The derogation involves establishing the local distribution company as exclusive responsible party for small customer metrology and for the roll-out of advanced metering infrastructure.

Background

On 21 November 2007 the Commission received a Rule change proposal from the Minister for Energy and Resources (Victoria) seeking a jurisdictional derogation to implement the roll-out of advanced metering infrastructure. The derogation proposal involves establishing the local network service provider as the exclusive responsible party for small customer metrology and in particular for the roll-out of advanced metering infrastructure.

On 20 December 2007 the Commission published a notice under section 95 of the National Electricity Law advising of its intention to commence the Rule change process and initial consultation for this request for a jurisdictional derogation. First round submissions on the proposal closed on 15 February 2008.

On 3 April 2008 the Commission published a notice under section 107 of the NEL to extend the publication of the draft Rule determination.

The Commission considered it necessary to extend the publication of the draft Rule determination in order sufficiently to analyse and address complex issues necessary to prepare the draft Rule determination. The Commission will be considering the material presented in the Cost Benefit Analysis of Smart Metering and Direct Load Control prepared by consultants for the Ministerial Council on Energy as well as submissions from stakeholders made in response to that material.

The Commission was to publish the draft Rule determination on 26 June 2008.

On 17 June 2008, the Commission released a report by NERA London on "Smart Metering for Electricity Consumers in Selected Jurisdictions". NERA London was engaged by the Commission to write a report describing arrangements for Advanced Metering Infrastructure (or smart meters) in seven jurisdictions in Europe (United Kingdom, Italy, Netherlands and Sweden) and North America (California, New York and Ontario). The Report was commissioned to help inform the Commission about the policies and approaches in relation to smart meter roll-outs in other jurisdictions. View more information on the NERA London Report.

On 26 June 2008 the Commission published a notice under section 107 of the NEL to extend publication of the draft Rule determination and draft Rule.

The Commission considered it necessary to extend the publication to allow adequate time to review new material relevant to the preparation of the draft Rule determination and draft Rule. The Commission will be considering the following documents issued on 13 June 2008 by the Ministerial Council on Energy:

• Statement of Policy Principles in relation to the roll out of advanced metering infrastructure (or smart meters); and
• Smart Meter Decision Paper.

The Commission was to publish the draft Rule determination by 22 August 2008.

On 16 July 2008 the Commission released a report by LECG on “Developments in the New Zealand market for Advanced Metering Infrastructure and related services”. LECG was engaged by the Commission to write a factual report on arrangements and developments for Advanced Metering Infrastructure (AMI) and related services in New Zealand. The Report describes plans to deploy AMI to up to 1.5 million domestic and small business customers in New Zealand within five years. The deployment of AMI is being led by electricity retailers and independent metering providers in a contestable market. More information of the LECG Report.

On 21 August 2008, the Commission published a notice under section 107 of the NEL to extend the publication of the draft Rule determination to 26 September 2008.

The Commission considered it necessary to extend the publication date in order to consider and review recent developments that directly impact the preparation of the draft Rule determination, including progress that has been made by the national working groups dealing with smart meter roll-outs (as contemplated in the MCE Smart Meter Decision Paper issued 13 June 2008).

On 18 September 2008, a letter was published from Peter Batchelor MP informing the Commission about the latest development relating to the Victorian Advanced Metering Infrastructure (AMI) Project.

On 25 September 2008, the Commission gave notice under section 99 of the NEL of the making of the draft Rule determination and draft Rule.

The Commission has accepted the Rule change proposal from the Victorian Government and, accordingly, has determined to make the draft Rule proposed by the Victorian Government with some amendments (Draft Rule).

In making this draft Rule determination, the Commission had regard to a number of factors including the Rule proposal, stakeholder submissions and the requirements under the NEL. The Commission is satisfied that, having regard to all of the relevant factors and issues, the Draft Rule will, or is likely to, contribute to the achievement of the National Electricity Objective (NEO). Therefore, it satisfies the Rule making test required under the NEL.

The Commission was of the view that the Draft Rule (reflective of the Government’s proposal) meets the NEO in that it provides for a certain, predictable and accelerated rollout of AMI, thereby meeting the Victorian Government’s policy. An accelerated rollout of AMI would enable a number of efficiency benefits to be realised. These benefits would not be available to the same extent and as rapidly under a retailer mandated rollout of AMI.

There are some disadvantages associated with a distributor led rollout, but they could be minimised by the implementation of mechanisms to allow for the transition from service provided under a monopoly environment to contestable environment.

On 18 December 2008, the Commission gave notice under section 107 of the NEL to extend the publication of the final Rule determination and final Rule.

The Commission considered it necessary to extend the publication date by 6 weeks in order to adequately consider and review new and other relevant issues raised in stakeholder submissions.

Under section 108A of the NEL the Commission is required to publish a report on Rules not made within 12 months of publishing the section 95 notice.

On 22 January 2009, the Commission published a report under s108A as it had not made a final Rule determination and final Rule within 12 months due to the quantity of new information and relevant ongoing developments that have required consideration and analysis.

On 29 January 2009, the Commission gave notice under sections 102 and 103 of the National Electricity Law (NEL) making the National Electricity Amendment (Victorian Jurisdictional Derogation (Advanced Metering Infrastructure Roll Out)) Rule 2009 and related Rule determination. The Rule as Made is reflective of the Victorian Government’s Rule change proposal and the Rule determination sets out the reasons for the Commission’s decision. The Rule commences operation on 1 July 2009.