The electricity distribution businesses (EDBs) CitiPower, Jemena, Powercor, SP AusNet and United Energy Distribution are required by the Victorian Government to roll out AMI smart meters over a four-year period ending 31 December 2013.
In February this year, the EDBs submitted proposed budgets to the Australian Energy Regulator (AER) for expenditure from 2012-15 totalling $A1.24 billion. This compares to the AER’s earlier determination of a total $A1.08 billion AMI budget for the initial 2009-11 roll-out period.
The AER responded last week with the issuance of a draft determination which proposed a budget of $A760 million for the second roll-out period, a reduction of around 39 per cent from that proposed by the EDBs.
“The AER considers the [EDBs] have not justified the substantial expenditure proposed for this second phase of the roll-out period. Of particular concern is the size of the ongoing operational costs of advanced meter provision,”? said the AER.
“We are disappointed that the AER has failed to understand the submissions on the costs
involved in rolling out pioneering technology,”? said Energy Networks Association (ENA) Chief Executive John Devereaux. “We are also disappointed that the AER has ruled out many of the specific proposals which will enhance benefits that could flow to customers from the roll out, and speed up their delivery. These proposals were included in response to the stated goals of the Victorian Government.”?
The businesses have now begun a further detailed examination of the draft determination, to understand how the AER could have reached these conclusions.
“As an industry, we will redouble efforts to help the AER understand the very real costs of
implementing the smart meter project successfully, in a way that delivers the optimum benefits to Victorians,”? said Mr Devereaux.
The AER has invited interested parties to make written submissions to the AER on the draft determination by close of business 9 September 2011. A final determination will be made at the end of October 2011.