The rule allows Victoria to wait and transition to the national framework for competition in metering and related services, once that is established, as a means of introducing small customer metering competition. It is likely to be in the long term interests of consumers because:

• Without the rule, Victorian-specific arrangements would need to be established to accommodate retailer responsibility for the provision of small customer metering services while realising the benefits of the Victorian AMI program.
• The incremental benefits of allowing retailers to provide small customer metering services in Victoria are likely to be low over the period until the national framework is established.
• The costs of establishing a Victorian-specific framework for commercial contestability are likely to outweigh the incremental benefits of doing so. These costs could include possible detrimental impacts on the development of a national solution if Victorian-specific arrangements are developed.

The Commission's Final Determination

On 28 November 2013, the Australian Energy Market Commission (Commission) published a jurisdictional derogation in relation to meters installed under the Advanced Metering Infrastructure (AMI) program in Victoria. Distribution businesses will remain exclusively responsible for providing advanced metering infrastructure to Victorian small electricity customers for the duration of the derogation.

The Victorian Government requested a rule change to extend for up to three years the effect of the 2009 jurisdictional derogation in Victoria, which was to expire on 31 December 2013. The existing derogation was put in place to allow distribution businesses to install advanced metering infrastructure in Victoria.

The Commission made the proposed rule with some minor amendments.

The derogation will continue until the rules are amended to provide a national framework for competition in metering and related services for residential and small business customers and regulatory arrangements are made to provide for the orderly transfer of Victorian metering arrangements to this framework. If these requirements are not met by 31 December 2016, the derogation will expire.

Background

The 2009 jurisdictional derogation made distribution businesses exclusively responsible for metering services (provision of the meter and meter data services) for Victorian small electricity customers, meaning that retailers were prevented from providing these services. As a consequence, distribution businesses also controlled related services that are enabled by AMI meters.

If the derogation was not extended, the metering rules that were derogated away from in Victoria would have come into force. Retailers would have been able to become responsible for small customer metering services, and would have also controlled access to the related services that are enabled by AMI meters. In the rule change request, the Victorian Government argued that for retailer provision of metering services to occur in practice, while at the same time realising the expected benefits of the Victorian AMI program, a number of processes and systems would need to be developed

Many of these processes and systems are being established as part of the national framework for competition in metering and related services for residential and small business customers, following the Commission’s Power of Choice review, which the Standing Council on Energy and Resources has agreed to progress. However, the national framework would not have been established before the 2009 derogation expired.

The Victorian Government identified that, without the national framework in place, specific Victorian arrangements would need to be established to accommodate contestable metering services and to prevent a loss of benefits from the Victorian AMI program – such as those relating to remote de- and re-energisation, network operational efficiency and flexible pricing.

The Victorian Government therefore sought a new jurisdictional derogation that would preserve distribution business exclusivity for small customer metering services for another three years from 1 January 2014, or until national arrangements for competition in metering and associated services are implemented.

Consultation process

On 4 July 2013, the AEMC commenced consultation on the rule change request and published a consultation paper to facilitate public comment. The period for submissions closed on 1 August 2013. We received eight submissions.

On 19 September 2013, the AEMC published a draft determination. The period for submissions closed on 31 October 2013. We received four submissions.