Metering Competition within the Australian Regulatory Framework
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1 Metering Competition within the Australian Regulatory Framework Maria Cugnetto Metering Billing CRM/CIS Conference Barcelona, EUROPE Tuesday 20 September 2005 Cugnetto Consulting 1
2 Metering Competition Australia Cugnetto Consulting 2
3 Metering Competition Regulatory Reform Responsibility for Metering Services Interval Meters Cugnetto Consulting 3
4 Australia WA NT SA Queensland NSW VIC ACT TAS Cugnetto Consulting 4
5 Regulatory Reform Deregulation of Australia s Energy Markets National Electricity Market (NEM) Basslink Further developments Restructuring of NEM Australian Competition & Consumer Commission (ACCC) NEMMCO Further reform from July 2004 Cugnetto Consulting 5
6 The Electricity Market - Before Competition S T A T E Generation Transmission M Distribution M Customers J U R I S D I C T O N State / Jurisdictional control Vertical integration Regulated tariffs Monopoly services (including metering) Franchise customers
7 The Electricity Market - Before Competition Generation & Transmission Distribution Network Poles-Wires & Substation Design & Construction Retail & Billing Metering & Meter Reading + Revenue Protection Jurisdictional Control Vertically Integrated Regulated Tariffs Monopoly Services Franchise Customers Franchise Customers
8 The Electricity Market - Before Competition Metering Perspective Electricity Distributor Metering Service Provider Customer
9 National Electricity Market Wholesale market since Dec 1998 Operates eastern Australia WA is not interconnected Tasmania to join completion of Basslink Objectives Increase competition between businesses Provide choice for electricity customers Cugnetto Consulting 9
10 Basslink Interconnector between Tasmania & Victoria Commissioned by summer 2005/06 Will export max 600 MW power Will import max 300 MW to Tasmania 350km electricity cable, 295km undersea cable Cugnetto Consulting 10
11 Further developments restructuring of NEM Reform initiatives Dec 2003 MCE SCO COAG Markets Study Establish 2 new national energy market institutions AER Australian Energy Regulator AEMC Australian Energy Market Commission Elimination of inconsistencies Cugnetto Consulting 11
12 Regulatory Framework from July 2004 Federal Government QLD Government NSW Government ACT Government VIC Government SA Government TAS Government AEMC NATIONAL ELECTRICITY LAW NATIONAL ELECTRICITY CODE AER NATIONAL ELECTRICITY MARKET NEMMCO ACCC AUSTRALIAN COMPETITION TRIBUNAL FEDERAL COURT
13 NEMMCO National Electricity Market Management Company Independent market operator Responsibilities day to day operation Power system Wholesale spot market Financial settlement of all wholesale transactions Cugnetto Consulting 13
14 Transition To NEM Responsible Person Host Network & Retail NEMMCO MDA NEM NEM MP Customer 2nd Tier 1st Tier Franchise Host Customer Metering Host Meter Read NEM Retailer
15 The Electricity Market Full Retail Contestability National Electricity Market Generators Metering Transmission States / Jurisdictions Customers Retailers Networks
16 The Electricity Market Full Retail Contestability Metering Perspective Networks Regulators Metering Service Provider Customers Auditors Retailers Brokers
17 Further reform from July 2004 AEMC Australian Energy Market Commission Responsible for rule making & market development Initially for wholesale electricity & transmission networks By 30/6/05 for gas transmission & distribution networks By 31/12/06 electricity & gas distribution & retail markets Not retail pricing Cugnetto Consulting 17
18 Further reform from 2004 AER Australian Energy Regulator Responsible for economic regulation Initially for wholesale electricity & transmission networks By 30/6/05 for gas transmission networks & enforcements of National Gas Access Code By 31/12/06 electricity & gas distribution networks & retail markets Not retail pricing Cugnetto Consulting 18
19 Full Retail Market With Churn Gas MP B MP C RP- A Network Water Network Network RP - B Customer C MDA MP Customer Customer Metering competition A A A B Retailer B Network Multi Utility Retailer A Retailer C RP - C MDA C MDA B Electricity
20 Metering Services Move towards national consistency Unwind current complex arrangements for metering services Equitable arrangements should apply across customers First tier 2 nd tier Cugnetto Consulting 20
21 Responsibilities Utility meters National Measurement Institute National Measurement Act 1960 National Measurement Regulations 1999 NEMMCO Metrology Procedures for metering installations Types 1-4 Each Jurisdiction / State Metrology Procedures for metering installations Types 5-7 Cugnetto Consulting 21
22 Meter Types Type 1 4 Electronic meter generally CT Half hour interval meter Read by telephone Type 5 Electronic meter Half hour interval meter Read by meter reader using probe Type 6 Basic meter Read manually by meter reader Type 7 Unmetered eg. Street lights Cugnetto Consulting 22
23 Responsibility for metering services Consumption First Tier Second Tier >160 MWh per annum Accumulation meter is min req Jurisdictional Code regulates Responsibility: DISTRIBUTOR Interval meter Type 1-4 is min req NEC regulates Responsibility: RETAILER <160 MWh per annum Accumulation meter is min req Jurisdictional Code regulates Responsibility: DISTRIBUTOR Metering installations Types 4,5 or 6 Jurisdictional Metrology Procedure regulates Responsibility: DISTRIBUTOR for Types 5 & 6 via derogation RETAILER for Type 4 Cugnetto Consulting 23
24 Joint Jurisdictional Review Increased competition in metering services desirable Large customers, benefit from innovations Small customers, distributors exclusively responsible for metering services Cugnetto Consulting 24
25 Responsibilities: FINAL recommendation Competitive metering services First Tier Jurisdictional decision > z MWh per annum Metering installation type 1, 2, 3 or 4 Second Tier Customers with a metering installation type 1,2,3 or 4 Distributor responsible < z MWh per annum not a metering installation type 1, 2, 3 or 4 Customers with a metering installation type 5, 6 or 7 Cugnetto Consulting 25
26 Interval meters Victoria mandatory rollout Commencing 2006 For regulated customer classes Cugnetto Consulting 26
27 Interval meter roll out Customer class Consumption per year Interval meters to be installed by New & replacement installations commencing in All large customers > 160 MWh All small business & large residential customers with off-peak or 3 phase metering < 160 MWh & > 20 MWh All small business & large residential customers with off-peak or 3 phase metering < 20 MWh All small business & residential single phase, non-off peak metering 2008
28 Benefits of interval meters Increasing overall market efficiency More demand management Customers More accurate settlement Removal of energy cost cross-subsidies between customers Improved equity Cugnetto Consulting 28
29 The way forward New direction & reform to Australian energy market Remove duplication Strengthen competition Encourage investment Competitive metering Cugnetto Consulting 29
30 Metering Competition within the Australian Regulatory Framework Maria Cugnetto Metering Billing CRM/CIS Conference Barcelona, EUROPE Tuesday 20 September 2005 Cugnetto Consulting 30
31 Metering Competition within the Australian Regulatory Framework Maria Cugnetto Metering Billing CRM/CIS Conference Barcelona, EUROPE Tuesday 20 September 2005 Cugnetto Consulting 31
32 Type 1-4 Type 1 Volume Limit per annum per connection point >1,000 GWh to 1,000 GWh to < 100 GWh 4 < 75 MWh HV customers with VT must meet relevant accuracy reqments of Type 3 metering for active energy only Cugnetto Consulting 32
33 ACCC Derogation Decision Derogation to Chapter 7 of NEC Metering exclusivity to distributors for Types 5-7 meters Application for extension through to 31 December 2006 Final ACCC determination for NSW- 2 March 2005 Any interval meter that incorporates meter reading capabilities, irrespective of how frequently it is remotely read will not be subject to the derogation Cugnetto Consulting 33
34 Deregulation of Australia s Energy Markets Prior to 1990s Electricity supply was responsibility of utility authorities Little interconnection between networks No effective competition Hilmer Report Published May 1991 Recommended reform Objective to increase national productivity Cugnetto Consulting 34
35 ACCC Australian Competition & Consumer Commission To retain responsibility for: Competition regulation Trade Practices Act 1974 Industry access code approvals and authorisations Cugnetto Consulting 35
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