Our Two Cents: Metering competition: risking the benefits of Victoria’s Advanced Metering Infrastructure

The Victorian Government is consulting on a move to adopt the national framework for metering competition from December 2017. Its preferred position outlined in an options paper released in October is for competition to be introduced, but with metering requirements that match the current capability of Victorian meters installed through the Government’s mandated Advanced Metering Infrastructure (AMI) rollout.

Consultation on the options paper closed in November. Our joint submission arguing for the introduction of metering competition to be deferred can be found here.

The rollout of smart meters in Victoria was largely completed in 2014 at an estimated cost of $2.24 billion.[1] Despite this, two years later most of the benefits of smart meters are still yet to be realised. There is a risk that a move to adopt the national competitive metering framework in Victoria will further delay these benefits being realised, and may even result in additional costs to households.

Why move to competitive metering?
Competitive metering is designed to facilitate the greater uptake of smart meters, which in turn will allow for:

consumer benefits including access to data, innovative tariffs and demand management products
industry benefits that come from enhanced network management and planning, and operational efficiencies.
Regardless of whether Victoria adopts the competitive metering framework, the base infrastructure for all those objectives to be realised is already in place.

The underlying rationale for a competitive framework is that it will lead to meters being installed at a lower overall cost and will encourage innovation. However, Victoria’s AMI rollout means that most of these cost benefits cannot be realised. Further, flexibility around the metering specifications (to encourage innovation) means that customers will face new risks that may jeopardise the realisation of existing and promised future customer benefits of the AMI rollout.

A better approach for Victoria
We consider that, instead of introducing metering competition at this time, the primary focus for Victoria should be working out how to provide customers with the most benefit from the AMI rollout that they have already paid for.

While progress is being made on the realisation of network operational efficiencies, and networks are finding uses for smart meter data that were not originally contemplated at the time of the rollout, a stable framework is needed to allow for continued gains in this area. Metering competition introduces a degree of uncertainty around data access and systems that will impede further development.

Benefits that require customer engagement are largely unrealised. This is partly due to a lack of effort by energy businesses: retailers have largely chosen not to offer innovative products and services and to promote time of use tariffs, and distributors have no incentive (or obligation) to invest in giving third parties access to meter functions. But communication by government has also failed to bring consumers along with the changes. For example, the recent Energy Consumers Australia Energy Consumer Sentiment research (July 2016) found that 38 per cent of Victorian consumers are unaware that they already have smart meter.

The Victorian Government should develop a new public education campaign that focuses on how customers can take advantage of new data and functionality from their meters. The Government should also explore whether there are any barriers to retailers or third parties accessing meter data and functionality. Options to address any access issues could include an access regime for third parties to request data, and requirements for distribution businesses to provide customers with access to their interval data directly through Victoria Energy Compare (and through other energy usage tools and resources) so that they can more easily assess retail offers.
[1] Victorian Auditor-General’s Report, Realising the Benefits of Smart Meters, September 2015.

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