Customers can reduce their consumption and their bills by combining a smart meter with a flexible tariff that has time-based variable pricing (time-of- use tariff). While savings for an individual customer are difficult to determine, a national study of tariff reform found that a customer with a relatively flat consumption pattern could save about $50 a year by switching to a time-of-use tariff, without changing their consumption habits. The same customer could save an extra $100 a year if they shifted around 20% of their electricity consumption from peak afternoon (2 pm to 8 pm) to other times.42
With smart meters already rolled out In Victoria, distribution companies in that state are starting to move towards default time-of-use tariffing and planning to support energy literacy programs to help customers understand the change.43
Both the NSW Productivity Commission and the Australian Industry Group recommend that smart meters should be accompanied by a time-of-use tariff as a default tariff with an opt-out option.44 To encourage uptake, there should be an education campaign that explains how customers can unlock savings through these tariffs.
However, time-of-use tariffs can have an unintended impact on vulnerable customers, who may have a limited ability to shift their consumption away from peaks when electricity becomes more expensive.45 Building on the work the social sector has already done in this area, there must be special consideration for these customers to ensure they are not worse off on the time-of-use tariff.