{"data":{"id":"sbm3a5bf5dd837c88409996c","short_id":60,"created":"2026-01-16T08:12:55.555Z","space_id":"spc38bf5a4130666a5ccd765","project_id":"prj38bdad552e555e1c7f990","org_id":"org20ee740c8b3c21feb3566","content":{"zovp5q48":"Origin Energy","upload-a-submiss_9dbd27":"fil3a5bf5cca468c7ac7089a"},"is_topic":false,"title":null,"count_replies":0,"closed":false,"reply_to_id":null,"last_activity":null,"reactions":{},"_files":{"fil3a5bf5cca468c7ac7089a":{"id":"fil3a5bf5cca468c7ac7089a","bucket":"files-au-climate","remote_path":"climate-au/p/prj38bdad552e555e1c7f990/submission/spc38bf5a4130666a5ccd765/Origin_Energy_SSO_submission_redacted.c428bbc0.pdf","url":"https://storage.googleapis.com/files-au-climate/climate-au/p/prj38bdad552e555e1c7f990/submission/spc38bf5a4130666a5ccd765/Origin_Energy_SSO_submission_redacted.c428bbc0.pdf","filename":"Origin_Energy_SSO_submission_redacted.pdf","transcribed":"21 November 2025\n\nMs Kirsty Gowans\nHead of Electricity Division\nDepartment of Climate Change, Energy, the Environment and Water\nCanberra ACT 2600\n\nEmail: SolarSharerOffer@dcceew.gov.au\n\nDear Ms Gowans,\n\nSolar Sharer Offer\n\nOrigin Energy (Origin) appreciates the opportunity to provide comments on the Department of Climate\nChange, Energy, the Environment and Water’s (DCCEEW) proposed Solar Sharer Offer (SSO) tariff.\n\nOrigin supports efforts to improve affordability and equity throughout the energy transition, particularly for low-income households and renters. Encouraging energy use during relatively low demand periods can help customers realise cost savings while also supporting efficient market operations. It should be noted, however, that there are already market driven initiatives aligned with these objectives including customer participation in virtual power plants (VPPs) and various retailer offerings. Adopting a mandatory approach carries the risk of unintended consequences for low-income households—the very group this policy aims to benefit—as well as for the broader market. It is therefore imperative the SSO is carefully designed to mitigate these risks.\n\nEnergy is not costless, regardless of what time of the day it is delivered. Even during periods of low demand or excess supply, retailers incur wholesale, network and retail operating costs. To ensure the market functions effectively and efficiently, retailers must be able to recover the costs they incur in providing energy during the designated zero-cost period.\n\nCustomer uptake of the SSO and the level of demand within the zero-cost period will be key determinants.\nThe more load consumed during the zero-cost period, the greater the costs that will need to be recovered through the tariff applied for the remainder of the day.\n\nWe are also concerned about potential unintended consequences. Customers who can consistently shift load into the zero-cost period will likely be better off because their savings will outweigh the required tariff increase in the non-free period. In our experience, these are likely to be high-income households with flexible load, smart appliances and batteries. Conversely, lower-income households or customers who rent tend to have less discretionary load. These impacts will need to be monitored on an ongoing basis to inform a future review of the SSO’s performance.\n\nPrice signals play an important role in incentivising the efficient use of energy. Creating incentives for a customer to potentially access unlimited zero-cost energy may result in the installation of oversized batteries. This could exacerbate the required increase in the tariff outside of the free period. It could also create a substantial volume of demand and supply that is not visible or predictable could undermine system stability.\n\nTo mitigate these risks, Origin considers the following design features to be crucial:\n\n• Ensure retailers recover the costs incurred in providing energy in the zero-cost period in the SSO\ntariff that applies over the remainder of the day. This should be informed by detailed analysis and\nmodelling to determine a robust forecast of likely uptake of the SSO and how it will impact usage\npatterns.\n• Cap the amount of load that is eligible for zero-cost because this will reduce the incentive for\ncustomers to shift excess usage into this period and thereby limit the amount of costs to be\nrecovered in the non-free period. Capping dilutes the incentive to over-invest in batteries, lessens\nthe potential financial downside for those customers who are unable to shift sufficient load, and is\nmore likely to support a manageable transition to a smoother system load profile.\n• Align network tariff structures with the SSO tariff: Aligning the structure of network tariffs with the\nSSO (so they both have the same zero-cost window) would allocate the risk of network cost-\nrecovery with the party best able to manage this risk, which are the network businesses. The AER\ncould approve these network tariffs and any under or over recovery through its annual network\npricing approval process. This would add transparency and greater price stability.\n• Eligibility should be limited to those households without a battery. This will limit the risk of over-\nsubscription that could result in too much load being moved into the zero-cost period and would\ntherefore reduce the risk of price distortions and system instability.\n• There needs to be greater functionality within Energy Made Easy (EME) to enable customers to\nmake informed comparisons of the SSO with other products, especially the default market offer\n(DMO).\n• Include in the DMO Code the requirement to review the performance of the SSO at a predetermined\ntime (e.g. 2 years). This review should include but not be limited to assessing the effectiveness of\nthe SSO in meeting its stated objectives, whether it has undermined the effectiveness of other\npolicy reforms, and its impact on the retail market and the energy transition.\n\nWe discuss these issues further detail in Appendix 1. If you have any questions regarding this submission, please contact Sean Greenup in the first instance on or\n.\n\nYours sincerely\n\nSteve Reid\nGeneral Manager, Regulatory Policy\n\n2\nAppendix 1\n\n1. Cost of energy during the zero-cost period\n\n[1] Retailers incur costs for the supply of electricity regardless of what time of the day it is delivered.\nThese costs include wholesale (both hedging cost and energy purchase costs), networks costs, and\nretail/residual costs. We discuss the nature of these costs further below, having regard to the\nunderlying premise of the proposed SSO and associated free energy period.\n\n1.1 Wholesale costs\n\n[2] Energy purchase costs are incurred by a retailer when procuring energy from the NEM spot market\nto satisfy their customer demand. To manage exposure to spot price volatility and variable load,\nretailers will enter into hedging arrangements on a forward basis. In practice, retailers will adopt a\nmix of hedging strategies (e.g. utilise owned generation, power purchase agreements, over-the-\ncounter contracts and financial derivatives). This hedging results in customers paying a stable\naverage price and means providing wholesale energy is not costless regardless of when it is\nsupplied.\n\nThis is reflected in the methodology used to determine wholesale energy costs (WEC) for a\nbenchmark retailer under the DMO. The DMO methodology assumes retailers build a portfolio of\nhedges on a forward basis (e.g. two to three years ahead of time). Base contracts are procured to\ncover the 50-60th percentile estimate of off-peak demand (depending on the network), and 100 per\ncent of median annual peak demand.1 This approach means the benchmark retailer would have\nsome financial exposure to energy (i.e. sub $300/MWh) prices should demand exceed the expected\n/ median outcome, but we consider a prudent retailer would likely seek to hedge this risk to an even\ngreater extent in practice.\n\n[3] Even if only considering exposure to the spot price (i.e. discounting the idea that retailers incur\nhedging costs), it is clear wholesale procurement costs would still be incurred. While spot prices can\nbe negative during low demand periods in the middle of the day (e.g. between 11am and 2pm), on\naverage they are positive. This is demonstrated in Table 2 below, which shows the average spot\nprice between 11am and 2pm for FY 24 and FY25 was positive across all DMO regions except for\nSA in FY25. This is consistent with the fact that negative prices occur relatively infrequently,\naccounting for only 10, 16 and 29 per cent of trading intervals in NSW, Qld and SA in FY25.2\n\nTable 2: Average Actual Pool Prices between 11am and 2pm ($/MWh)\n\n$/MWh NSW QLD SA\nQ3 - 2023 $15 ($18) ($9)\nQ4 - 2023 $21 ($4) ($11)\nQ1 - 2024 $46 $42 ($31)\nQ2 - 2024 $59 $3 $71\nFY 24 $35 $6 $5\nQ3 - 2024 $24 ($7) $6\nQ4 - 2024 $54 $11 ($35)\nQ1 - 2025 $22 $11 ($20)\nQ2 - 2025 $34 $18 $38\nFY 25 $33 $8 ($3)\nSource: Origin analysis\n\n[4] Spot prices can also reach materially higher levels during the middle of the day depending on market\ndynamics, as experienced in 2022. Diagram 2 below shows NEM spot prices averaged $200/MWh\nin July 2022. As noted by ACIL Allen, it is this exposure to spot price volatility that drives retailer\n\n1\nACIL Allen, Default Market Offer 2025-26 – Wholesale energy and environment cost estimates for DMO 7 (Final Determination), 26\nMay 2025, pg. 69.\n2\nOrigin Energy analysis.\n\n3\nhedging on a forward basis, which as noted above, gives rise to costs regardless of when energy is\nconsumed.\nDiagram 1: Wholesale spot prices for second quarter FY23 ($/MWh)\n\nSource: AEMO Quarterly Energy Dynamics Q3 2022, October 2022.\n\n[5] The potential frequency of zero / negative price intervals over time is also highly uncertain. In its\nrecent WEC determination for DMO 7, ACIL Allen noted material growth in utility scale storage\ncapacity could soak up excess solar generation during daylight hours and stabilise price outcomes,\nlimiting the propensity for further increases in the negative price outcomes.3\n\nImpact on wholesale market dynamics\n\n[6] One of the objectives of the SSO is to shift consumer demand away from peak periods to flatten the\ndemand curve and thereby reduce the need for higher cost peaking generation while improving\nsystem security and decreasing risk management (hedging) costs for retailers.4\n\n[7] The ability of the SSO to significantly reduce hedging costs will be determined by whether it will\nimpact peak demand because when setting the DMO, the AER assumes a retailer will buy enough\ncap contracts to meet median peak demand in each quarter.\n\n[8] However, relying on the SSO would not be a prudent strategy to manage exposure to wholesale\nmarket volatility. There is no guarantee or evidence to suggest that it will shift load from the evening\npeak into the zero-cost window. It is just as likely that load will be shifted more evenly from the\nmorning, late-afternoon, and the evening peak. If this occurs, hedging costs will not materially change\nbecause there has been no notable reduction in the evening peak.\n\n[9] Furthermore, the SSO has not been developed or costed and is unlikely to be finalised until just\nbefore it is to take effect on 1 July 2026. By that time retailers will have already put in place their\nhedging portfolio and therefore the SSO will have no impact on wholesale costs for at least its first\nyear of operation.\n\n[10] Detailed analysis is needed to better understand the impact of the SSO on load and how this will\nimpact peak load and whether it will deliver wholesale cost benefits in the long-term.\n\n3\nACIL Allen, Default Market Offer 2025-26 – Wholesale energy and environment cost estimates for DMO 7 (Final Determination),\n26 May 2025, pg. 54.\n4\nDCCEEW, Solar Sharer Offer (SSO) Consultation Paper 2025-26, p. 20.\n\n4\n1.2 Network costs\n\n[11] To demonstrate how network costs are incurred, Table 3 shows the network tariffs that are allocated\nto a customer when they install a smart meter. These costs include a daily fixed charge and peak\nand off-peak usage charges. In the case of Endeavour, they can include addition parameters such\nas seasonal peak tariffs.\n\n[12] Fixed network charges are recovered from customers through the fixed daily supply charge. As a\nresult, the recovery of these costs will not be impacted by the SSO. Similarly, peak charges are\nrecovered during the peak charging window and will also not influence the calculation of the SSO.\nHowever, off-peak and in some instances shoulder charges will be captured by the zero-cost period.\nThese are shaded in Table 3 below. The design of the SSO will also need to consider how recently\nintroduced network export charges will be assessed, especially as these may include a negative\ncharge i.e. customers are charged for exporting under certain conditions such as during a minimum\ndemand period.\n\nTable 3: AER approved default network charges for 2025-26\nHigh Low Network DER Export\nFixed Solar soak\nPeak season season Shoulder Off-peak demand export charge\nNetwork Charge energy\nc/kWh peak peak c/kWh c/kWh price rebate c/kWh\nc/day c/kWh\nc/kWh c/kWh c/kW/day c/kWh\nAusgrid 55.49 2.43 2.43 38.49\n\nEssential 137.76 16.95 5.85 -11.57 0.82\n\nEndeavour 59.66 21.80 13.84 3.43 10.49\n\nEnergex 51.8 19.37 4.87 0.48\n\nSAPN 61.85 18.95 4.74 9.47 1.0\nSource:\nAusgrid - AER - Consolidated stakeholder report 2025–26 v5 .xlsx\nEssential Energy - Essential Energy Price List & Explanatory Notes 2025-26_FINAL_v2_20250625\nEndeavour Energy - AER - Consolidated stakeholder report 2025–26 v5 .xlsx\nEnergex - AER - Consolidated stakeholder report 2025–26 v5 .xlsx\nSAPN - AER - Consolidated stakeholder report 2025–26 v5 .xlsx\n\n1.3 Retail and Residual costs\n\n[13] Most retail costs are fixed costs, however there are some retail costs that are recovered on a usage\nbasis. In addition, the retail margin is also applied to the whole retail cost stack including the variable\ncost component. This margin is important because it acts as a safety net enabling retailers to absorb\nsome additional costs as they arise due to inconsistencies between the DMO and actual costs faced\nthroughout the year. This is particularly important given the risk other DMO cost stack components\nmay underestimate actual costs faced by some or all retailers – an inevitable risk given the retailer\npool is diverse, and market dynamics and costs cannot be fully anticipated.\n\n1.4 Total costs\n\n[14] To provide an indication of the magnitude of these costs, Origin has estimated the average cost per\ncustomer of providing energy between the hours of 11am and 2pm based on our current residential\nload profile and assumed no load is shifted. The results of our modelling are presented in Table 4.\nThis shows that the costs of supply range from $90.61 (SAPN) to $240.98 (Endeavour). For\ncompleteness we have also provided estimates of the required increase in the variable retail tariff\nthat would need apply in the other times of the day to ensure that all costs are recovered.\n\n5\nTable 4: Average annual Origin costs of supply small customer during the time period 11am to 2pm\nNetwork\nUsage (kWh) WEC ($ exc Residual ($ Increase in non-\nNetwork Costs ($ exc Total Costs\n11AM to 2PM GST) exc GST) zero tariff\nGST)\nAusgrid 572 $29.49 $107.66 $68.28 $205.43 11.01%\n\nEssential 458 $65.28 $87.79 $58.90 $211.98 11.21%\n\nEndeavour 537 $76.43 $106.68 $57.88 $240.98 12.41%\n\nEnergex 571 $2.72 $100.81 $43.36 $146.89 7.80%\n\nSAPN 338 $16.06 $70.51 $4.05 $90.61 5.31%\nSource: Origin analysis\n\n[15] Diagram 2 provides a breakdown of Origin’s customer load profile and average costs of providing a\ncustomer throughout the day in the Endeavour network. While the cost of supplying the customer is\nat its lowest during the hours of 11am to 2pm, it is nevertheless on average about $40/MWh.\n\nDiagram 2: Load profile and cost for average residential customer on an Endeavor TOU tariff\n\nREDACTED\n\nSource: Origin analysis\n\n[16] We consider that the SSO would also increase basis risk for retailers because there will be a\ndisconnect between when retailers incur costs during the zero-cost period and when and how these\ncosts are recovered at other times. This risk could be material during winter periods when the impact\nof solar PV on demand is typically reduced (meaning a lower likelihood of negative price periods\noccurring) and further increase the challenges of operating in the retail market, noting consideration\nis separately being given to further reducing allowable margins under the DMO.\n\n[17] To address the risk of cost under-recovery, the SSO should be designed to ensure retailers recover\nthe costs incurred in providing energy in the zero-cost period in the SSO tariff that applies over the\nremainder of the day. To identify these costs, it will be necessary to undertake detailed analysis and\nmodelling to develop robust forecasts of the likely uptake of the SSO tariff in terms of both customer\nnumbers and the shifting of load into the zero-cost period.\n\n2. Potential unintended consequences of the SSO\n\n2.1 Impact on customers\n\n[18] The costs set out in Table 4 provide an estimate of the costs that will need to be recovered in the\nnon-free period based on Origin’s customer load profile.\n\n[19] Customers who can consistently shift load into the zero-cost period will likely be better off because\nthe savings from their free usage will more than offset the required tariff increase in the non-free\nperiod.\n\n[20] It is difficult to identify which customers and how many are likely to take up the SSO and then respond\nin a positive way to the price signals because there is a lack of historical data on dynamic price\nresponsiveness.\n\n6\n[21] A recent study by Energy Consumers Australia of more than 4,000 households found that a third of\ncustomers on TOU tariffs do not change their usage behaviour to save money.5 This is broadly\nconsistent with the consumer behaviour Origin has observed with our dynamic based rewards\nproduct call Spike. 6\n\n[22] The ECA also found that renters and lower-income households are also less likely to have access to\nelectric appliances like dryers and dishwashers, resulting in lower discretionary loads. On the other\nhand, more engaged consumers who were interested in having greater choice, control, or flexibility\nover how they use and manage their energy consumption were more likely to be higher income\nhomeowner households with existing solar systems. The ECA also found that peak demand\nreductions are much higher for households that can access enabling technologies.7\n\n[23] We believe this highlights a risk that those customers who are most likely to respond to the SSO\nprice signals will be higher income households with greater ability to shift load. On the other hand,\nlower-income households or customers who rent have less discretionary load.\n\n[24] To address the risks that lower socio-economic households could be exposed to higher prices we\nconsider the following constraints to the SSO could be applied:\n▪ Cap the amount of load that is eligible for zero-cost because this will reduce the incentive for\ncustomers to shift excess usage into this period and thereby limit the amount of costs to be\nrecovered in the non-free period. Capping dilutes the incentive to over-invest in batteries, lessens\nthe potential financial downside for those customers who are unable to shift sufficient load, and\nis more likely to support a manageable transition to a smoother system load profile.\n▪ Limit eligibility to those households without a battery. This will limit the risk of over-subscription\nthat could result in too much load being moved into the zero-cost period and would therefore\nreduce the risk of price distortions and system instability.\n\n[25] There also needs to be greater functionality within EME to enable customers to make informed\ncomparisons of the SSO with other products, especially the DMO.\n\n[26] To address potential unintended outcomes persisting, we consider there should be a requirement to\nreview the performance of the SSO at a predetermined time (e.g. 2 years). This review should include\nbut not be limited to assessing the effectiveness of the SSO in meeting its stated objectives, whether\nit has undermined the effectiveness of other policy reforms, and its impact on the retail market and\nthe energy transition.\n\n2.2 Impact on energy efficiency\n\n[27] There has been a concerted effort by State governments to promote energy efficiency including\nproviding financial incentives to households and business for installing energy-efficient products such\nas LED lighting and heating and cooling systems.8\n\n[28] These schemes are underpinned by the objectives of meeting state-mandated emissions targets.\nThe Federal government also has a legislated target to reduce greenhouse gas emissions to net\nzero by 2050.\n\n[29] The SSO creates an incentive to increase consumption rather than reducing it. To the extent that it\ncreates excess demand beyond current solar discharge during the day, this is likely to be met from\nbase load coal and gas generation.\n\n5\nEnergy Consumers Australia, Consumer knowledge of electricity pricing and responsiveness to price signals, January 2025, p. 5.\n6\nWe notify a customer of an upcoming “Spike Hour” by email, SMS or push notification. The customer is encouraged to switch loads\nfrom appliances such as heaters and dishwashers etc. If the customer stays below their target based on their historic use, they are\nrewarded with one hour of free energy at a time of their choice (except for peak times of 4pm to 9pm).\n7\nEnergy Consumers Australia, Consumer knowledge of electricity pricing and responsiveness to price signals, January 2025, p. 8.\n8\nFor example, see the NSW Energy Savings Scheme and the Victorian Energy Upgrades scheme.\n\n7\n3. Other Free Price Period tariffs\n\n[30] DCCEEW has highlighted the emergence of Free Price Period (FPP) products in the Australian\nmarket.\n\n[31] A key feature of these FPP products is that they have higher off-peak charges to recover costs for\nthe energy supplied in the “free” window. This is a feature that is also necessary for the SSO to\ninclude. In addition, these products have other key conditions to manage risk including capped free\nusage, pre-payments, or the need to join the retailer’s virtual power plant scheme (VPP). In Australia,\nthe FFPs are also generally aligned with a network ‘solar sponge’ tariff.\n\n[32] A summary of FPP tariffs and associated conditions are provided in table 5.\n\nTable 5: Free Price Period products\n\nProduct Region Conditions\n▪ Not for excessive or non-household use\nAGL Three for Free SA ▪ If home battery, it must be supplied by AGL and\nconnect to AGL’s VPP\nGloBird Four4Free* NSW, QLD, SA ▪ Standard energy circuits only\n▪ Eligible solar-battery system\nGloBird Zero Hero NSW, QLD, SA ▪ Must participate in GloBird’s VPP\n▪ Excludes premises with life support\n▪ General usage only\nOvo The Free 3 NSW, QLD, SA\n▪ Pre-payment required\nOvo The Basic Free 3 NSW, QLD, SA ▪ General usage only\n▪ Must own EV registered to same address\nRed EV Saver ACT, NSW, QLD, SA ▪ If solar generation, must use own solar first to meet\ndemand in free period\n▪ Free energy capped at 150/kWh during the week and\nContact Energy Good capped at 200/kWh on weekends\nNew Zealand\nPlans ▪ Free energy products have a higher usage charge\nthan other Contact Energy products\n* We have considered ‘Four4Free’ as the ‘Free lunch’ product referenced in the consultation paper was no longer available on the\nAER’s Energy Made Easy website. All of these companies clearly state these products are market offers that can be discontinued with 20 business days’ prior notice.\n\n[33] A challenge for customers in understanding whether they will be better off under a FPP tariff is their\nability to meaningfully compare these to other tariffs. While EME provides an indicative cost of the\nFPP it does not provide a comparison to the default market offer for a comparable assumed usage.\nComparisons are also challenging because the benefit of FPP tariffs rests with the ability of the\ncustomer to shift load into the free period. Based on our analysis using EME we have observed that\nFPP tariffs are notably higher than the retailer’s best offer. Consistent with our analysis above, this\nsuggests that the only way these products work is for the prices in the non-free periods to be higher\nso that the retailer can recover all of their costs.\n\n[34] Internationally, in the USA, premiums are typically charged for free price products. At the extreme\nReliant Retail in Texas charges customers more than double its standard tariff offer outside of the\nnon-free period. Reliant Retail and Direct Energy (Texas) lock customers in with 12- or 24-month\ncontracts and impose material exit fees which they state allows them to manage their risks and lock\nin hedge contracts.9\n\n9\nA Guide To Free Nights and Weekends Electricity | Direct Energy (accessed 28 November 2025)\n\n8\n[35] In New Zealand, Contact Energy caps consumption during the free price periods under its ‘Fair use\npolicy’ to avoid unreasonable or overly excessive use during that time. 10\n\n4. Interactions with other reforms\n\n[36] There are several major reviews either currently underway or have recently been finalised and are\nin the process of being implemented such as the AEMC’s pricing review. These reviews have been\ntasked with examining pricing reform and the impact of CER. Given the inter-related nature of these\nreforms, we consider that the SSO should be informed by these outcomes as part of any future\nreview of the SSO.\n\n10\nThis is defined specified in the ‘Contact residential plan special terms and conditions’ on its website.\n\n9","size":342533,"redacted":[],"meta":{"name":"Origin_Energy_SSO_submission_redacted.c428bbc0.pdf","local_path":"files/seVL_uZT8sEjzvcrBVdgHXr0.pdf","transcribe_error":null,"transcribe_status":null},"config":{}}}}}