Wellington, New Zealand — (METERING.COM) — August 13, 2009 – Smart meters in combination with smart tariffs can significantly improve the potential for energy efficiency, load management and cost reductions and should be facilitated, New Zealand’s ministry of economic development has said.
In a new Ministerial Electricity Market Review aimed at improving market performance, smart meters and smart tariffs are put forward as one of the options to improve wholesale and retail prices through increased competition in New Zealand’s electricity market.
Noting that a recent report by the Parliamentary Commissioner for the Environment highlighted the risk that meters installed by retailers focus mostly on saving costs for retailers and lack some functionalities, the ministry points out that a decision on whether mandatory standards are required will be made by the Electricity Commission by the end of 2009. It is important also that meter specifications do not act as a barrier to customer switching.
The ministry recommends that guidelines and standards on smart meters provide for, or allow upgrades for, energy efficiency capability, open access communications, customer switching, and the development of smart networks.
In addition retailers should be encouraged to make tariffs available as an option for consumers that provide incentives to better manage electricity consumption including through shifting load to off-peak times and conservation during dry years.
The objective of the Review is to improve the performance of the electricity market and its institutions and governance arrangements in order to better achieve the government’s objectives for the sector of providing a reliable supply of electricity at competitive prices. With apparently excessive price increases, especially for residential consumers, and frequent supply crises, the current electricity market arrangements had been seen by many as falling short of this objective.
The main causes could be attributed to insufficient competition in the retail market, especially outside the main centers, incentives for some market participants to seek to shift increased costs to consumers through public conservation campaigns rather than manage the risks themselves in dry years, and a backlog of investment in the transmission system.
Other options proposed by the ministry for improving wholesale and retail pricing are a restructuring of the state-owned generator-retailers, providing for increased demand side participation in the wholesale market, allowing lines companies to retail in their local areas, simplifying and standardizing line tariffs, and improving price monitoring and transparency.
Customer switching should also be encouraged and a NZ$5 million (US$3.4 million) fund is proposed to promote the benefits of customer switching. The ministry has estimated that residential customers would be better off on average by around NZ$100 (US$67) per customer per year if they were to move to the cheapest available retailer. Anecdotal evidence suggests that slow customer churn is driven by a combination of lack of information on what is available, a view that it is too hard to switch, and a perception that any savings would be temporary as the new retailer would put up their price.
Moreover, for customers with smart meters the timeframe for switching between retailers should be shortened from 23 days to three days.
Energy and resources minister, Gerry Brownlee, said he welcomed the review and that the government finds many of the recommendations appealing.
“It is a well written report which offers practical solutions to many complex problems facing the electricity sector,” said Brownlee.
The review is now open for discussion for a period of five weeks.