The power of choice – what the introduction of smart meters means for customers
On 1 December 2017 the Power of Choice (PoC) reforms commence introducing contestability for the provision of metering services to small customers in NSW, ACT, Queensland, Tasmania and South Australia. Under the reforms, responsibility for providing small customer metering services changes from their local distributor to their retailer.
More importantly, the reforms require all new and replacement meter installations to be a smart meter so, overtime, manually read accumulation meters will be replaced by smart meters. While a smart meter is not like a smart device such as a mobile phone, where consumers can load different applications to meet their needs and wants, they will drive a number of changes on how customers purchase and use electricity.
Firstly, smart meters will record consumption of electricity in intervals of an hour or less and communicate that information to the retailer for monitoring and billing. That consumption data will be provided to the customer informing them of how their consumption decisions determine their energy bills.
Secondly, smart meters enable the retailer to offer more time varying tariffs which in some circumstances, depending on customers’ consumption patterns, can lead to lower bills. In the future, tariff comparison tools should enable consumers to utilise their meter data to accurately determine if they could reduce their annual electricity costs by shifting to a different type of tariff.
Thirdly, smart meters enable remote two-way communication between the meter and the central system. This leads to additional functionality such as allowing power to be switched off and on remotely.
Other than the consumption monitoring benefits, the customer benefits of smart meters differ between retailers. Some retailers are already offering a daily check of solar system performance notifying consumers when problems are detected and remote communication should also make first and final reads on move out and move in more efficient. Other benefits will evolve as the number of customers with smart meters increases.
There are three ways to obtain a smart meter.
- The first is to just wait until the current accumulation meter is due for replacement.
- Secondly, customers can shop around to find a retailer who will offer them a smart meter with the services they desire, although there is not obligation for energy retailers to provide a smart meter.
- Thirdly retailers offer a new product which relies on a smart meter being installed.
Our current understanding is most retailers are not charging customers upfront to provide smart meters. The exception is if significant wiring work is required at the customer’s premises to safely install the meter. In this case the customer will be presented with a quote to make their installation safe before the new smart meter is installed.
Once the smart meter is installed retailers can offer customers a smart phone App or website access to view their daily consumption data. The cost of this service is expected to be little to nothing.
With a replacement meter or new connection, customers have the legal right to refuse to have the remote communications on the smart meter enabled. In this case the meter will record the customer’s energy consumption every thirty minutes but will be read manually. However without remote communications, the meter data will not be available via Apps or websites.
Competition in the provision of smart meter services provides retailers with incentives to offer customers new services and tools to manage their electricity bills. This is only a good thing, empowering customers to have more control over their energy usage with subsequent energy and cost savings while further driving the digital transformation of the industry.