Aurora Energy Submission to TasNetworks' Directions and Priorities Consultation Paper

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1 1... Aurora ENERGY 12 September 2017 Mr John Sayers Program Leader - Revenue Resets TasNetworks PO Box 606 MOONAH TAS 7009 Dear John Aurora Energy Submission to TasNetworks' Directions and Priorities Consultation Paper Aurora Energy welcomes the opportunity to provide feedback on TasNetworks' Directions and Priorities Consultation Paper ('Consultation Paper') relating to its Transmission and Distribution Determination for the period. As TasNetworks' largest customer, Aurora Energy is retailer for 279,636 Tasmanian residential and business customers. Aurora Energy's core focus is on its customers, creating valued outcomes and providing sustainable returns to the Tasmanian community. Aurora Energy acknowledges and agrees with TasNetworks' purpose to deliver network services in a way that creates value for Tasmanians 1. Aurora Energy also agrees that Tasmanians' energy needs and expectations are evolving and that all energy service providers must change to meet these needs. Energy affordability continues to be a major issue for Tasmanian households and businesses. Aurora Energy is acutely aware of the impact of electricity prices on Tasmanians, particularly customers who have difficulty paying their bill. Aurora Energy is committed to supporting vulnerable Tasmanians through its Your Energy Support (YES) Program, which helps customers remain connected with energy saving tips and tools, budgeting advice and tailored and flexible payment plans for immediate and long term relief. The price of electricity will continue to be a challenge for Tasmanians for the foreseeable future. Costs across other parts of the electricity supply chain are increasing, in particular the unprecedented increases and volatility of the cost of wholesale electricity across the National Electricity Market. This directly influences Tasmanian energy prices and in response, the Tasmanian Government acted to cap the average retail electricity price increase for Tasmanian households at 2% for the year commencing 1 July While not directly related to TasNetworks Consultation Paper, this is important context in which to consider TasNetworks costs, which make up the largest part of Tasmanian electricity prices. 1 TasNetworks Strategy on a page. Aurora Energv Ply Ltd ABN Kirkswav Place GPO Box 197 Hobart Tasmania 7007 Telephone: Facsimile:

2 2 Aurora Energy provides in-principle support for the five major priorities outlined in the Consultation Paper. However, Aurora Energy would like to emphasise the following matters: Lowest sustainable cost: Consistent with the customer feedback TasNetworks received, Tasmanian customers have made it clear that they "'don 1 t want prices to rise n. Aurora Energy notes that TasNetworks' proposed regulated revenue is growing by 1.7% per annum above the rate of inflation 2. Aurora Energy 1 s view is thpt TasNetworks should aim to constrain network price increases to inflation, or where prices do increase above this, the reasons for this should be subject to a much higher level of justification with customers. Network tariff reform: The Consultation Paper notes that TasNetworks continues to "explore how to best implement demand-based prices n. Aurora Energy reiterates that these network prices will have to be reflected in retail prices for customers to receive the intended price signals. While Aurora Energy supports a transition to cost reflective tariffs, Aurora Energy considers that sufficient customer willingness and clear customer benefits for demand-based tariffs would have to be demonstrated before it would support implementation in Tasmania. Investment in distributed energy resources and supporting new renewable energy developments: Aurora Energy agrees that this investment will play an important role in meeting Tasmania 1 s energy needs in the future. However, it is Aurora Energy 1 s view that investment in the network to support DER and larger-scale renewable energy should be subject to rigorous testing of customers 1 willingness to pay for those investments. The electricity market continues to evolve at pace, creating a risk that investing too early to support DER technologies will result in stranded or under-utilised network assets. With respect to large scale renewable generation, Aurora Energy suggests that TasNetworks continue to consider from whom the costs of these investments should most appropriately be recovered, as it may not be directly from Tasmanian customers through regulated prices. As TasNetworks 1 largest customer, Aurora Energy looks forward to continuing to proactively engage with TasNetworks through its Transmission and Distribution Determination process, supporting the shared objective of creating value to Tasmanian energy customers. If you have any queries in relation to this submission, please contact Hayden Moore, Manager Regulatory & Policy. on or via hayden.moore@auroraenergy.com.au. 2 Refer Table 1 of the Consultation Paper. This is calculated as an annual increase from the last year of the current determination period.

3 7 September 2017 COTA Tasmania Submission to inform the development of TasNetworks Direction and Priorities Consultation Paper Thank you for the opportunity to provide input to TasNetworks Transmission and Distribution Determination consultation paper. COTA Tasmania is the peak body advocating for the rights and understanding the needs of older Tasmanians. Older Tasmanians are particularly vulnerable to energy price rises. Many are dependent on low incomes including the Age Pension, Disability Support Pension or Newstart Allowance, and are particularly affected by temperature extremes. Heating and cooling is essential to their health and wellbeing. COTA has heard anecdotally that older Tasmanians sometimes have to choose between heating their home, purchasing medications or eating adequately. Many try to find ways to reduce their energy use to save on bills, sometimes to the detriment of their health and comfort. However, very few older Tasmanians complain about their circumstances, stating that they have always had to make do with what they have and will continue as best they can. As energy prices continue to increase disproportionally to income and welfare payments, the financial pressure placed on older Tasmanians is growing. TasNetworks has the potential to help reduce the strain on older Tasmanians by keeping the cost of energy to a minimum and supporting people in the community to better manage and understand their energy usage. There are a number of energy issues affecting older Tasmanians that COTA would like to see addressed in TasNetworks Transmission and Distribution Determination

4 1. Shifting communications, services and products to online and digital platforms can exclude people with poor digital access and skills. Though moving services online and introducing digital products improves efficiency and consumer control, some of Tasmania s most vulnerable may be unable to utilise these technologies without support. Tasmania has the lowest digital inclusion scores in Australia and people with disability, low income and who are over 65 years are the least digitally included in our state (The Australian Digital Inclusion Index, 2017). These people also tend to be the most affected by energy price rises, and information about outages, ways to reduce energy use or bills, and information about new prices, tariffs and energy products could significantly impact these people s lives. It is vital that TasNetworks communicates with consumers both online and offline, and supports people with poor digital access or skills to utilise new digital technologies. This will be of particular importance with the introduction of demand-based tariffs and smart meters. Consumers should be fully informed about how these will be rolled out and appropriately trained in using and understanding these tariffs and meters to get the full benefit of them, particularly if their digital access and skills are quite low. 2. Consumers need to be supported to better manage their energy and access programs that help them reduce their energy bill without reducing energy use. The introduction of new tariffs and energy products has made the energy market increasingly complex for consumers and inhibits them from understanding how to use their energy efficiently. TasNetworks must continue to support consumers to understand energy tariffs (what is available and how to best utilise that tariff), energy efficiency techniques and how they can save energy without using less energy. This final point is of particular importance for older Tasmanians as COTA understands that some people living off a pension are taking energy efficiency too far to their own detriment. Examples of this include going to bed at 4pm so they don t need to use a heater, using candles or solar garden lights left out during the day to avoid using lights at night, or not heating or cooling the house appropriately to maintain good health and comfort. Education about concessions, loan 2

5 schemes and financial advice or hardship programs can help consumers to reduce energy bills without reducing their quality of life. TasNetworks has an important role in educating and supporting its consumers about how to use energy and keep themselves safe. COTA recognises that TasNetworks already supports community programs and partners with community organisations to achieve this. It is vital that with the changing market and increasing costs that even more of this support is provided to consumers in the coming years. 3. Fixed charges must be kept to a minimum. Fixed charges have a significant impact on low energy use consumers. Many older Tasmanians live either as a couple or alone and use relatively low amounts of energy. High fixed charges are a significant proportion of their energy bills and reducing their energy use may have very little impact on how much they pay. COTA understands that fixed charges enable TasNetworks to better forecast revenue, but these costs must be kept to a minimum so as to not disadvantage low energy users. TasNetworks must demonstrate that all of its operations and investments are efficient and aim to reduce the strain on consumers. 4. Population samples in upcoming trials and pilots must reflect the diversity of the Tasmanian community. Engagement with customers from a diverse range of ages, backgrounds and cultures is important to ensure that new tariffs and technologies benefit all of community. Some of the community most vulnerable to energy market changes are those who are the most difficult to engage. This may include people who have poor digital access, low levels of education, are culturally diverse, disabled or on low income. The energy market is undergoing a large number of changes and all pilots and trials conducted by TasNetworks must be sure to include a diverse cohort to ensure it reflects the Tasmanian community. 3

6 With these issues in mind, COTA makes the following comments in response to several of the consultation questions: Question 2: Are there are other key issues or messages that you want us to know about as we finalise our service and expenditure proposals? Feedback included: Continual improvement in how we communicate with customers is critical, particularly via social media platforms, such as Facebook. While communicating online and through social media is a useful way to connect with consumers quickly, it is vital that TasNetworks also continues to improve how they communicate with consumers who are offline. Continuing to support community through program sponsorship is a key issue for TasNetworks, particularly as more people will struggle to afford and understand electricity as power prices increase, new demand based tariffs are introduced, smart meters are installed and new technological advances in solar and batteries occur. Question 3: Do you share our 2025 vision for TasNetworks? If not, how should it be amended and why? The vision is good, but could include more about acknowledging, engaging with and understanding people from a range of ages, backgrounds and cultures to reflect the diversity in the Tasmanian community. It is particularly important that all pilots/trials include a diverse customer sample. Monitoring and evaluation of services and programs also need to be well planned and of highest quality. TasNetworks must also focus on continually improving efficiency energy service delivery to Tasmanians, thereby reducing costs. Question 4: Do you agree with our direction and priorities for ? If not, how should they be amended and why? COTA is pleased that TasNetworks aims to reduce network charges from July 2017 and that costs will aim to be kept as low as sustainably possible. This is very important for low energy 4

7 use households whose energy bills are largely made up of fixed costs. Reducing fixed charges will also incentivise people to change their energy behaviour with demand-based tariffs as they are more likely to see reductions in their energy bills. We will continue to engage with our customers to ensure that the technologies we deploy are fit for purpose and deliver customer value. Suggested addition:...and we ensure that customers are supported to use these technologies effectively to understand and regulate their energy consumption to reduce costs without adversely affecting their lifestyle. We continue to improve the way we communicate effectively with, and listen to our customers. Suggested addition:...and their advocates/community organisations that represent them. Communication must be effective in both online and offline methods. Question 6: What information would you like to better understand in our preliminary forecast capital and operating expenditure for transmission and distribution? What has been forecast to cause expenditure changes, particularly increases, year to year? Are all the expenditures forecast to occur aiming to reduce electricity costs for consumers? COTA would like an explanation about how investments and operating directions and priorities will result in cost savings for consumers. If not, an explanation about why this expenditure is necessary and the price impact on consumers should be provided. Question 8: Our transmission outage performance has improved over time. Do you support us changing the measures for big and small transmission outages to provide clearer incentives to maintain or improve performance? Yes, as long as customers are not affected by penalties if TasNetworks fails to meet new measures. Question 10: What information would you like to better understand in our tariff reform plan? More information about how consumers will be educated about new tariffs - will there be tools and support that allow consumers to assess the lowest cost tariffs for their situation? 5

8 Will consumers be supported to understand what particular elements of their individual demand could be changed to provide an even lower energy cost via reduced energy use or movement to a more appropriate tariff? More information about who will be recruited in incentive trials will these aim to engage a diverse consumer sample, both online and offline? Question 11: Do you support our approach to tariff reform? Yes, but it would be useful to mention how TasNetworks will enable consumers to use the new tariffs and technologies effectively. COTA recognises the effort that TasNetworks have made to consult with their community and address issues to support Tasmanians with their energy use. We appreciate the opportunity to respond to the Determination for on behalf of older Tasmanians. Yours sincerely, Sue Leitch CEO COTA 6

9 25 August 2017 Program Leader Revenue Resets TasNetworks PO Box 606 Moonah, TAS RE: Direction and Priorities Consultation Paper Transmission and Distribution Determination ERM Business Energy welcomes the opportunity to respond to TasNetworks Consultation Paper for its Transmission and Distribution Determination About ERM Business Energy ERM Power Retail Pty Ltd, which trades as ERM Business Energy, is a subsidiary of ERM Power Limited, an Australian energy company operating electricity sales, generation and energy solutions businesses. Since launching in 2007, ERM Business Energy has grown to become the second largest electricity provider to commercial businesses and industrials in Australia by load 1, with operations in every state and the Australian Capital Territory. ERM Business Energy has increasing success in the small business market. Response to Consultation Paper TasNetworks faces an important challenge in maintaining reliability while greater levels of intermittent generation are integrated into our system. We are encouraged that its future direction and priorities respond to this system-wide evolution, while also reflecting the changing needs of TasNetworks customers as stakeholder groups and individuals. We welcome the revenue neutral outcome of this proposal, and particularly applaud this during this time of industry transition. Please contact me if you would like to discuss this submission further. Yours sincerely, Ricky McCulloch Account Manager or rmcculloch@ermpower.com.au 1 Based on ERM Power analysis of latest published financial information.

10 TASMANIAN FARMERS & GRAZIERS ASSOCIATION TasNetworks Program Leader Revenue Resets Moonah TAS 7009 Via TFGA Submission TasNetworks Directions and Priorities Paper The Tasmanian Farmers and Graziers Association (TFGA) is the leading representative body for Tasmanian primary producers. TFGA members are responsible for generating approximately 80% of the value created by the Tasmanian agricultural sector. Agriculture is one of the key pillars of the economy and, with the current level of support from government, are well positioned to further capitalise on the stature of Tasmania agriculture. The TFGA is appreciates the opportunity to make comment to the TasNetworks Transmission and Distribution Determination , Direction and Priorities Consultation Paper. Comments to the Direction and Priorities Consultation Paper: 1. Overwhelmingly, people have told us that they want about the same reliability for about the same price. Is this consistent with what you think? For agriculture reliability is critical. To have a consistent power supply when farming operations need it is paramount. Price is very important, but equally important is having a set price that farmers can budget and plan for. 2. Are there any other key issues or messages that you want us to know about as we finalise our service and expenditure proposals? The TFGA understand when there is a major power outage resources need to be placed at priority areas for example getting power back on for aged care homes. We would like TasNetworks to consider two new proposals regarding future services. i. Animal welfare: Intensive farming operations rely on consistent power supply for their operations, some at different parts of the day and some continuously. During a power outage, it would be beneficial to include animal welfare under the emergency line (option 2) when calling outage number. ACN ABN P: (03) W: A: TFGA House, PO Box 193 Cnr Cimitiere & Charles Streets Launceston TAS 7250

11 ii. To give priority to restoring power quickly to farming operations will provide some level of comfort to those farmers that lose power. Examples where this will assist is the need to warm/cool chicken sheds or milking dairy cows. External electrical contractors: During major power outages there would be added pressure on TasNetworks resources. To assist during these events TasNetworks could have a list of preferred external electrical contractors who could undertake certain jobs on behalf of TasNetworks. A recent example where this would have been extremely beneficial is where a dairy farmer was affected during a prolonged power outage in this instance he missed his morning and afternoon milking. The issue that needed to be fixed was a fuse. TasNetworks could have given this job to an external contractor to address in a timely manner, instead thousands of dollars of milk payments were lost. 3. Do you share our 2025 outlook for TasNetworks? If not, how should it be amended and why? There are two areas that TasNetworks should be fixing to provide assurance to its customers of who owns what assets and further advancing its services effectively and efficiently. i. Power poles: As stated on TasNetworks website there are around 65,000 poles in Tasmania that are privately owned. The TFGA is questioning if the transition of these poles from public to private ownership was legally undertaken. The issue of transition sits with successive governments, not TasNeworks, however the issue of ownership is still up in the air for the landowners who have power poles on their properties. The Transformation Roadmap 2025 that outlines some of the key changes TasNetworks expects to see isn t entirely accurate without adding the issue of ownership of power poles on private land. This is a major issue for private landowners not knowing if they own the poles; if they have a responsibility to maintain; or replace poles into the future. This is something that should be addressed. ii. Meters: An issue that is raised regularly by our members is meter readers on farm the issues being lack of notice when entering farm; reader not being read; and biosecurity issues associated with vehicles travelling across farm. The move to advanced (smart) meters is a positive. Priority should be to rollout advanced meters to rural areas to stop such issues as stated above from reoccurring. This will also be of benefit to meter readers to minimise OH&S issues. 5. Do you have any feedback on our preliminary forecast capital and operating expenditure for transmission and distribution? Under section Distribution capital expenditure it mentions one of TasNetworks key roles will be to maintain and renew the poles and wires networks. This section goes on to list TasNetworks investment plans recognising several key points, however there is no mention of a contingency plan if the supposedly 65,000 private power poles are put into public ownership. If this does happen there will be an impact on TasNetworks capital and operating expenditure. What is TasNetworks contingency plan if ownership of private power poles is deemed public? Tasmanian Farmers & Graziers Association

12 11. Do you support our approach to tariff reform? Yes, the TFGA is supportive of reform to have a tariff that is more responsive to our industry. Tariff 75, irrigation time of use, is a good example where reform is needed. There have been some changes to this tariff, which have made it not as favourable for farmers to use. Principally, by changing the off-peak times to 10pm-7am means farmers who use this tariff are not getting as much benefit through fewer hours being allocated to off-peak. TFGA has started discussions with TasNetworks about this tariff and how reforming a tariff to suit current and future agricultural practices is needed. A key component of the reform is recognising the changing face of agriculture across the State due to irrigation schemes. It needs to be also recognised that while time of use periods are utilised, irrigation now and into the future is changing where crops need water all times of the day. If Tasmanian agriculture is going to grow and continue to be a key pillar of the Tasmanian economy, farmers require a cost-reflective tariff. With the pace of technology, the use of renewable energy options on farm will increase and become more available. Farmers will need electricity, but will also be looking at options to reduce their power bills. TFGA want to work with TasNetworks to consider the best options available to have a responsive tariff that will meet the changing dynamics of agriculture across the State. Please contact the TFGA if you require any further information. Yours sincerely Peter Skillern Chief Executive Officer 8 th September 2017 Tasmanian Farmers & Graziers Association