From 1 April 2016, Unison introduced a new price category for customers with distributed generation (DG), which applies to customers with solar panels connected to Unison's network.
The new price category is to recover Unison’s ongoing costs of delivering electricity when your solar panels are not supplying all your electricity needs. All customers pay separate line charges for using energy from the distribution network, and these are included in your electricity costs invoiced by your electricity retailer. It is free for you to use our network to sell your surplus electricity to your electricity retailer.
If you are installing a distributed generation system (solar panels) after 1 April 2016, your electricity retailer may transfer you from your existing price category to a new category for customers with Distributed Generation (G11 DGEN or G12 DGEN, depending on household consumption). It is up to electricity retailers to decide whether they pass-through our new prices to you.
For existing customers with solar panels connected to our network, your retailer is permitted to leave you on your existing price category through until 31 March 2019, after which your retailer may transfer you to a new price category for customers with distributed generation.
As with all of Unison's price categories, the price category for customers with distributed generation is comprised of a fixed component, and a variable component. A ‘Low User’ option is also available for those using less than 8,000kWh/year. As with all distribution pricing, these costs are included within the retailers’ charges.
Why has the network subsidy for solar customers been reduced?
The reduced subsidy for solar users is about fairness for all our customers. Customers who can’t afford or don’t want to go solar shouldn’t have to carry the cost of the network being available to those who do.
This is because the cost of providing a lines service is driven by the capacity of the connection which needs to be able to deliver for peak demand. This is the same for most households regardless of how much electricity is used. Unless solar can deliver all a customer’s electricity needs all the time, Unison will still need to bring them electricity, particularly at peak times and in winter.
What will solar customers actually pay in lines charges from now on?
Around $715 a year, compared to $900 for non-solar customers.
Solar users are still paying less in lines charges than non-solar customers (on average $185 less a year) in recognition of their lower demand. In addition, customers with solar are also saving on their energy costs when they are using their panels.
Customers who have installed solar since 1 April 2016 will have the new category applied, however our existing solar customers will not be affected until 2019.
Why is solar being targeted for reduced subsidies?
The big difference between solar and other energy choices such as solar hot water, gas hot water and heating, wood and wetback heating, and LED lighting is that solar doesn’t reduce winter peak demand when the most pressure is put on our ability to deliver electricity into homes and businesses.
Existing pricing structures required by law were designed to incentivise this kind of energy efficiency to reduce both energy consumption and peak demand, however they are ineffective at fairly allocating network costs for technologies like solar that reduce daytime consumption but make no contribution to reduction in peak demand.
Our lines network needs to be built and maintained to deliver for peak demand so everyone can have electricity when they need it - and all our customers, including solar users, need it most in winter.
The Electricity Authority is encouraging distributors to introduce pricing that reflects the cost of the service provided bringing electricity during evening peaks.
The new pricing allows the fairest cost sharing among customers for this network to be available – and it is still lower than non-solar users in recognition of the lower total demand they put on the network.
We have seen solar grow rapidly over the last two years, and we have worked hard with customers and solar installers to make it easy to connect to the network. We also recognise that solar is a significant investment for customers and we want to support customers with this investment decision by ensuring they understand the true ongoing cost of being connected to the network.
Our solar price category reflects this true cost and our solar investment calculator has been developed to assist customers before they decide to invest.
We want to avoid a similar situation to Australia where huge numbers of solar customers have been negatively impacted by the withdrawal of subsidies for solar. Longer term, increasing numbers of solar customers will mean non-solar customers will have to pay more in network costs to subsidise solar customers which we do not think is fair.
How was the new solar price category calculated?
We did a lot of research before setting our solar price category rates to ensure our decision was informed and fair to our solar customers.
This included looking at how solar and non-solar customers use energy in different ways, and how a customer’s energy consumption changes once they make the switch to solar.
This is why we set a rate based on solar customers’ average energy use – to take account of both their lower overall, but similar peak demand to non-solar customers. The result is a reduction in delivery charges of $185 for the average residential customer installing solar.
Does the solar price category reflect actual costs solar users put on the lines network?
We’ve done a lot of work to ensure our decision was informed and fair to our solar customers, and while there will be some variation based on different customers’ energy use, for the average solar customer the pricing we have set is an accurate reflection of the costs on the lines network.
What is Unison doing to help customers who are thinking of going solar or using other energy efficient technologies?
Unison has always promoted energy choice and incentives for people to reduce their carbon footprints, provided they’re fair to everyone. We want to help our customers to embrace new technologies and be energy efficient and we are committed to providing good information on the real costs and benefits of different technologies, practical tools and meaningful incentives to help people make good energy choices.
This is why we have trialled a range of technologies, including solar and in-home batteries, to understand the network impacts and to provide a full picture for customers considering them.
Customers can also find out more by visiting the pages in this section of our site to find out what we have been doing in the solar energy space.
Why does Unison need different price categories?
Unison has a number of different price categories to reflect the fact some customers use energy in different ways to the average customer – (for example at different times of the day/year and different total consumption).
This allows fairer cost sharing among customers. As well as solar, Unison has categories for holiday homes.
Why doesn’t Unison charge network costs in a different way?
The limitations of the laws around how we charge our customers mean we are very constrained in the way we can charge customers for the costs on the lines network.
This is why we would like to see law changes that allow us more flexibility to set prices that better reflect changing electricity demand and technology so we’d no longer need a separate price category for solar customers, and we could do more to reward customers for energy efficient behaviour such as such as using less electricity at peak times.
Smart metering systems also need to be improved to make these smarter prices available for customers.
We are committed to getting a better long-term deal for all our customers and will be talking to the government, electricity retailers and consumer groups about the law changes and system improvements needed to allow this to happen.
But in the meantime we wanted to make sure that people thinking about going solar have the right information to make informed energy choices.
Shouldn’t Unison be doing more to encourage renewable energy generation?
New Zealand already produces 80 percent of our electricity from renewable sources like wind-farms and hydro dams, so the bar is set much higher for solar and other emerging technologies to be produced as cost effectively and to have as meaningful an impact on reducing our carbon emissions.
This makes us very different to many countries whose energy generation isn’t anywhere near as carbon-friendly as ours and why we think more needs to be done to raise awareness of the real costs and benefits of different technologies.
Unison has and will continue to promote energy choice and incentives for people to reduce their carbon footprints, provided they’re fair to everyone. One of the best things we can do to facilitate this is to make sure we are providing good information on the real costs and benefits of different technologies, and practical tools and meaningful incentives to help people make good energy choices.
Read the Concept Consulting Report
Parliamentary Commissioner for the Environment's Statement on Concept Consulting Report
Electricity Authority Market Commentary: Assessing the Impact of Evolving Technology
The EA has produced a brochure to illustrate the issue and assist industry and customers to understand and engage in this process.