Briefing paper

Electricity pricing, heatwaves & household vulnerability in Australia

15 Jun 2017

In the context of energy reforms to address peak electricity demand in Australia, this briefing paper provides a critical review of cost-reflective electricity pricing policy and the potential impacts of heatwaves and other extreme heat events in vulnerable households.

It constitutes the first phase of the Heatwaves, Homes & Health research project, funded by Energy Consumers Australia.

In 2012, the Standing Council on Energy and Resources deemed it crucial that the introduction of cost-reflective retail pricing structures ‘be accompanied by appropriate consumer engagement and education for all consumers, and protections for vulnerable consumers’ (SCER, 2012, p.7). The Heatwaves, Homes & Health project will provide critical evidence about the health and financial risks for heat vulnerable households associated with:

 • cost-reflective pricing

• public messaging about peak demand in hot weather

It is widely established that householder concerns about capacity to pay energy bills can lead to self restriction of home heating during cold weather, and negative health, wellbeing, and social outcomes (e.g. Cornwell et al., 2016; Liddell and Morris, 2010). However, impacts of electricity costs on home cooling use and health in hot weather are less well understood. Understanding this issue is important for energy policy to deliver on commitments to protect vulnerable consumers, particularly given potentially disproportionate health and financial risks facing heat vulnerable householders such as the elderly, infants and those with chronic health conditions.

The Heatwaves, Homes & Health project involves three stages of research:

 • Stage 1. Review of existing literature and policy (discussed in this briefing paper)

• Stage 2. An online survey and interviews with informants from the social services sector; and

• Stage 3. Interviews with potentially vulnerable households in Melbourne, Dubbo, and Cairns.

These activities aim to provide insights into:

• household experiences of extreme heat in three different regions and climatic zones;

• dependence on air conditioned cooling, fans and other strategies by vulnerable groups during periods of extreme heat; and

• how pricing, messaging, and programs may impact health and financial risks to heat vulnerable households.

This briefing paper identifies key empirical gaps for the Heatwaves, Homes & Health project to investigate. The paper is organised as follows: • Section 2. Residential air conditioning and electricity sector impacts • Section 3. Health and wellbeing impacts of heat in Australia • Section 4. Consideration of household vulnerability in cost-reflective pricing policy • Section 5. Impact of electricity pricing on heat health practices • Section 6. Impacts of non-financial public messaging about peak demand • Section 7. Conclusion

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