3 Excuses Suppliers Use to Overcharge Solar Customers
It sounds amazing to get your electricity free from the sun. And it is!
But many energy suppliers then turn around and charge you more for the electricity that you purchase. For example, EnergyAustralia entirely remove their 35% usage discount for solar customers.
AGL reduce their usage discount from 28% to 15% for solar customers.
Origin Energy to their credit have the same rates, but unfortunately are mostly uncompetitive.
Is there any basis for this?
In Victoria suppliers have to buy your solar output for 6.2 c/kwh which is proposed to reduce to 5c/kwh from Jan 1, 2016. Suppliers could argue that they lose money on their purchase of electricity from solar customers, but the facts don’t support this proposition.
The energy that suppliers buy at 6.2 c/kwh from solar customers, is sold to other customers at ~25 c/kwh. Their only additional costs are charges of ~11 c/kwh for using the poles and wires. That gives suppliers a very healthy margin. For customers with the initial higher feed in tariff, it’s a bit more complicated but the same margin applies.
Suppliers could argue that solar customers are less attractive because of the time at which they consume energy. Maybe, maybe not, but any difference in retail margins would be minimal, based my experience as GM Energy Trading for United Energy.
Solar customers buy less energy, so the margin that suppliers earn is less. True, but they apply the same tariffs to low and high users of energy, so why discriminate against solar customers?
Suppliers exploit the confusion and fragmentation
Solar customers represent around 11% of the market in Victoria, and within that there are different categories depending on the date of installation. Suppliers exploit this fragmentation and don’t compete as fiercely for solar customers.
It is a more complex task for customers to compare suppliers when they have solar. Once again, suppliers see this as an opportunity to extract a margin, that’s business after all, but it’s not solar friendly. That’s why Energy Umpire has launched its bill analysis service to provide a simple accurate comparison for solar customers.
Supplier profit margins are 22% in Victoria, about twice those in other States. For solar customers we believe the margins are even higher. From the users of Energy Umpire, some of the biggest savers have been solar customers.
A fair deal for solar please
We call on suppliers not to exploit solar customers and instead have exactly the same tariffs and discounts for solar customers as for non solar customers.