Proposals for a new ActewAGL electricity tariff structure due to take effect next year have been rejected by the Australian Energy Regulator as unnecessarily complex and unlikely to move consumers to off-peak consumption.
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Actew AGL's proposal, which has been with the regulator since last November, was prepared in response to legislative changes initiated by the Australian Energy Market Commission's 2012 Power of Choice review.
The AER released its draft decision on ActewAGL's proposed tariff structure on Tuesday.
Actew AGL had developed the tariff structure after extensive consultation with its customers, energy networks general manager, Stephen Devlin, told Fairfax.
"We are working through the details of the [AER's] draft decision and will engage further with the AER to ensure we get an outcome that is in the best interests of our electricity consumers," he said.
"We will submit a revised proposal to the AER in response to its draft decision within 45 business days."
Mr Devlin said the AER had accepted key elements of the tariff proposal and welcomed the introduction of new demand tariffs for residential and low voltage commercial customers.
The 2012 Power of Choice review found if consumers had a clear idea of the true cost of power, particularly in peak periods, and were charged accordingly, they would move as much consumption to off peak periods as possible. It recommended cost reflective tariffs as the best way to do this.
"Cost reflective tariffs will mean customers will be more aware of... costs and may be able to respond by shifting some of their electricity usage out of periods of peak demand," the draft decision said.
"Reducing peak demand will mean there is less need for new investment to maintain a safe and reliable electricity network. This will help defer costly network investments and place downward pressure on the network charges over the longer term".
In short, spreading the load would reduce the need for new power stations, be more compatible with renewable energy sources and, ultimately, save consumers money.
AER was critical of ActewAGL's "windows" for determining consumer demand for pricing purposes, noting they could be confusing: "We are not satisfied ActewAGL has achieved the appropriate balance between greater cost reflectivity and simplicity to enable customer response.
"We are satisfied ActewAGL's year-long evening peak demand charging window is cost reflective, but we are not satisfied ActewAGL's year long morning peak demand charging window reflects times of congestion.
"We require ActewAGL to limit its peak charging window to either a single evening window or restrict its morning charging window to winter only and/or implement off-peak weekend periods to address our concerns. For the low voltage commercial Kw demand tariff we require ActewAGL to limit the application of this demand charge to during a peak charging window to address our concerns."
AER also asked Actew AGL to broaden its opt out provisions for the proposed demand tariff structure to include existing commercial low voltage customers.
