Australian Electricity market to be opened up to curb demand

The SMH has a report on the latest plans by the Australian energy market regualtor to make power prices more market driven - Electricity market to be opened up to curb demand.

In a bid to drive down surging electricity prices, the national wholesale electricity market is to be opened up to large energy users for the first time. The move is part of a series of measures aimed at cutting power demand during peak periods of the day, such as late afternoon.

Central to the new proposals, households will be pushed to cut electricity consumption during these peak periods - typically first thing in the morning and during the late afternoon and evening - in a bid to slash the need to spend tens of billions of dollars on new equipment, outlays which are driving up power prices.

In NSW, for example, electricity prices have risen upwards of 60 per cent over the past three years, which has prompted a fall in power demand for the first time on record.

In a report issued this afternoon, the Australian Energy Markets Commission, which oversees the electricity and gas markets, has outlined detailed plans for an overhaul of the market.

The key measures include:

* allowing large power users direct access in the wholesale electricity market for the first time;
* changed electricity tariffs to encourage more energy usage in off-peak times of the day, such as the afternoon and late evening;
** open up the sale of household and small commercial electricity, such as from rooftop solar panels, to buyers other than electricity companies.

The SMH also notes that following cost blowouts and the usual conservative conspiracy theories gaining traction in Victoria, smart meters aren't mentioned by name in the new recommendations - Smart meters too toxic to touch.

It is perhaps the biggest single public policy failure in the energy sector of the past decade - mandated smart meters which are being introduced in Victoria.

With the cost of the roll-out now estimated at more than $2 billion - more than twice the initial estimated cost - it has added another lucrative profit source to the activities of the power distributors.

And the backlash has been so intense that the Australian Energy Markets Commission omitted any reference to "smart meters" in its 192-page report released yesterday. The report outlines a series of measures to overhaul the electricity market by boosting so-called demand-side participation - that is, measures to encourage lower demand at times of peak electricity prices.

The report is littered with the term "better metering" and even "interval metering" as a means of introducing "more innovative pricing options" to the electricity market, to cut the need for a new round of capital spending.

The issue of smart meters has become so toxic politically that the NSW government, for example, refuses to countenance a mandated roll-out, fearful of a tabloid newspaper-generated backlash, such as occurred in Victoria, even though the federal government is threatening penalties if it doesn't go down this path.

And as Victoria has found, there has been no advantage in being the "first mover" in introducing smart meters, since technology has moved on since it launched this program several years ago now, especially since many so-called smart meter functions are little more than a smartphone app these days - especially with the national broadband roll-out.