Smart metering regulation in Europe


Sir John Mogg,
Brussels, Belgium — (METERING.COM) — November 28, 2007 – European energy regulators should introduce minimum requirements for smart meters in order to ensure a certain standard of data quality and functionality within their respective countries, the European Regulators’ Group for Electricity and Gas (ERGEG) has recommended.

In a new position paper entitled “Smart metering with a focus on electricity regulation”, ERGEG notes that innovation in IT and communication technology and cost cutting through market liberalization have triggered a move towards smart metering. As such, as an issue that is relevant for the development of a competitive energy market in Europe, ERGEG has developed recommendations and policy options for regulators in European Union member states.

ERGEG says it should be highlighted that introducing a smart metering infrastructure for small-scale consumers is not an objective in itself. International experience indicates that the reasons for metering innovation vary among countries. Having identified the policy objectives and acquired a clear vision of the regulatory and commercial framework, the first step in assessing the case for a policy that favors investments in more innovative metering is to carefully weigh the potential costs against the expected benefits.

A general experience is that costs are most often easier to quantify than benefits. Given this, there is a higher probability of positive net benefits when taking into account the issues which can only be evaluated qualitatively. From a regulator’s perspective, special attention must be paid to the issue of cost recovery and split incentives, i.e. when some market actors face the costs while others face the benefits.

The range of potential benefits from smart metering for small customers can be rather extensive. Regulators should single out their objectives and have a particular focus on those objectives relevant to the key benefits. Only then, should regulators identify potential benefits in other areas.

It is crucial that the party responsible for collecting and administrating meter data makes the data accessible to all other authorized market players in a non-discriminatory way. If the customer is expected to react to price signals, actual demand, etc., then easy access to meter data, for instance on a display, is needed.

On the technical aspects, AMM systems should have functional and performance characteristics that offer the same minimum options to all customers (household, non-household), whether they remain under a customer protection scheme or opt to switch to a new retailer. Minimum requirements should apply at system level rather than equipment level, to render them independent from the architectures used by operators or recommended by AMM system vendors, thereby preventing the rejection of solutions whose architectures or philosophies may be different from those currently used but which may be just as efficient.

It is also important to define certain minimum smart meter functionality. In order to allow for economic optimal solution and technical innovation, the individual meter service provider should be left to decide on the technical solution to fulfil the required functionality. The following main functionalities should be carefully considered: remote meter reading; load profile data; on demand metered data access for the customer; on demand meter data access for authorized third parties; provision of variable time-of-use tariffs; remote meter management; remote demand reduction and connection/disconnection; and price signals to customers.