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Australia's new energy future: the smart meter churn and burn

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This article was written by Scott Gardiner and Odette Adams.

The Power of Choice reforms are designed to enable consumers to better understand and to take control of their electricity use (and their electricity bills).  The AEMC's final rule, which commences on 1 December 2017, changes how metering services are delivered.  Retailers will be required to engage a "Metering Coordinator" to provide both hardware and data services to small customers.  Large customers will have the choice of appointing their own Metering Coordinator. The new framework for metering comes into effect on 1 December 2017.

This means that from 1 December, distribution businesses will pass the baton of responsibility for providing the hardware and collecting data from meters to retailers - it being retailers, not distribution businesses, who have the customer-facing relationship with consumers.  The objective being that retailers (and others) will then develop the technologies and products consumers want to help them to get those electricity bills down.  

So, while the rule is in a direct sense focussed on creating competition in the provision of smart meters to consumers, its ultimate goal is to empower the consumer to better manage their electricity consumption and their electricity bills.

Will there be any burn?

The transition is unlikely to be a smooth one, as 1 December may well be coming around more quickly than industry has anticipated – this is where the burn comes in! 

Retailers will be reliant on Metering Coordinators (and the Metering Providers and Metering Data Providers that they engage) for the meter data feed that retailers use to bill customers.  They also need Metering Coordinators to arrange the installation of all their customers' new and replacement meters and to maintain their existing meters.  The price that retailers (and ultimately customers) will pay for these services, as well as a lot of the detail on how they will be provided, has been left to the retailers and Metering Coordinators to agree contractually.  

So, come 1 December, will enough of the retailers have negotiated and entered into contracts with enough Metering Coordinators to make sure that this big experiment works?  If they haven't, the risk is that consumers could face lengthy delays and uncertain prices (indirectly) for metering services from 1 December.  Distribution businesses, retailers and the regulator may all need to be flexible and conciliatory over the next few months at least, as the new Metering Coordinators get appointed and find their feet commercially.

What will happen when old accumulation meters need replacing en masse?

The big test for retailers and the new Metering Coordinators will be when a distribution business identifies a so-called "family failure" of the old, accumulation meters (ie a whole fleet of meters, which could run into the thousands, which are reaching their end of life and need to be replaced). Under the new arrangements, the retailer is obliged to "promptly appoint" a Metering Coordinator to replace these meters. The Metering Provider is then required to replace the meters within 10 Business Days. There could be some more, yes you guessed it, burn coming up here too!

Will the Metering Coordinators agree to these appointments if they have serious doubts about their ability to install this number of meters within such a short time frame? If they do not, will the distribution businesses continue to provide services to the retailers? What role will the regulator play?

Back to the $64 question. Will consumers' electricity bills come down? 

Will this big experiment actually deliver consumers better and cheaper services?  Only time will tell, but if the competition works as AEMC intends, it certainly should. 

One of the key features of the smart meters is their ability to be read, energised and de-energised remotely.  In theory, this should save the costs associated with  ubiquitous quarterly meter-reads, as well as technician call-outs and fees for customer disconnections and (re)connections.   

The real benefit to customers and the long term goal of this whole exercise, should be the cool new technologies and products developed to take advantage of the smart meters.  If what we have seen in Europe is anything to go by, these technologies will enable consumers to better manage their consumption and lower their electricity bills.  Over time these technologies will even enable consumers to automatically manage their consumption to make the whole savings process largely painless, or, one might say 'burnless'.  We all look forward to that day!

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