Smart meters – will COAG give us the Trabant solution?


The debate on electricity smart meters will reach a crescendo this Friday when the Prime Minister presents her plans to lower power prices to COAG. Much of the package focuses on regulatory changes. However the real innovation and savings occur when households both see the real cost of the electricity they consume (including the costs of network congestion) and can make consumption choices based on those costs. And that needs smart meters.

Already the wagons are circling against smart meters. Here is an article from WA. And the state government has a point – if a centrally-planned, Soviet style approach is taken to smart meters. So the real test for COAG is not whether they endorse smart meters, but whether they endorse a market driven approach to these meters.

I have argued for the benefits of a market based approach to smart meters here. But for the sceptics, let me just ask the following question:

Would you be happy if the government decided what mobile phone you (and everyone else) was allowed to use? Would you be happy with them trying to ‘pick’ the best mobile phone for you going forward? Do you think having government mandated phones (and, no, you couldn’t refuse to have one or choose an alternative – that would be illegal) would lead to more innovation and better service for customers?

If you answered ‘yes’ then welcome to the world of the Trabant. If you answered ‘no’, then the only way forward is to allow the market for smart meters to work. It will be a messy world with a range of meters and different plans and options. But it will also empower households and help households make better choices over their power consumption.


7 Responses to "Smart meters – will COAG give us the Trabant solution?"
  1. Stephen, do you think that if smart meters were owned by households, faster take-up might result (as in the case of mobile phones)? Thereby obviating any need to make having one compulsory? Of course, an added incentive would be that people who opt not to have one would also not receive the benefit of real time pricing.

  2. What is the question to which smart meters is the answer? About three quarters of Australia’s electrical load has been smartly metered for the last 2-3 decades. Most of this does not see time variant prices. And much of this load is managed by procurement managers who are likely to be far more skilled than households in understanding and managing temporal variation in prices. So what hope (or to be more precise, what reasonable expectation) households?

    • Hi Bruce, the thing is that for customers being settled on deemed profiles, prices diverge from supply costs by more than 10 per cent for around 60 per cent of customers – see chapter 2 of my report to the Australian government on consumer access to smart metering data. That doesn’t do much for economic efficiency and probably results in excess demand/infrastructure/generation investment. Scarce resources are diverted from other worthwhile stuff. Industrials and SMEs are pretty much paying what they cost to supply, because retailers have to pay upstream supply costs calculated using interval metering data, not deemed profiles. Prices match costs pretty closely here because you have sophisticated parties on either side. Because prices are pretty efficient (leaving aside bigger stuff such as the full cost of carbon etc.), there is less likelihood of excess demand etc.

  3. What about users’ experiences with smart metering elsewhere, Stephen?
    Have you tried using a meter to log power usage at individual power outlet? (I bought one, stickered ‘eco-worthy’, via eBay.)

  4. Your comparison with mobile phones is wrong. The meter is equipment owned by the service provider. Not the customer, but the service provider decides on the best equipment to use. We don’t ask customers what customer relationship management to use. The privacy fears of customers need to be managed by the service providers by emphasising the benefits of the smart meter.

  5. Also you don’t need an electrician to install your mobile phone. Break it in two. The company bit, which is the meter, which can be extended in a standard way (like a USB connection) to mine information and price data. (the smart bit).

  6. Also as a consumer, my first choice in smart meter would be one that fails to actually measure how much electricity I use, so I don’t have to pay for it. That would be a popular model.

    Also mobile phones aren’t attached directly to the electrical grid without the benefit of circuit breakers or fuses. Any entrant to the market would probably have to have a very very large amount of independent auditing done to pass regulator’s standards, just so they don’t go wrong and start fires or blow out the power for everybody within five blocks. That would be worse still in old apartment blocks.

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