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Demand Response: Informed and Empowered Consumers versus Consumer Protection

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Susanne Wixforth, of the Austrian Chamber of Labour, presents at the Vienna Forum on European Energy Law, 2014

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Demand Response: Informed and Empowered Consumers versus Consumer Protection

  1. 1. www.arbeiterkammer.at Demand response: informed and empowered consumers versus consumer protection Susanne Wixforth Austrian Chamber of Labor
  2. 2. www.arbeiterkammer.at Introductory remarks The Austrian Federal Chamber of Labour is the legal representative of 3,2 million employees and consumers in Austria. We take the view that consumer protection and information are a pre-condition to their empowerment.
  3. 3. www.arbeiterkammer.at What is the meaning of empowerment? From a societal point of view, empowered consumers should be able to reduce their electricity consumption as much as possible without loss of convenience. From a consumer´s point of view, empowerment means a cost reduction for comfortable energy consumption. Both concepts put together bring the EU closer to its 20-20-20 energy targets.
  4. 4. www.arbeiterkammer.at Don´t consumers care about prices? No switching – consumption at the wrong time that is the peak time. Awareness of households about energy prices and energy efficiency is high, BUT Consumers are not professional energy experts who have the knowledge and time to closely study every day´s price peaks of electricity. Also, the change of provider is not comparable to the change of a brand: It is a contract of continuing obligations providing a service of general interest.
  5. 5. www.arbeiterkammer.at Sequence of equipment cascade Does the consumer dispose of energy efficient infrastructure, that is an insulated house/apartment, energy efficient windows, energy efficient domestic devices? Does he dispose of the sufficient high income to establish such infrastructure? Second question: Is the consumer connected to receive e-bills and e-information? Is the consumer at this stage ready for the installation of a smart meter to manage his demand?
  6. 6. www.arbeiterkammer.at Smart meter offers a data flow on household consumption every 15 minutes subject to prior agreement. The consumer will be overnewsed about his power consumption but underinformed about the most effective way to save power. Therefore, the third step must be the energy advice offered by professionals, preferably by trusted bodies. Only at that later stage the installation of a smart meter might deliver: Reduction of energy use on the one hand and reduction of the energy bill on the other.
  7. 7. www.arbeiterkammer.at Who will foot the bill? Whereas the EU-directive foresees an 80% roll out by 2020, Austria implements a roll-out of smart meters of 95% by 2019. The total cost for this investment is estimated up to 1,5 billion Euros. According to the German Energy Agency, the cost per household will amount from 60 Euros up to 240 Euros per year, whereas the benefits will total between 9 Euros and 42 Euros depending on the consumption.
  8. 8. www.arbeiterkammer.at Can this amount be gained by demand response? A study (Ernst&Young) commissioned by the German Ministry of Economics concludes: For users with low power consumption the installation cost for smart meters are higher than the achievable energy savings. Only about 15% of household consumers, whose energy consumption is above average, will derive profits from the roll out. Why? Flexibility of demand response is limited, even if the off peak tariffs might be very preferential.
  9. 9. www.arbeiterkammer.at Who devised demand response and what for? Demand response offers precious information to the energy providers. The concept of Demand Side Flexibility has been developed by suppliers to optimize the sourcing costs of their portfolio. It represents a means for portfolio optimization.
  10. 10. www.arbeiterkammer.at Clear allocation of roles Security of supply and capacity management are the core tasks of energy providers. Consumers must be protected against remote disconnection. Households will never become professional electricity dealers or speculators on the blossoming European commodity markets.
  11. 11. www.arbeiterkammer.at Demand side response shall not be redefined in such a way that the households have to offer services instead of the electricity providers.
  12. 12. www.arbeiterkammer.at Which problems have to be tackled? The answer is simple… Easy access, transparency, data protection, balanced financing and equal benefits for households and electricity providers. The road to achievement might be rocky…
  13. 13. www.arbeiterkammer.at Concept for a feasible framework The main and highest priority has to be set on the implementation of energy efficiency measures. Priority to regulation by public order law. For example: obligation that at least 40% of energy efficiency measures bring about positive benefits for households. For special targets, subsidy programs should be established on EU- level for households struck by energy poverty (e.g. means from the European Social Fund).
  14. 14. www.arbeiterkammer.at Personalized energy advice to households by trusted bodies Recast of Austrian smart meters roll-out : Reduction of the roll-out to 80% until 2020 Evaluation of the beneficial effects taking into consideration the technological development. Avoidance of stranded costs for less deployed technologies. The further expansionary path until 2025 should be based on these findings.
  15. 15. www.arbeiterkammer.at Tariffs shall be simple and comparable. A jungle of tariffs blurs the target of lower prices and more competition. Base and time-independent tariff for households, which should be the standard- tariff. Austria´s relevant legal provision in § 81 (7) of the Electricity Act could be a useful starting point for eventually harmonized EU law.
  16. 16. www.arbeiterkammer.at Thank you for your attention! http://wien.arbeiterkammer.at