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Aust's electricity consumption fallen 'significantly'

29 November, 2013

An unprecedented 4.5 per cent fall in electricity consumption nationwide has contributed to Australia's emissions total remaining constant for several years, according to an expert from Australian National University (ANU).

The fall in consumption is having major disruptive impacts on the generation and distribution network sectors of the electricity supply industry.

Dr Hugh Saddler, research associate of the Australian National University Centre for Climate and Principal Consultant – Energy Strategies with pitt & sherry says residential electricity use has dropped significantly, coupled with a "collapse" in manufacturing output.

Dr Saddler says the decrease in residential electricity consumption is the result of "a combination of factors, including energy efficiency programs being rolled out by governments, improvements in minimum energy performance standards for household appliances such as televisions, fridges and air-conditioning, and improved building energy efficiency standards."

He says consumers have also made a conscious effort to reduce their electricity use at home.

"Households have really responded to higher electricity prices. This was evident when power prices became front page news around 2010, people started looking at their electricity bill and thinking 'what can I do to reduce my power consumption?'"

And the growing popularity of rooftop photovoltaic (solar panel) systems on homes has also had a significant impact.

Dr Saddler says energy generation and output may continue to drop, especially if there are more major industrial closures around the country, such as the potential shutdown of some older aluminium smelters.

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Lloyd | Monday, December 2, 2013, 9:59 AM
Interesting topic but it would be great to have some more detail. What was the reduction in manufacturing consumption? Hopefully there was a more specific result than "collapse"? Perhaps a reference to the data could be included?
PaulH | Monday, December 2, 2013, 10:35 AM
It's good to see that national consumption has decreased, however, consumers are under the misconception that reduced consumption will lead to reduced bills. On the contrary, suppliers have no choice but to increase the cost of electricity to offset the decrease in demand, as well as satisfying shareholders with some increase in profits. It's a simple equation - if a business sells less of what it makes then they have to increase its cost, or find other ways to make money - something the power industry can't easily do, if at all. I don't know of any business that makes more money by selling less of whatever it offers. The same thing happened with water during the early 2000's drought years. Water consumption reduced dramatically (here in Vic) but water bills increased. I realise some of this went to infrastructure including the desalination plant, but a large part had to go towards offsetting the reduced revenue to the various water suppliers. Consumers will soon realise they are being deceived into thinking that by investing money (changing bulbs, appliances, installing timers, etc.) and changing habits to cutting-back on electricity use they will be rewarded with lower bills. (I won't even go into the whole network gold-plating rort...)
Lloyd | Monday, December 2, 2013, 1:02 PM
PaulH, you raise some interesting points and I concur that our bills will probably increase!. When the SECV was still responsible for Victoria's power generation they actually subsidised energy saving measures for industry as this was considered cheaper than building a new generator. I assume the 4.5% fall is over one year but this article doesn't actually state this? The number of Victorian households are expected to increase at 1.7% per year to 2021 (Vic. Gov't Data) so maybe this will take up the 'slack'? Or maybe Hazelwood could be shut down? Also as PaulH states we have an interesting model to allow power generators to build (and charge) for infrastructure. Perhaps Dr Saddler can add some data and we could have a really interesting discussion? PaulH's reference to water costs is also interesting. I believe that NZ tried a model of 'user pays' with a low fixed charge. It sounded a good idea but water consumption decreased so much that they could barely recover their fixed costs! No fear of that here! Melbourne Water has increased fixed charges and also dramatically increased the number of households billed to an extent that even the 'non-user' pays. We have a farm with no water connection and runoff into a reservoir not managed by Melbourne Water. Recently Melbourne's boundaries were changed and we are now charged for 'a service' to help pay for the desal plant! (Thanks Vic ALP!)
MikeM | Monday, December 2, 2013, 1:04 PM
@PaulH, You paint a depressing and ratehr negative outcome with the implication its quite ok to consume more or at least suggest its a waste of effort to be efficient. Such a view might be ok if there were no competition and your only energy supplier was a very greedy US type corporation (eg Enron) with nil moral sense or facist grabbing intent. The power industry is in a state of flux (electrically punny) and competition in many places is available well, provided the infrastructure maintenance loading is fair in the user's invoices. I'm all for efficiency, went from a desktop pc to a laptop which saved me a real $300/year documented and even more shortly there-after when finding a few useless tasks in xp-64 on the laptop that saved me a further $50/year... For the most part, by far, reduced consumption will reduce consumer's costs, its the marginal difference where it might not but, as Lloyd pointed out and I agree fully we need details because:- "Details Matter, as the truth often hides in the details or is pummeled there by those with an unclear agenda..." Cheers Mike
Geoff Thomas | Monday, December 2, 2013, 2:37 PM
PaulH, whilst I concur that the general thrust of your argument in that if companies sell less they will be poorer is true, the electricity market is a lot freer than in past times so competition should force companies to get rid of internal bureaucracy, become more lean and efficient, increase their niceness index, etc, otherwise they will go broke and their assets bought up by their competitors for a song. This is Normal, - Free Market Enterprise Capitalism, so if there is diminishing requirement, then the companies offering the best prices should win. Installing timers/meters is a different item from all the rest, it is not to help the customer as such, but to enable the suppliers to charge higher rates for peak electricity, - this is actually to help them, - not the customer, as the high peak times usage of electricity fiercely degrades profitability on buying eg new generators when they are only going to be used for three hours a day just to supply the Peak, (there is more than enough Generation Capability to supply the rest) so this will be a more relevant area, and customers are wanting already to be free from that so are buying more independent systems, - even including some battery back-up, to free themselves from that block to their own business or personal survival, - which incidentally helps the surviving producers so it should be progress. All over the world, the price of energy is increasing, consumers have, or will take, the right to reduce their costs, and the net result is reducing National Energy costs, so all fine. Cheers, Geoff Thomas.
james thomas | Tuesday, December 3, 2013, 3:16 PM
I can tell you these place still behave as if they were govt run, though they be privatised the people are the same . There are huge union influences from the public service days. On the distribution side some of the former semi-govt authorities have people still carrying out dated practices that will take along , long time to change and the unions will fight all the way. Sort that out and we the consumer wins. It went private for our benefit and all we saw was increased costs
Geoff Thomas | Friday, December 6, 2013, 3:19 PM
Hi James, a very insightful comment, IMHO, putting together the Public Service and Unions is an interesting twist, - I suspect significantly justified, if all was pure, the Unions would only be interested in working conditions and basic wage, whereas the Public Service is more interested in keeping their wage and retirement benefits intact, - ie they rarely work from idealism... as is true for so much today. - I think the decisions we need to make is more along the lines of 'Associative Economics', - Google it, - possibly a hard row to hoe but possibly a good row. Cheers, Geoff Thomas -