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Regulator takes issue with penalty charge for solar power

Regulator takes issue with penalty charge for solar power

By Pattrick Smellie

April 5 (BusinessDesk) - The Electricity Authority says plans by the Hawke's Bay electricity lines operator, Unison Networks, to charge a special tariff effectively penalising households that install solar power units on their rooves are out of step with its recommendations.

Unison's new charge would as much as halve the average $300 in annual savings that a photo-voltaic solar electricity generation unit could produce for an average Hawke's Bay household. The move has angered the Labour and Green parties and provoked a complaint to the Commerce Commission, which the competition watchdog says is not its territory.

However, the Electricity Authority, which regulates the electricity industry, acknowledged in an emailed comment to BusinessDesk that the EA had "recently consulted on these types of issues as we identified that distributors need to change their prices to reflect the services they’re delivering and the cost of those services."

"However, Unison hasn’t followed our approach as they haven’t related their prices to the services they’re delivering," said the EA's chief executive, Carl Hansen. "Our approach would increase choices for consumers. Unison’s approach provides no additional choice of services for consumers."

The Labour Party's energy spokesman and MP for Napier, Stuart Nash, said no such charges were applied when electricity users switched some of their consumption to natural gas.

“If consumers move their appliances from electricity to gas, there is the same effect of falling electricity usage, but power companies don’t charge them more for their electricity," Nash said, pointing to research by Auckland-based lines company Vector that showed three-quarters of consumers installing solar PV units were in the upper half of electricity users.

"It’s a myth to state that solar users use significantly less power than other users," Nash said.

Vector and Powerco, two lines companies with extensive national operations, told BusinessDesk they had no plans to follow Unison's lead. The Dunedin lines company, Aurora, said it had "no immediate plans" to introduce a separate charge for customers with distributed generation installations, such as solar PV.

"A volumetric pricing approach, as currently applied to most residential connections connected to the Aurora Energy network, may lead to residential connections with distributed generation avoiding the full costs of building and maintaining a reliable network to meet peak demand," a spokesman said. "We are considering how to best address that challenge as part of Aurora Energy’s wider strategic pricing review, as well as through industry working groups and participation in the Electricity Authority’s consultation on the impact of emerging technologies on electricity distribution costs."

Hansen noted that 99 percent of residential consumers on the Unison network are not affected by Unison’s new price category.

"The new price category currently only affects those consumers who install solar from April 1," he said. Unison has also stated it will apply the new price category to consumers with existing generation, but only 0.4 percent of residential consumers on Unison’s network currently have their own generation."

The EA was itself in the gun last year when it released a discussion paper on the potential for widespread adoption of off-grid electricity generation, such as solar PV, to load the cost of the national grid and local electricity networks onto customers still connected to the grid.

It received 54 submissions on the issue and is now considering "next steps."

Unison justified the price increase by saying that it cost around $900 a year to maintain a household connection to its network. By reducing their use of grid-supplied electricity while maintaining a network connection for back-up power, they would be loading additional network fixed costs onto non-solar customers. Its new tariff still left households with solar PV installed around $150 to $190 a year better off.

(BusinessDesk)

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