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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-10-13 Daily Xml
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NATIONAL ELECTRICITY (SOUTH AUSTRALIA) (SMART METERS) AMENDMENT BILL

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (19:48): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

In recent years, a number of significant reforms have been made to energy markets in Australia. Under the guidance of the Ministerial Council on Energy (MCE), Australia has moved towards greater national consistency of governance and regulation. The reforms have aimed to ensure efficient infrastructure investment and promote competitive energy markets.

In February 2006, the Council of Australian Governments (COAG) agreed to a progressive national roll-out of 'smart' electricity meters to allow the introduction of time of day pricing and to allow users to better manage their demand for peak power only where benefits outweigh costs for residential users and in accordance with an implementation plan that has regard to costs and benefits and takes account of different market circumstances in each State and Territory. COAG directed MCE to oversee this process.

After reviewing a national smart metering cost benefit analysis in 2008 MCE noted a wide range of potential net benefits, but that benefits and costs were not certain in all jurisdictions. Given the potential net benefits MCE supported the development of a national smart metering framework and smart meter deployments initially in Victoria and New South Wales. Ministers agreed to further progress the smart meter roll-out by undertaking coordinated pilots and business-specific business case studies in most jurisdictions (not including South Australia and Tasmania). These pilots and business cases seek to confirm the findings of the cost-benefit analysis, reduce the range of uncertainty to inform whether a roll-out should proceed, and also inform the development of roll-out implementation plans to maximise benefits. This Bill establishes the first element of the national framework and provides support for pilots.

This Bill, although only making minor amendments to Australia's national energy market legislation, reflects another significant reform of the energy sector overseen by MCE. The Bill amends the National Electricity Law (the NEL), a schedule to the National Electricity (South Australia) Act 1996, to provide heads of power for State and Territory energy Ministers to decide the scope and timing of smart meter pilots and roll-outs of smart meters for their jurisdiction. Ministers will be able to require an electricity distributor to conduct a pilot or roll-out where the Minister is satisfied that the requirement would be in the long-term interests of consumers.

The Bill:

supports timely and nationally co-ordinated pilots, the outcomes of which will better inform the development of jurisdictional roll-outs and the national cost benefit analysis;

facilitates information sharing across jurisdictions conducting smart metering activities by enabling a Minister to specify that a distributor must provide the information derived from smart meter pilots; and

facilitates cost recovery by distribution businesses.

The Bill provides a mechanism to roll out or pilot smart meters in a jurisdiction by introducing a head of power allowing jurisdictional Ministers to make a Ministerial smart metering determination that would require a distribution business to conduct a trial, assessment or roll-out of smart metering and related technologies. The Bill has no effect, including on any existing smart metering deployments, except where a minister issues a smart metering determination.

A Ministerial smart metering determination will have the effect of changing the regulatory obligation on the distribution business, triggering a mechanism for recovery of efficient direct costs in accordance with the National Electricity Rules (the Rules). Ministers also recognise the importance of promptly passing on cost efficiencies resulting from smart metering to customers affected by the costs of a roll-out.

The sharing of information obtained from smart meter trials and assessments is essential to the MCE commitment to smart meters. In 2012, MCE will review the smart meter cost benefit analysis in light of the results of smart meter trials and assessments, at which time Ministers will review jurisdictional deployment timelines and any requirement for further analysis. Ministers will be relying on this information to decide if a roll-out should proceed, and to assist in the development of roll-out implementation plans to maximise benefits. The MCE is conscious of the commercial interests of businesses involved in pilots. Therefore, a determination cannot oblige a distribution business to make information publicly available in a way that would identify the person to whom the information relates unless the business has the written consent of the relevant person.

Before issuing a pilot determination a Minister must consult with a person or body that the Minister considers has an interest in the determination.

Direct load control (DLC) is showing itself to be an important and beneficial way of assisting consumers to manage their energy consumption during peak times, whether independently or in conjunction with smart meters. Direct load control focuses on remotely switching loads such as air conditioning, pool pumps or water heaters that are operating during peak load periods. Consequently, the head of power included in the Bill that supports pilots of smart metering and related technologies, also captures direct load control trials. Technology created primarily for the purpose of direct load control is specifically included as a 'related technology' to smart meters in the trial context. While the national smart metering cost benefit analysis does not support further trials or roll-outs of smart meters in South Australia at this point, direct load control shows strong potential to reduce costs for consumers in a way that works for them. This government will continue to support further development of direct load control to help contain electricity costs for consumers.

The Bill allows a jurisdictional Minister to make a Ministerial smart meter roll-out determination, placing a regulatory obligation on a distribution business to roll out smart meters.

Before issuing a Ministerial roll-out determination, a Minister must consult publicly on it and must have regard to the National Electricity Objective. These conditions provide a safeguard that the determination is appropriate and the long-term interests of electricity consumers are protected.

A Ministerial roll-out determination cannot be inconsistent with the National Electricity Rules, which will contain the detailed elements of the national framework for smart meters. The prescription of detailed requirements under the National Electricity Rules places them under the transparent institutional governance arrangements that this Parliament has established on behalf of all Australians for the process by which Rules are made. It also provides an expectation of long-term consistency of requirements for smart metering, increasing the national character of arrangements for the electricity market. The Bill does, however, provide individual Ministers with the discretion to specify the date or dates by which infrastructure and services must be provided, allowing different levels of service to be delivered in different locations and times during the roll-out period. This discretion allows specific differences in circumstances to be taken into account in support of the objective of delivering long-term net benefits for electricity consumers.

Businesses are required to comply with a Ministerial smart meter roll-out determination despite any other contract or agreement. This is to support the benefits a mass roll-out can deliver. In having regard to the National Electricity Objective, a Minister would be expected to consider implications for existing contracts as advised by businesses during consultation.

In complying with a Ministerial smart meter roll-out determination, a specified regulated distribution network operator will be the exclusive provider of metering services for relevant metering installations. An MCE Initial Rule will be inserted in Chapter 11 (Savings and Transitional Rules) of the Rules. The Initial Rule implements, as a transitional measure, MCE's Statement of Policy Principles with regard to responsibility for smart metering during a roll-out. Section 90C of the Bill includes the necessary head of power to allow this Rule to be made.

Where a jurisdiction has already developed and mandated a smart meter program consistent with COAG and MCE commitments, it is anticipated that the jurisdiction will establish an appropriate transition arrangement. Further, in the case of Victoria, it is understood that the State will seek support to have the major elements of its current advanced metering infrastructure project recognised as consistent with the national framework.

As jurisdictions roll out smart meters over different periods and at different times, the costs and benefits as shown by pilots should become clearer for each jurisdiction. These amendments are intended as transitional arrangements to support the mandate of smart meters and as such should not remain as law in perpetuity. MCE will therefore review, by 2020, the ongoing need for these NEL amendments.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The measure will be brought into operation by proclamation.

3—Amendment provisions

This clause provides that the measure amends the National Electricity Law set out in the Schedule to the National Electricity (South Australia) Act 1996.

Part 2—Amendment of National Electricity Law

Division 1—Smart meter amendments

4—Amendment of section 2—Definitions

This clause provides new definitions for the definition section (section 2) of the National Electricity Law.

5—Insertion of Part 8A

This inserts a new Part concerning smart metering services.

Part 8A—Smart metering services

Division 1—Interpretation

118A—Definitions

This section provides new definitions for Part 8A.

Division 2—Ministerial pilot metering determinations

118B—Ministerial pilot metering determinations

This section permits Ministers of participating jurisdictions to make Ministerial pilot determinations. A Ministerial pilot determination may include trials of direct load control technologies.

118C—Consultation with interested persons required before making Ministerial pilot metering determination

This provision requires Ministers to consult before making a pilot determination.

Division 3—Ministerial smart meter rollout determinations

118D—Ministerial smart meter rollout determinations

This section permits Ministers of participating jurisdictions to make Ministerial smart meter rollout determinations and specifies what a determination may or must contain, including when the determination expires.

118E—Public consultation required before making Ministerial smart meter rollout metering determination

This section requires Ministers to consult before making smart meter rollout determinations.

Division 4—Provisions applicable to Ministerial smart metering determinations

118F—Compliance with Ministerial smart metering determinations

This section requires a regulated distribution system operator to comply with a Ministerial smart metering determination.

118G—Minister of participating jurisdiction must consult with other participating jurisdiction Ministers

This section requires a Minister of a participating jurisdiction to consult with the Ministers of other participating jurisdictions before making a Ministerial smart metering determination.

118H—Content of Ministerial smart metering determinations

This section lists the content of a Ministerial smart metering determination.

118I—Publication and giving of Ministerial smart metering determinations

This section requires publication of a Ministerial smart metering determination.

118J—When Ministerial smart metering determinations take effect

This section provides for the determination of the date of effect of a Ministerial smart metering determination.

118K—AEMC must publish Ministerial smart metering determination it receives on its website

This section requires the AEMC to publish Ministerial smart metering determinations on its website.

Division 2—Other related amendments

6—Insertion of section 90C

Proposed new section 90C allows the South Australian Minister to make initial Rules concerning smart metering services.

Debate adjourned on motion of Hon. S.G. Wade.

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