Cost-reflective Tariff Design

Project outline

Recent regulatory reform efforts in the Australian National Electricity Market (NEM) have included a number of rule changes aiming to contain electricity price rises driven by network investment by distributed network service providers (DNSPs). One focus area has been the economic inefficiencies of current network tariff arrangements, particularly for residential and small business consumers. 

Current tariffs are typically shaped by limited metering capabilities and equity considerations and have generally involved a major volumetric consumption component. This tariff structure doesn’t clearly reflect the role of consumer contributions to network peak demand and hence in overall DNSP expenditure. 

This work aims to build knowledge around the design of more cost-reflective tariffs.  Cost-reflective tariffs should, in theory, charge customers according to the costs they impose on network businesses. This should ensure that customers cover the costs they cause and, very importantly, now see price signals that incentivise efficient investment and operation of their own loads, storage and distributed generation. 

CEEM has been interested in this work for a number of years, including a number of papers and presentations as shown below. We have most recently developed a Tariff Tool that can be used to assess various impacts of different tariff designs.

Development of the Tariff Tool

The work is supported by Energy Consumers Australia, Project 'Tariff Assessment Tool, No 814. We have developed a modelling tool to assist stakeholders wishing to contribute to network tariff design in the Australian National Electricity Market. It is an open source modelling tool to assist stakeholders in assessing the implications of different possible network tariff designs, and hence facilitate broader engagement in the relevant rule making and regulatory processes in the NEM. Our tool takes public energy consumption data from over 5000 households in NSW, and allows users test a wide range of existing, proposed and possible tariffs structures to see their impacts on network revenue and household bills. Demographic survey data of the households allows you to explore the impacts of these tariffs on particular household types – for example, families with young children.  The tool can also show how well different tariffs align these household bills with a households’ contribution to network peak demand.  The tool and data are open source – you can check, validate and add your own data sets; test existing or even design your own tariffs, and validate and even modify the underlying algorithms.

Download the Tariff Tool!

You can download the Tariff Tool here. Note that, if you have administrative/security concerns, you can download the MCR from the Mathworks website (use Version 2017, 9.2), then run the Tariff Tool (TDA.exe). Please email any comments and bugs here.

Load data

The tool currently uses household load data from the Smart Grid Smart Cities dataset. If you can provide any more household load data, please get in contact with us!

The Reference Committee for this work is:

  • Lynne Gallagher, ECA
  • Brendon Crown, ENA 
  • Mark Byrne, TEC
  • Craig Memery, PIAC
  • Sam Wanganeen, DoEnvironment & Energy
  • Iain Magill - UNSW
  • Anna Bruce - UNSW
  • Rob Passey - UNSW

UNSW Research Project Team:

Navid Haghdadi
Robert Passey
Anna Bruce
Sharon Young
Iain MacGill 

Publications

Title & place of publication Author Research area Typesort descending Links Year
'Designing more cost reflective electricity network tariffs with demand charges', Energy Policy, 109, p642-649. Passey, R., Haghdadi, N., Bruce, A., MacGill I. Energy Efficiency & Distributed Generation Journal Papers 2017
Dynamic Model Approach to Assess Feed-in Tariffs for Residential PV systems Oliva, S.J., MacGill I. Energy Efficiency & Distributed Generation Conference Papers 2013
'An Assessment of the Cost-Reflectivity of Proposed Network Tariffs in Australia’, Asia-Pacific Solar Research Conference 2015, Brisbane, Australia Kelly, D., Bruce, A. , MacGill, I., Passey, R. Energy Efficiency & Distributed Generation Conference Papers 2015
’Electricity network revenue under different Australian residential tariff designs and customer interventions’, IEEE PESGN, July 2016 Young, S., Bruce, A., MacGill, I. Energy Efficiency & Distributed Generation Conference Papers 2016

Events

Event Presenter Type Research area Location Date
Temporal and spatial variability of distributed PV impacts on Australian distribution network load profiles Navid Haghdadi Seminar Energy Efficiency & Distributed Generation CIDER Tuesday, August 15, 2017
Workshop on Distribution Network Tariff Assessment and Design Rob Passey, Iain MacGill, Brendon Crown, Craig Memery, Mark Burne Workshop Energy Efficiency & Distributed Generation UNSW CBD Campus, O'Connell St, Sydney. Tuesday, June 27, 2017
Workshop: Network Tariff Analysis Tool Iain MacGill, Rob Passey, Navid Haghdadi, Sharon Young Workshop Energy Efficiency & Distributed Generation APSRC 2016, ANU, Canberra Thursday, December 1, 2016
(Re)designing cost-reflective tariffs Rob Passey Seminar Energy Efficiency & Distributed Generation AESA Conference and Exhibition, Australia Technology Park, Sydney Wednesday, June 1, 2016
Workshop: Cost-Reflective Pricing – some different perspectives Various Public forum Energy Efficiency & Distributed Generation AES Conference and Exhibition, Sydney ATP Wednesday, June 1, 2016