New benchmark for solar feed-in tariffs in NSW

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On 3 July, the Independent Pricing and Regulatory Tribunal (IPART) released its final report on the value of solar feed-in tariffs for 2018/2019[1]. We heralded the release of IPART’s final decision in an earlier article and encouraged our readers to make submissions on the issues paper.

solar feed-in tariffs - girl holds the sun

Photo by Olivier Fahrni on Unsplash

By Alex Silcock, Senior Paralegal, Compliance Quarter

Rooftop solar has become increasingly popular, with customers either using electricity generated by their own panels or selling the electricity generated back to the grid. ‘Solar feed-in tariffs’ refer to the amount customers receive from retailers for electricity that they export back to the grid.

It is important to note that IPART does not set a uniform tariff that all retailers must adhere to. Rather, they set a voluntary ‘benchmark range’ which gives retailers guidance as to the feed-in tariffs that they should offer customers. For the 2017-2018 year, IPART’s benchmark range was 11.9 to 15.0 cents per kilowatt-hour, while the actual tariffs offered by retailers varied between 6 cents and 20 cents per kilowatt-hour.

The newly released report by the NSW regulator has reduced the benchmark range to 6.9 to 8.4 cents per kilowatt-hour. This is a significant reduction on last year, and a key consideration for the regulator was to ensure that feed-in tariffs for solar owners were not pushing up electricity prices for those customers without solar.

It must be emphasised, that IPART also found that customers with rooftop solar pay an average of $450 less on their energy bill than those without. This figure was reached before feed-in tariffs are taken into account. Therefore, even with the reduced benchmark, solar customers are still reaping benefits.

From a regulatory perspective, it is interesting that, despite submissions to the contrary, IPART has continued to persist with the voluntary benchmark range rather than setting a minimum solar feed-in tariff as occurs in other jurisdictions. This is consistent with the state regulator’s monitoring role, which focuses more on investigation and no longer actually sets regulated prices. Furthermore, this should continue to allow retailers greater scope for market innovation around rooftop solar.

It will be interesting to see if there is a significant change to tariffs in response to IPART’s new benchmark.

If you have any questions about your rights as a consumer of rooftop solar, or your obligations as an electricity retailer, please contact us at Compliance Quarter.

 

[1] https://www.ipart.nsw.gov.au/files/sharedassets/website/shared-files/pricing-reviews-energy-services-publications-solar-feed-in-tariffs-201819/final-report-solar-feed-in-tariff-benchmarks-201819-june-2018.pdf

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