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PowerSmart or “Time of Use” is a new system of pricing electricity which EnergyAustralia is progressively implementing throughout its electricity network.
Why is EnergyAustralia implementing PowerSmart?
Over time, there has been a substantial growth in electricity demand, in particular an increase at certain times, known as ‘peak demand’. Increased usage of appliances such as reverse cycle air conditioners and the use of more and bigger electrical appliances in people’s homes together with increased business demand is driving this trend.
Electricity prices in Australia are among the cheapest in the world. If we do nothing to limit the growth in demand, investment in both the capacity of power stations and EnergyAustralia's electricity network is likely to continue to increase in the foreseeable future and this may lead to higher electricity prices.
So, like many utilities around the world, EnergyAustralia wants to actively work with its customers to encourage more efficient use of electricity and help reduce peak demand.
In moving to this new system, EnergyAustralia understands electricity customers want to be able to continue with household activities like heating and cooling, cooking, watching tv, using their computer and taking a bath when they want, while continuing to receive an affordable electricity bill.
How does it work?
With traditional ‘flat’ pricing, the price you pay for electricity is the same, no matter what time of day or night you use it with the exception of customers who have special off peak meters and rates, usually for hot water.
With PowerSmart, your electricity rates are broken down into three different time periods - Peak, Shoulder and Off Peak. This means you pay for how much electricity you use, based on when you use it. A higher rate is charged during the Peak period, than the Shoulder and Off Peak periods. So your rate is less when the demand for electricity is lower, and more when it is higher. And this means you have greater control over your electricity bill.
PowerSmart better reflects the cost of supplying electricity to each home. A survey of 3,000 PowerSmart Home customers shows that 94% of customers have found their bills are the same or cheaper than what they would have paid under the traditional flat pricing system, often without changing the way they use electricity. In fact, customers saved an average of 10% compared to what they would have paid under flat pricing, while some customers were able to save more than 30%. Of the small number of customers whose bill was higher, the increase was mostly less than 5%.
EnergyAustralia is currently rolling out new ‘smart’ meters that are able to record consumption during the peak, shoulder and off peak periods. The new meters and PowerSmart pricing will be implemented progressively over the next decade as part of a long term plan to help reduce the increasing peaks in electricity demand by spreading electricity consumption more evenly across the day.
While most electricity customers use electricity during the peak period, most households use the majority of their power during the shoulder and off peak periods. Our sample of 3,000 PowerSmart Home customers found the average consumption during the peak period was 21%, with the majority consuming less than 30% of their power in the peak.
The feedback we have had from customers is they have been able to save money with small changes to their electricity use like by simply using appliances like dishwashers, washing machines, dryers and pool pumps when power is cheaper.
The good news is that even if customers don't feel it's possible to move some of their usage to cheaper time periods, in the vast majority of cases their bills will not increase under PowerSmart Home.
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