at the moment is about 30c/kWh.
Such a hike would likely be rare, only apply with at least a day’s notice and last for no more than four hours. The goal would be to curb usage on the hottest days.
The trade-off would be price cuts in normal weather. By curtailing peak demand, less money would need to be spent on network expansion.