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FAQs about the new electricity pricing and tariff structures for 2012-13
How will consumers be rewarded for using less electricity?
Currently, residential consumers in Queensland are charged a flat rate for the electricity they use plus a fixed supply charge. Under the new system, consumers will continue to pay a fixed supply charge, but the rate they pay for their electricity use will vary depending on how much they use. In the future, a high user will be charged at a higher rate than a low user, once they pass a certain threshold.
This is known as an inclining block tariff structure. Queensland residential electricity customers will be automatically transferred to the inclining block tariff structure from 1 July 2012.
An inclining block tariff structure encourages consumers to use less electricity by rewarding them with lower rates. This type of tariff for residential electricity customers is used in a number of other Australian states.
When will the new prices be announced?
The QCA will release its final determination on the new electricity prices to apply from 1 July 2012, by 31 May 2012. These prices will include the new consumption blocks for the inclining block tariff, the different time periods for Time-of-Use tariff and the schedule of charges for all regulated tariffs.
The QCA is currently undertaking a detailed consultation process on the new pricing system. In June 2011 the QCA released an Issues Paper on the proposed changes and a further Draft Methodology Paper was released on 11 November 2011. The consultation process will be ongoing until the final determination is handed down in May 2012. Further information on this process can be found on the QCA website.
When will the changes be implemented?
The inclining block tariff structure is scheduled to apply to all residential electricity accounts from 1 July 2012. All residential electricity customers will automatically be transferred to the new inclining block tariff structure from this time. Consumers do not need to contact their electricity retailer to move to this tariff.
A voluntary residential Time-of-Use tariff will also be available from 1 July 2012 for consumers with appropriate metering installed.
Why is the system changing?
Queensland has operated the same electricity pricing system for more than 20 years. The current electricity pricing system does not adequately reflect the cost of supplying electricity in Queensland and has not kept pace with the changing way we use electricity in our homes and businesses.
Queensland Competition Authority Review
In 2009, the Queensland Competition Authority reviewed the current electricity pricing system, the Benchmark Retail Cost Index (BRCI) and determined that some customers were paying more than it cost to supply them with electricity and some were paying less.
The Queensland Competition Authority made a series of recommendations to improve the system, including:
- a pricing system that more accurately reflected the cost of generating and supplying electricity
- an inclining block tariff structure for residential consumers
- a voluntary time-of-use tariff for residential consumers
- removal of obsolete business tariffs and remaining declining block tariffs
- removal of access to regulated tariffs for large non-residential customers (more than 100 megawatt hours per annum) - the Queensland Government has agreed to implement this recommendation in South East Queensland only.
What does removing access to regulated tariffs for large
non-residential customers mean for business?
Large non-residential customers (over 100 MWh per year) in South East Queensland (SEQ) who have not already moved to a market contract, will no longer have access to regulated prices, and must negotiate a market contract with an electricity retailer.
This may require a metering change for some large customers in SEQ. More information on this will be available as the consultation process progresses.
Large non-residential customers in regional Queensland will still have access to regulated prices, if they are currently on them and have not moved to a market contract.
Will the Community Service Obligation still exist?
The Queensland Government remains committed to the Community Service Obligation (CSO), which currently ensures that all non-market customers outside South East Queensland (SEQ) (including both large and small) pay no more for their electricity than customers in SEQ. These electricity pricing reforms do not alter in anyway the Government´s ongoing commitment to CSO Policy.
What are the incentives to shift peak demand?
From 1 July 2012, the Queensland Government will also pave the way for residential consumers with the appropriate electricity metering to have the option of paying a lower rate for their electricity when electricity demand is low and a higher rate when demand is at its peak.
This is known as a Time-of-Use tariff and consumers wishing to utilise this option will need to have an electricity meter installed that is capable of recording electricity consumption at different times of the day. This voluntary tariff is an option for those consumers who can shift their consumption away from peak demand periods (generally Monday to Friday from 4-8 pm).
Those customers who already have a meter with Time-of-Use capability installed will require the existing meter to be reprogrammed in order to utilise this tariff.
More information on this tariff, including the times at which the different pricing periods will apply, and the requirements for installation, will be available as the consultation process continues.
Last updated 11 November 2011