In 2006, the Victorian Government decided to roll out advanced metering infrastructure (AMI), or 'smart meters' to all Victorian residential and small business electricity customers. The regulatory arrangements relating to the roll out are set out in a November 2008 Order in Council (OIC) made under the Electricity Industry Act 2000 (Vic). The OIC prescribes the time frame for the roll out, as well as the new regulatory framework and the AER's responsibilities associated with the AMI roll out.
The AER will be responsible for decisions made under the OIC from 1 January 2009 to 31 December 2015, after which AMI will be regulated by the AER under the National Electricity Rules (NER).
Variation of the Final Determination by the Australian Competition Tribunal
The Australian Competition Tribunal has handed down its decision on an appeal by United Energy Distribution (UED) and Jemena Electricity Networks (JEN) against the AER's October 2009 determination on Victorian Advanced Metering Infrastructure (AMI) budgets for 2009 to 2011 and metering charges for 2010 and 2011.
The Tribunal decided to vary the AER’s determination by adding the management fees paid by UED and JEN to a related service provider (Jemena Asset Management) for the AMI roll-out to their approved budgets. This was on the basis that such fees were not outside the scope of the AMI roll-out under the Victorian Government’s regulatory requirements, as specified in its Order in Council.
The amendments to the AER’s determination and further details are available in the documents below.
AER final determination on initial AMI budgets and charges applications
On 30 October 2009, the AER released its final determination on the AMI budgets for 2009–11 and charges for 2010 and 2011.
The final determination establishes the basis for the metering charges payable by Victorian consumers using less than 160MWh of electricity per annum for 2010 and 2011. It responds to issues raised in submissions on the draft determination, released on 31 July 2009.
The OIC required that where the AER's draft determination on the initial AMI budgets rejected a DNSP's proposed budget, the DNSP must submit an amended submitted budget within 20 business days of the AER's draft determination. The AER received amended submitted budgets from CitiPower, Powercor and SP AusNet. United Energy Distribution submitted an amended budget that accords with the AER’s draft determination. The AER did not receive an amended submitted budget from Jemena as the draft determination approved Jemena's initial AMI budget application.
AER draft determination on initial budgets and charges applications
On 31 July 2009 the AER released its draft determination on the DNSPs’ initial AMI budget and charges applications, covering metering charges for the period 2010 and 2011. In assessing the budget applications, the AER applied the various expenditure tests as required by the OIC and also sought assistance from its technical consultant, Energeia. While the AER was not required to issue a draft determination on the DNSPs’ charges applications under the OIC, it did so in combination with its budget determination in order to promote consultation on charges prior to its final determination on 31 October. The draft determination and Energeia’s report are available below.
The AER conducted a public forum on 21 August 2009 which outlined key aspects of its AMI draft determination and provided the opportunity for stakeholders to raise issues and ask questions. The AER’s presentation and minutes of the meeting are available below.
The distribution network service providers (DNSPs) were required to provide their initial AMI charges applications, covering the period 2010 and 2011, to the AER by 1 June 2009. The purpose of the charges application is to recover expenditure incurred in response to the Victorian government's decision to mandate the rollout of AMI to all customers consuming less than 160MWh per annum. Meter service charges recover the costs associated with meter installation and meter data service costs. These documents do not include data that if made public might limit distributors' negotiations with suppliers and hinder competitive pricing outcomes.
The DNSPs also provided a joint submission outlining the debt risk premium they propose to adopt for the initial AMI Weighted Average Cost of Capital (WACC) period.
As part of the Victorian Government's mandated rollout of Advanced Metering Infrastructure (AMI) in Victoria, the Order in Council made under Sections 15A and 46D of the Electricity Industry Act 2000, 28 August 2007 and as amended by the Order in Council No S 314, 25 November 2008, the five electricity distributors were required to provide the AER with their initial AMI budget period budget application covering the period 2009-11 by Friday 27 February 2009, and are attached below.
Because certain information provided by the distributors to the AER is commercial in confidence, sensitive information has been removed.
Further, pursuant to their initial AMI budget period budget application, distributors will submit to the AER their initial charges application for 2010-11 by 1 June 2009.
The AER will provide a draft decision on the initial budget and charges applications by an indicative date of 31 July 2009, with a final decision by 31 October 2009.
SP AusNet AMI initial budget application—inclusion of selected cost data
On 22 May, following a request from the AER, SP AusNet provided another version of its AMI initial budget application 2009-11, incorporating some additional cost data, for publication on the AER's website. The additional AMI cost data can be viewed in the following attachment (table E1 on page 8).
The regulatory arrangements for the AMI roll out are set out in a November 2008 Order in Council (OIC) made under the Electricity Industry Act 2000 (Vic). The OIC provides that a budget, charges or fee application made by a distributor must include the information specified by a framework and approach paper and information templates released by the regulator.
The ESCV released a paper setting out the proposed framework and approach for the AMI cost recovery and draft information templates in December 2008. Submissions to this paper were received and passed to the AER for consideration in making its final decision, which was released on 30 January 2009.
Framework and Approach - Final decision
On 30 January 2009, the AER released its final decision on the framework and approach applying to distributors' budget applications for AMI expenditure for 2009-2011 and charges applications for 2010 and 2011. Information templates applying to each distributor are also attached below.
On 4 December 2008, the ESCV released a paper setting out the proposed framework and approach for the AMI cost recovery. Draft information templates for completion by distributors were released along with the consultation paper.
Interested parties were invited to provide written submissions on the proposed framework and approach. Submissions closed on 29 December 2008, and are available by clicking on the below link.
