The Australian Energy Regulator (AER) is developing a standardised metering services model to use in the future across all jurisdictions. The AER intends to standardise the presentation of distributors’ metering expenditure for the AER’s assessment. The outcomes sought are:
- Better and more transparent presentation for consumers;
- Unified understanding amongst distributors; and
- More time-efficient processing of proposals by the AER.
Currently, the AER assesses each distributors proposal for metering models individually, including their CAPEX, OPEX, revenue and pricing models. The absence of a unified collation and presentation structure results in complexities for the AER, retailers and customers.
Different models with varying levels of complexity and information content are a significant barrier for retailers and consumers who engage with distributors’ proposals. A unified model is sought to provide for greater engagement of consumers and retailers with metering proposals.
In its Consultation Paper, the AER has published two preliminary standardised models:
- CAPEX and OPEX Model
- Metering Pricing Model
The CAPEX and OPEX Model determine the distributors’ revenue requirement for the meters. The meter revenue that is generated by the models is the basis for the Metering Pricing Model, which converts the overall revenue requirement into individual prices applicable to the first year and the following years. The Metering Pricing Model is set to fit within the price cap contained in most jurisdictions.
Source: Standardised Metering Models Consultation Paper – Australian Energy Regulator 2021.
Metering Pricing Model
Metering charges are regulated differently across jurisdictions. Most National Electricity Customer Framework (NECF) distributors are subject to price caps for interval and accumulation (type 5 and 6) metering services. In Victoria, on the other hand, a revenue cap mechanism applies to all metering services, and price caps apply to exit fees.
The proposed Metering Pricing Model provides for two things: a price cap and metering exit fees.
- The ‘price cap’ sets caps for metering charges based on a revenue model, which considers the return of capital, OPEX, revenue adjustments, and net tax allowance.
- The ‘metering exit fees’ provide for the consideration of the asset base for meters, communication systems and IT, forecasted CAPEX, regulatory depreciation together with administration and handling costs.
Next Steps
The AER closed submissions on 19 November 2021. The next steps will involve the AER holding a workshop with stakeholders to further develop and finalise a standardised metering model.
Key Takeaways
The Standardised Metering Models Consultation Paper provides an opportunity for retailers, embedded network providers and other stakeholders to voice the complications they encounter with metering proposals of distributors.
The models proposed are broad at this stage and offer retailers and embedded network providers the opportunity to shape the uniform guidelines in the future and avoid complications.
