Hardship, inclusion and our customer-driven energy future Chris - PowerPoint PPT Presentation

Hardship, inclusion and our customer-driven energy future Chris Twomey Leader, Research & Policy Development WACOSS Senior Industry Fellow BCEC

Rapid rise of energy costs in WA Residential A1 tariff WA 2009-17 Electricity costs: model WA household, 2009-17

…but prices are higher in other States Electricity costs – States and Territories Electricity costs – Perth vs Australia

Energy burden for low income households Energy Expenditure as proportion of EDHI and GHI in Australia 20 18 16 14 Proportion of EDHI / GHI 12 10 8 6 4 2 0 Lowest Second Third Fourth Highest Total energy expenditure as proportion of EDHI Dwelling Energy expenditure as proportion of EDHI Total energy expenditure as a proportion of GHI

Household types – single parents struggle Comparison of average Australian housing costs by household composition ($/week) 8 7 6 5 Percentage of GHI 4 3 2 1 0 Couple family with dependent One parent family with Couple only Other one family households Multiple family households Lone person Group households children dependent children Dwelling Energy Fuel for Vehicles Total Energy

Going without… Households reporting energy saving strategies 70 60 50 40 Percentage 30 20 10 0 Not turning on heating / cooling Not cooking hot meal Going to bed early Keeping to one room Lowest < $31k Income $31 - 70k

Cost of living pressure – its about the rent Income Expenditure Net Position Single Parent Family $978.00 $905.92 $72.08 Working Family $1,425.59 $1,294.62 $130.97 Unemployed Single $310.46 $343.67 -$33.21

Cost of living pressure Minimum Wage and Unemployment payments vs AWOTE

40% of low income households rent Housing tenure by income bracket in WA 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than $25,000 Less than $50,000 Less than $70,000 Less than $110,000 $110,000 or more Owned / mortgaged Rented

Rising housing costs for renters Average housing costs for renters by state ($/week) 400 350 300 250 200 150 100 1994–95 1995–96 1996–97 1997–98 1999–00 2000–01 2002–03 2003–04 2005–06 2007–08 2009–10 2011–12 2013–14 WA NSW VIC QLD SA NT TAS ACT

Landlords aren’t keen on energy efficiency Properties fitted with energy saving measures by tenure 120 100 Percentage of households 80 60 40 20 0 Owner without a mortgage Owner with a mortgage State housing Renter Private Renter All households Insulation % Window treatments % Solar electricity or hot water system %

Rising Underemployment 10.0 12.0 14.0 16.0 18.0 0.0 2.0 4.0 6.0 8.0 Aug-2006 Dec-2006 Apr-2007 Aug-2007 Dec-2007 Apr-2008 Aug-2008 Dec-2008 Apr-2009 Aug-2009 Underemployment Dec-2009 Apr-2010 Aug-2010 Dec-2010 Apr-2011 Aug-2011 Dec-2011 Apr-2012 Aug-2012 Unemployment Dec-2012 Apr-2013 Aug-2013 Dec-2013 Apr-2014 Aug-2014 Dec-2014 Apr-2015 Aug-2015 Dec-2015 Apr-2016 Aug-2016

Our new energy future? Renewable electricity generation by state 20.0% Proportion of electricity generation sourced 18.0% 16.0% 14.0% from renewables (%) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 WA Australia NSW Vic Qld NT

Growth of solar PV in WA WA renewable energy mix 2006-15 WA Generating capacity rooftop solar 2016-22 2500 100% 2% 7% Composition of renewable fuels used for Generating capacity from WA rooftop solar (MW) 19% 19% 90% 22% 23% 26% 2000 80% electricity generation (%) 11% 8% 70% 8% 1500 Solar PV 60% 83% 79% Hydro 50% 1000 70% 74% Wind 40% 64% 63% 62% Biogas 30% 500 20% 0 10% Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018 Jul 2018 Jan 2019 Jul 2019 Jan 2020 Jul 2020 Jan 2021 Jul 2021 Jan 2022 15% 14% 11% 7% 5% 5% 5% 0% 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 MW from rooftop solar projected MW from rooftop solar ci(lower) ci(upper)

Reduced network payments from PV

Smoothing the duck curve? MW\h of operational electricity load 1,000 1,200 1,400 1,600 400 600 800 0:00 Summer Sun Light 1:00 2:00 3:00 4:00 5:00 6:00 7:00 Winter Sun Light 8:00 9:00 10:00 11:00 12:00 13:00 14:00 2016 Winter 15:00 16:00 17:00 18:00 19:00 2016 Summer 20:00 21:00 22:00 23:00 0 5 10 15 20 25 30 35 40 45 50

MW\h 1,000 1,200 1,400 1,600 400 600 800 Changing load patterns 0:00 1:00 2:00 Summer Sun Light 3:00 4:00 5:00 6:00 7:00 8:00 9:00 2013 10:00 11:00 12:00 13:00 2007 14:00 15:00 16:00 2010 17:00 18:00 19:00 20:00 2016 21:00 22:00 23:00 0 5 10 15 20 25 30 35 40 45 50 MW\h 1,000 1,200 1,400 1,600 400 600 800 0:00 1:00 2:00 Winter Sun Light 3:00 4:00 5:00 6:00 7:00 8:00 9:00 2007 10:00 11:00 12:00 13:00 2010 14:00 15:00 16:00 2013 17:00 18:00 19:00 20:00 2016 21:00 22:00 23:00 0 5 10 15 20 25 30 35 40 45 50

Power Ahead trials: Horizon Power - Port Hedland 20.3 S, 118.6 E

Power plans - like a mobile plan … Mobile Power Plan Plan Data Peak • Logic is that: Allowance Allowance • Peak capacity is more costly so pricing (3GB) (9kW) should reflect it Consequence Discount • Customers want more visibility on bills if you exceed incentive if do allowance not exceed • Stay within your allowance to earn allowance discounts during the peak period $100 $xxx (Jan – Mar, 1pm – 8pm) per month per month • Free app provides alerts when likely to exceed allowance Calls and Electricity texts used • During trial incentives were lost only if exceed target after an alert sent 20c per XXc per call / text kWh

Early findings 407 households - including 41 ‘vulnerable’ in trial Anxiety about summer bills – some paying over $7000/yr (A/C) 63% vulnerable met all targets, 18% lost one incentive “Incentives and alerts worked and made sense” 40% changes usage “a lot” … learned about appliances… ..But 28% anxious about incentive – rises to 66% who went over 1 in 3 say would struggle to maintain changes (esp family members) 2 in 3 made ‘difficult’ choices, faced discomfort (e.g. A/C off)

Discussion Are we asking low income households to bear more of the burden? Vulnerable = more sensitive to incentive and more anxious Other family members, larger households struggle, conflict… Risk of encouraging harm? Exclude some groups (aged, DV) Problem with inefficient ‘in wall’ A/C – Can utility supply in bundle? … But high rates of rental turn-over (30% per year) Options – opt in model ‘no worse off’, concessional tariff

The Energy Trilemma - Finkel Affordable, Reliable, Clean Affordable for whom? Risk of shift to two-tiered system

Outcomes 1. Energy priced efficiently to deliver cheap & clean 2. Inform and enable customers to engage the market 3. Support household efficiency and productivity 4. Stronger consumer protection 5. Improve capacity to pay energy bills (incomes & concessions)

Challenges Low income households: • Inclusion in the new world - affordable, accessible & simple Average consumers: • Choice and control, consumer protection, affordability Innovators & high density living: • Strata planning & regs, precinct scale, ‘citizen utilities’ …

Challenges Established utilities: • Sunk capital stranded assets, new biz models, innovate to survive New market entrants: • Certainty to invest, rules of engagement, a niche Policy makers: • Vision for the future, transition strategy, principles