Network muscles in on smart meters as regulator grants “trial waiver”

New South Wales distribution network company Endeavour Energy will roll out around 5,600 smart meters to customers in various parts of the state, after being granted a “trial waiver” from the Australian Energy Regulator – the first of its kind.

The AER said on Wednesday it has granted the waiver to Endeavour to upgrade the meters of thousands of customers as part of a trial that aims to reduce peak electricity demand, give participants access to innovative energy services, and lower network costs for consumers.

The 30-month trial will see Endeavour Energy upgrade around 5,600 smart meters in parts of Greater Western Sydney, the Blue Mountains, the Southern Highlands and the Illawarra region.

In the case of this trial, all customers will receive a smart meter free of charge regardless of their existing meter and ordinary processes to recoup the costs of upgrades.

The uptake of digital smart meters in place of “dumb” analogue meters is broadly considered to be crucial to the smooth running of the modern renewable electricity grid.

For the energy market, the real-time digital monitoring of customer energy use is a hugely valuable resource, while for consumers, it offers access to retail deals that offer money-saving incentives to shift consumption to times of low demand.

Smart meters also empower customers with access to detailed, real-time information about how their electricity use, including through online platforms and apps.

The Australian Energy Market Commission, in a final report on its Review of the Regulatory Framework for Metering Services, has recently recommended an accelerated program to install smart meters at all homes and small businesses in the NEM by 2030.

“Achieving a critical mass of smart meter deployment in a timely and cost-effective way will help deliver greater benefits to customers and support the system in transition,” it said.

Currently, under the contestable market framework, retailers are responsible for the installation of smart meters, with network companies only allowed to initiate the upgrade when a traditional accumulation meter is found to be faulty.

The AER says the waiver will allow Endeavour to trial the issuance of Meter Fault Notices (MFN) to initiate the meter swap “in circumstances where there is no genuine metering fault.”

This sounds questionable, but RenewEconomy has learned that the notices sent to customers will contain clear information on what is planned, what their rights are, how they can opt out and how to get in touch with either Endeavour or the AER to discuss the matter further.

The notices will also have a link to a page on the Energy Innovation Toolkit website that has further information about the trial. The trial customer information page can be viewed here.

“New provisions in the National Energy Laws and Rules provide the AER with a function to grant such waivers to support innovation, knowledge-sharing, and more broadly, the energy transition,” the regulator says.

“The AER, in granting trial waivers can apply a range of conditions including consumer protection measures, reporting requirements and other obligations, to support the market while applicants are running their trial.”

AER chair Clare Savage says the trial was approved by the regulator under new powers allowing a time-limited waiver from certain requirements through the Energy Innovation Toolkit.

Savage says lessons learnt from the trial will be shared publicly at its conclusion in 2025 and help the AER better understand the impacts of distribution businesses rolling out smart meters.

“This is an important milestone in the AER’s regulatory sandboxing work,” the AER chair said on Wednesday.

“Through the Energy Innovation Toolkit we are making it easier for innovators to launch their energy ideas and test new business models in a real-world environment, without risk of negatively disrupting the market,” Savage said.

“We are committed to providing regulatory frameworks that enable energy innovation and will continue to engage extensively with industry, energy stakeholders, policy makers and the broader community to share knowledge and support new ideas through the energy transition.”

For Endeavour, the trial will boost its digital transition; according to the network’s website, it still had more than 800,000 customers with outdated analogue meters at the start of 2021, compared to nearly 241,000 customers with smart meters.

In its own statement, issued on Thursday, Endeavour said the waiver would allow it to use the smart meters to dynamically control customers’ storage hot water systems, instead of investing in “expensive old technology at major substations” to control off peak hot water.

“We’ll be working with retailers to agree a roll-out approach. The trial will give customers greater control over their electricity use and allow them to soak up excess solar power generated in the middle of the day to heat hot water, helping lower their electricity bills,” the utility said.

Endeavour has appointed Intellihub as its metering coordinator to undertake the 5,600 meter replacements. It has worked with Intellihub before in the past, including on a 2021 program using the Australia and New Zealand-based company’s smart meters to share surplus rooftop solar between households to power electric hot water systems.