Nathan Strong: Users required to pay fair share

Nathan Strong.

Recently, some people have expressed concerns about Unison's pricing for those who choose to install solar panels.

We have taken the time to listen and want to assure our community that our new pricing is about being fair to all our customers.

Currently, a typical residential consumer in Hawke's Bay pays Unison about $900 annually for the electricity lines, poles, transformers and for the connection that delivers electricity from Transpower's national grid into their home. We work hard to ensure the network supplies electricity 99.9 per cent of the time, 24 hours a day, 365 days a year. This means we enjoy one of the most environmentally friendly, low-carbon electricity supplies in the world.

So, what happens to electricity lines when someone installs solar panels? When the sun shines, the panels generate electricity and reliance on Unison's network is either reduced or replaced. But, when the sun isn't shining during the dark, winter peaks, the network remains available for all customers, including those with solar. Everyone, whether they're using solar or not, relies equally on Unison's network being available, so we think everyone should pay their fair share toward the network service.

So what do our new prices mean for solar customers? For a typical customer their lines charges still reduce from about $900 to $715 even though our network is available when they don't produce electricity from their panels. Which is why we say there is no "solar tax". In addition, customers with solar are also saving on their energy costs when they are using their panels. Unison's new prices do not affect these energy savings.

So why the controversy about Unison's new prices? To understand this, it's necessary to understand legal requirements for how fixed costs of running our network are recovered. Unlike broadband providers, the law doesn't allow us to charge a fixed amount for the lines each customer needs. Out of the $900 on average we charge each customer to manage the network, we are only allowed to recover $55 annually in fixed charges. For the balance, the law requires we set our prices based on how much electricity people use. But this makes no sense for lines charges, because our assets are there every day, no matter how much or how little people use them. These laws were introduced in part to help low-income consumers save money on power bills but, with changing technology, traditional pricing approaches are no longer effective in delivering such help. Actually, low income families and pensioners who can't afford expensive insulation, let alone solar, are likely to be penalised under these laws - and that's unfair.

This is why Unison introduced a new price category for customers with solar. People with solar panels reduce the amount of electricity going through the network, but they don't reduce their need for the network during peak times, so the costs to deliver don't drop.

Unison would like to see law changes so we can set prices to better reflect underlying costs and the service provided. This would remove the need for a separate category for people with solar. In future, we'd like to see prices that reward people for using less electricity during peak times, like using the drier late at night rather than during peak times. Over the next year we'll work with regulators, consumer representatives and others to develop simpler, more effective options to cover costs. But, for now, we wanted to ensure people thinking about solar didn't base their decision on subsidies implicit in current prices.

We also want to assure people we won't increase prices for people with gas heating or LED lights. In fact, we support people using these technologies because they help lower power bills and reduce demand on the network during peak times, unlike solar panels which don't produce during winter evenings when the network is needed the most.

We understand people saying Unison should support the environment by continuing the subsidy for solar customers. Firstly, the Parliamentary Commissioner for the Environment said recently that NZ should look to promote electric vehicles which offer positive environmental benefits. Whereas she said solar panels offer negligible benefits in NZ, because our generation is from renewable sources like wind-farms and hydro dams. This makes us very different to many countries whose energy generation isn't anywhere near as carbon-friendly as ours. Secondly, we support incentives for people to reduce their carbon footprints, provided they're fair to everyone and we believe it's the Government's role to provide subsidies for environmental programmes.

Unison is not anti-solar. We have always promoted energy choice, and have trialled technologies (including solar) to understand the network impacts and to provide a full picture for customers considering them. Find out more at www.unison.co.nz/solar.

Unison recognises those wanting a subsidy are upset by its removal, but we don't think it's fair the other 99 per cent of customers should pay for those who have solar. We have a responsibility to look after all customers and it's only right that everyone who needs our network pays their fair share.

- Nathan Strong is Unison's general manager for Business Assurance.

- Views expressed here are the writer's opinion and not the newspaper's. Email: editor@hbtoday.co.nz