Need to know
- The Australian Energy Market Commission (AEMC) recently announced that it aims to achieve universal uptake of smart meters by 2030
- Some energy retailers have hit customers with unexpected new charges after the installation of a meter
- The AEMC made a move to stop this in late November last year, prohibiting any new charges for two years after a smart meter is installed
Getting hit with a high energy bill can bring on a dispiriting mix of combativeness and helplessness.
You want to get to the bottom of it, but you also know you'll probably end up paying the thing – because who has time to go to war with their energy company?
Smart meters can add an unwelcome new layer to this conundrum.
Up until new protections came into play on 28 November 2024, some people who had smart meters installed by their energy providers soon noticed new charges. It's a concerning development that could be coming to millions of us who live on the East Coast of Australia.
The Australian Energy Market Commission (AEMC) recently announced that it aims to have every property that's connected to the National Energy Market (NEM) hooked up to a smart meter by 2030.
In places where meters were installed prior to these protections, energy consumers have been blindsided by the impact on their energy bills
Customers in Queensland, New South Wales, the ACT, Victoria and South Australia will have to get on board. (Western Australia and the Northern Territory have different systems and are not part of the NEM. Tasmania is part of the NEM but was not slated by the AEMC to be included in the rollout.)
The rollout is mandatory, but the new AEMC rules that came into play in November prohibit any new charges from being applied for two years after a smart meter is installed.
After two years, retailers are free to apply new charges – including controversial demand charges – as long as they provide customers with information showing how any new tariffs would compare with what they had been paying previously.
The degree to which retailers are currently complying with this corrective order is unclear. But in places where meters were installed prior to these protections, energy consumers have been blindsided by the impact on their energy bills.
Demand charges: 'Penalised for every day of the month'
Queensland resident Greg is willing to go the distance to avoid overpaying for energy. His smart meter was installed by Energex, a poles and wire company, in August 2024. At the time, Greg was an Origin Energy customer.
"I did not ask for this, nor did I want it. They said it was free of charge and would save them time as they can do everything remotely," Greg tells CHOICE.
When he then switched to Alinta Energy, he noticed that new charges were appearing on his bill.
"Not only do they have a daily supply charge and a usage charge, they also have a demand charge," he says.
Demand charges are based on the highest amount of electricity used for one 30-minute block over the monthly billing cycle. This level of usage then determines how much customers pay in the demand period set by the retailer for the entire billing cycle.
In effect they penalise you if, one day, you have the oven on to cook dinner while using the air-conditioner
Red Energy customer Greg
Critics say demand charges are an underhanded way for retailers to recoup costs imposed on them by poles and wires companies, whose infrastructure bears the load of peak usage.
"In effect they penalise you if, one day, you have the oven on to cook dinner while using the air-conditioner. Do this once in a month and you'll be penalised for every day of the month," Greg says.
Greg switched to Red Energy in December, only to discover that the company also applies a demand charge.
He asked if they offered a plan without one and was told about a 'time of use' plan, but he thinks that would likely cost him even more.
Many energy customers have been hit with unexpected new charges after the installation of a smart meter.
Richard's case: Daily and peak charges also up
Another energy customer in Queensland, Richard, also had a rude shock after Alinta installed a smart meter as his residence.
"Following this, my tariffs were updated," Richard says. Both his daily and peak charges were increased, and a new demand charge was added.
According to Richard's calculations, the demand charge was based on the maximum amount of energy used in any 30-minute period between 4pm and 9pm.
The idea that the smart meter would make billing easier and eliminate the need for manual reads sounds good, but they can also be used as a means to increase revenues
Alinta Energy customer Richard
Richard thinks he's onto the company's motivations. "The idea that the smart meter would make billing easier and eliminate the need for manual reads sounds good, but they can also be used as a means to increase revenues."
We contacted Alinta for comment but the company didn't respond.
Consumer concerns acknowledged by AEMC
AEMC chair Anna Collyer tells CHOICE that smart meters are the "digital foundation of our energy future".
"We're seeing a fundamental shift in how our system works – moving from a small number of large power stations sending electricity one way, to millions of homes both using and generating power. Already, one in four homes have solar panels, and this could reach 80% by 2050," Collyer says.
Smart meters offer several advantages, Collyer points out, including an end to estimated bills, faster fault detection, and the ability to integrate with solar technologies and electric vehicles.
The message is simple – no one should get an unexpected change to their bill after getting a smart meter
AEMC chair Anna Collyer
But she acknowledges that some retailers appear to have used the rollout as an opportunity to increase rates.
"We heard clear concerns from stakeholders about unexpected retail tariff changes after smart meter installations. That's exactly why we paused our final determination to strengthen consumer protections. The message is simple – no one should get an unexpected change to their bill after getting a smart meter," Collyer says.
Our energy system is changing, with millions of homes both using and generating power.
New rules to curb extra tariffs
Along with the two-year grace period on new tariffs, AEMC has also proposed that retailers be required to offer customers with smart meters a flat rate option and no demand charges, but it would be up to individual states and territories to implement that.
In September last year, the Queensland government passed a regulation that requires energy retailers to offer a flat rate without a demand charge, but no timeframe has been set for when retailers must comply.
Greg doesn't understand why he's being hit with a demand charge three months after the new rule was established.
A Red Energy spokesperson tells us the company is aware of the regulation and is in the process of developing a flat rate plan without a demand tariff for the Queensland market.
We understand that navigating the pros and cons of different tariffs can be challenging
Red Energy spokesperson
"We understand that navigating the pros and cons of different tariffs can be challenging," the spokesperson says. He recommends that customers call the company "so we can recommend the best solution".
We asked AEMC if customers who had been affected by new tariffs before the two-year rule started would be eligible for compensation, but the agency didn't respond to the question.
Asked about the fairness of demand charges in general, Collyer says AEMC's current pricing review "is examining the broader pricing landscape to ensure the tariffs customers see align with their preferences and needs in the longer term. What matters is that customers have real choice and control over their energy decisions, including their retail tariff".
It seems demand tariffs aren't going away anytime soon for customers whose meters were installed before AEMC's two-year rule came into effect.
A call for protections for older Australians
Smart meters may be the way of the future, but older Australians in particular should never be forced to pay the new tariffs that can come with them, says National Seniors Australia CEO Chris Grice.
"They should only move to them if they have the means to manage the complexity they offer. The AEMC has failed to adequately explain how a two-year protection safeguards consumers. Households installing a smart meter won't get any protection after this point. The rollout will place increased cost pressures on already struggling and financially stretched households."
The AEMC has failed to adequately explain how a two-year protection safeguards consumers
National Seniors Australia CEO Chris Grice
Grice adds that demand tariffs are a cost-recovery tool for retailers and should be banned.
"We are not opposed to smart meters for those who can manage them, we simply want adequate protections for the many who will struggle to understand the complex tariffs they enable," Grice says.
Greg lodged a complaint with Queensland's Energy and Water Ombudsman about his new demand charges, but he's not optimistic about being able to avoid higher power bills now that his new smart meter is on the job.
"I expect things are only going to get worse with energy supply for the foreseeable future," he says.
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Stock images: Getty, unless otherwise stated.
