Time-of-use Pricing Uncomfortable, But Not Flawed

Discussing the Government’s renewed push for electricity market reform on ABC Breakfast radio, in particular time-of-use pricing and the ability for households to shift their consumption, Dr. Lynne Chester from USyd said,

we all know when we’ve got a household full of children and teenagers it’s incredibly hard getting them to switch off all those appliances and not use electricity in particular heavy use periods.

Well, yes: getting people – adults or children – to change their behaviour is hard – but it’s also absolutely necessary; and if we’re not going to instill an energy-saving culture in a generation during its formative years, when are we going to do it?

If we want to reduce our consumption of resources, energy or otherwise, we need to change our lifestyles; there is no way around that. Teaching kids that using power at the same time as everyone else is expensive should be just as much part of life as teaching kids that driving on a road at the same time as everyone else is slow; turning appliances off when they’re not being used should be as normal as only putting as much food on your plate as you’re likely to eat.

Currently, if one household uses energy that’s cheap to generate and deliver (e.g. off-peak), an another household uses the same amount of energy but at much higher generation and delivery costs (e.g. peak), both households pay the same; the first household is subsidising the second. How is that desireable?¹

Time of use pricing makes households’ bills more closely reflect the costs of the energy they’re consuming, just as traffic congestion reflects that you’re driving with everyone else and wasting food means someone else goes hungry. That is an important, valuable reform, and pointing out that it will cause people to change, and that this change is difficult and/or uncomfortable, is an insufficient reason for the pricing reform to not take place.

¹ Perhaps the first household is rich, the second poor, and the subsidy socially desireable. If so, let the tax/welfare system do the redistribution: it’s much better suited to it than the electricity sector.

Comments

[Alister]

"...as much food on your placeplate as you’re likely to eat."

[MCJ]

@Alister: Corrected, thank you.