Professor Nattavudh (Nick) Powdthavee is a Professorial Research Fellow at the Melbourne Institute of Applied Economics and Social Research. His research interests are quantitative social and behavioural sciences.
A study has found that unless suitable policy protections are developed to shelter low-income and vulnerable households from pricing impacts, the effect could be grim.
The report by Michael McGann and Jeremy Moss from the University of Melbourne’s Social Justice Initiative, Smart Meters, Smart Justice?: Energy, Poverty and the Smart Meter Rollout, will be launched alongside a national report on smart meters and consumer protections by the St Vincent de Paul Society in the Senate Alcove Room in Parliament House Canberra at 11am today, Tuesday 2 February.
Dr McGann says focus group research found pensioners, parents with young children and people with disabilities were gravely concerned about the smart meter rollout, and felt that any introduction of time-of-use pricing would be a "tax on their circumstances".
Smart meters mostly benefit electricity distributors through improved operational efficiencies, according to Dr McGann, but he says charging higher prices for electricity use during peak consumption periods is likely to disadvantage consumers who need to use most of their electricity during the daytime. A pensioner with electric heating could pay $150 extra per year if put on to a time-of-use pricing plan like those used in smart meter trials.
"Time-of-use pricing penalises consumers who cannot shift their use to the off-peak period either because it is essential use, for example air-conditioning for someone for whom heat is a serious health risk, such as those with MS, or because households have older appliances that make it more difficult to control the time of their electricity use, such as appliances without timers.
"Given the already precarious state of energy affordability in Australia, the smart meter rollout could exacerbate the hardship that many low-income households already face in meeting essential, electricity dependent needs; things like heating, hot-water, cooling in severe heat, and electricity for cooking."
The researchers have found that time-of-the-day pricing is not the only disadvantage consumers will face, as many retailers have stated their intention of passing fixed charges for installation of the meters on to customers. Households in the Jemena network area (north western Melbourne) face $152 extra in supply charges this year because of smart meters.
"Households surviving on fixed-incomes would struggle to cope with such an increase in their annual electricity costs and may be forced to forgo essential electricity use or to give up other items, such as food and clothing, because of an inability to afford electricity usage," Dr McGann says.
The researchers say this would be an alarming outcome, given the poverty many already experience. "The need for smart meters has not been justified to the extent that it is legitimate to exacerbate the poverty and hardship of the vulnerable and disadvantaged merely to change over Australia’s metering stock."
The researchers suggest continuing to allow low-income ‘peaky’ households with inelastic electricity use to remain on flat regulated tariffs or, at the very least, extending concession schemes to ensure low-income households are not disadvantaged should flat tariffs with regulated prices be phased out in response to time-of-use network tariffs. Concession card holders should also be offered a discounted supply charge that excludes rollout charges.