Smart Energy Forum presentation 2014

1. Perspective on
New Zealand Smart Meter rollout
Smart Energy Forum
27 November 2014, Newcastle, Australia
Ron Beatty
Principal Adviser Market Services

2. Smart meters or AMI
• New technology is providing large amounts of accurate and timely data
• Smart meters are just complex, programmable, measuring and recording
devices
• New Zealand Electricity Market (NZEM) defined as advanced metering infrastructure – AMI –
includes comms and back office systems where information is collected by users

3. Smart technology transformation
• The real “Smart” we are seeing in the NZEM is
• new customer pricing offers and availability of time of use tariffs
• development of rapid and reliable two way communications
• internet of things
• smart phones
• developing communication protocols
• promise of “Smarter” appliances that may integrate with other systems
• mining of useful information from the extra data collected by the new technology

4. NZEM is a mix of contestable market
arrangements
Hedge
market
Wholesale
market
Customer
market
Approved
test
houses
Ancillary
market
Retail
market
Networks
Metering
market
Smart
home

5. NZEM competitive metering
• Since 1 April 1999 metering has been a workable competitive market
• metering services are independent of distributor and retailers
• commercial arrangements required
• guidelines available at
http://www.ea.govt.nz/operations/retail/metering/metering-installation/
• The participant responsible for the electricity flow through a point of
connection must ensure there is an MEP
• trader (retailer) for customer connections to networks
• grid owner for GXPs
• generator for GIPs
• network owners for network interconnection points
• Voluntary roll out of AMI has resulted in no discernible cost increase
to customers as costs and benefits currently accruing to the trader

6. Smart meters are part of wider market facilitation
including
• AMI policy and guidelines
• Set out expectations, recommended functionality and arrangements
• http://www.ea.govt.nz/operations/retail/metering/advanced-metering/
• Settlement of secondary networks (customer, network extension and
embedded)
• Global reconciliation implemented (UFE)
• Integration of distributed generation into the electricity market for seamless
market settlement and customer switching
• Default process for connecting smaller generators to distribution networks
• Centralised data hub
• High speed customer switching

7. Smart meters are part of wider market facilitation
including
• New metering rules
• regulated some AMI issues
• dealt with programming changes to AMI
• centralised metering records
• establishment of MEP role
• security and data access
• MEP responsible for AMI meter reading
• guidelines available at http://www.ea.govt.nz/operations/retail/metering/metering-installation/
• Regulated business to business file exchanges

8. 1 – First industry led data clean-up process completed
2 – Regulator signalled intent to enforce switching regulation, use of estimates commenced
3 – Global reconciliation and monitoring became effective
4 – Regulator required 50% within 5 business days and 100% within 10 business days
5 – Regulator put in place new metering rules and data cleanup – no impact to switch period
3 4 521
Smart customer switching

9. AMI installations as at 31 October 2014
-
500,000
1,000,000
1,500,000
2,000,000
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
Apr-15
NumberofICPs
Year and month
AMI installations
Actual installed Current trend Number of ICP identifiers
Trend based on last 6
months installs of
17,043 ICPs/month
• NZEM rollout
• signalled regulatory requirements and
expectations early to market
• costs and benefits initially realised by traders
• AMI takes a long time to roll out
• regulated agreements
• opt out/in and customer customers
• process changes have been disruptive
• Either rolling out AMI or intending to roll
out AMI
• 8 MEPs owned by networks
• 3 MEPs owned by retailers
• AMI being used in customer settlement
• 21 retail brands
• most still use NHH meter readings
• only 2 retailers use HHR AMI meter readings for
invoicing and market settlement
55% of customer installations have AMI
(communicating) installations operational

10. Reconciliation and distributed generation
• NZEM uses full global reconciliation
• traders provide consumption information
• identifies unaccounted for electricity (UFE)
• All buyers and sellers to NZEM do so on same
terms
• monthly revisions to 14 months
• Reconciliation model solves for 378
NSPs by trading period and allows for
• grid connected generation
• any amount of embedded generation
• grid connections to local networks
• interconnections between local networks
• interconnections to secondary networks
• customer networks
• network extensions
• embedded networks
UFE decreasing markedly as AMI is being
installed

11. AMI has already enhanced market outcomes
• Integration of consumers into the electricity market using innovative
tariffs – indirect load control
• Improved consumer information using web portals
• Accurate monthly customer invoicing – no estimates
• Reduction in network losses
• More accurate monthly wholesale market settlements
• Retailers able to manage vacant consumption
• New retailers entering the electricity market with innovative competitive
service offerings to customers

12. • Flick is a new entrant retailer that uses 30
minute AMI information to invoice
customers at wholesale cost (48 different
prices per day, every day)
• Flick provides web browser access to
customers to keep track of their
expenditure and the savings made on
Flicks tariff
• Customers receive incentives from the
pricing to shift consumption to low cost
weekend and night periods
AMI enabled retail competition

13. 13
Retail competition is working
HHI refers to the Herfindahl-Hirschman Index. This index is the sum of the squares of the market shares of
every retailer in a market. For example, if there are two retailers and one has 80% market share and the
other has 20% then the HHI = 80x80 + 20x20 = 6,800. If they each had 50% market share then HHI=5000

14. • Number of customers choosing a new retailer steadily increasing since 2006
• Last 12 months about 20% of customers switched
• Number of new entrant retailers entering market with new products
Retail competition is working

15. Future smart developments
• Around the world, the energy industry is facing fundamental change
• change is disruptive to current processes
• digital consumer technologies are creating new opportunities for utilities and others
• “internet of things” evolving – consumer choice with smart products
• Networks may become balancing systems
• development of microgrids
• economic battery storage
• Smart use of “Big Data” - AMI and SCADA information
• safety
• asset maintenance improvements
• capital deferral
• integration of renewable generation
• Consumers are becoming more
• connected
• expectations are increasing
• self sufficient
• energy efficient

16. Ron Beatty
Principal Adviser Market Services
DDI: +64 4 462 0609
Mobile: +64 21 618 048
Email: ron.beatty@ea.govt.nz
Electricity Authority - Te Mana Hiko
Level 7, ASB Bank Tower, 2 Hunter Street
PO Box 10041
Wellington 6143
New Zealand
www.ea.govt.nz