Metering and Competition for Household Electricity Consumers

  • Max Bradford

Metering is critical in the development of competition for household electricity consumers, Energy Minister Max Bradford said when he released a report for public discussion on electricity metering and competition for small power consumers.

"The NZ Institute of Economic Research report which I am releasing for discussion, suggests profiling is a viable method to open the electricity market for small consumers to competition, but would not preclude the development of half-hourly metering," Mr Bradford said.

"Profiling is a useful first step towards the ultimate goal of every household in the country equipped with a hi-tech meter which allows them to switch suppliers at will and which measures their power use in half hourly blocks."

(Because electricity is cheaper at some times of days than others, profiling is a system which estimates each customer's consumption patterns, and uses that profile to cost the electricity used. It does not require new technology. Half hourly metering is more sophisticated and measures a household's electricity use every half hour, as well as offering the potential for a range of other services.)

"The issue of data measurement is critical in the development of competition for household electricity consumers because it will allow residents to choose whatever energy trader is offering the best deal," Mr Bradford said.

"There are sceptics who say high-tech meters are too expensive to be viable for homes, but I challenge those people to look at the rapid changes in any technological industry over the past few years.

"Mobile phones get smaller and smarter and cheaper by the day. A phone that used to cost $1200 now costs $40 dollars, sends faxes and emails, and fits easily into a back pocket.

"A year ago voice reactive computer software was in its unwieldy early stages. Now many people are talking to their computers by choice and key boards will soon be a tool of the past."

"There is no earthly reason why the same progress will not apply to meters which will also combine with PC, remote banking and bill paying, home security, shopping services and appliance automation."

The report by the NZ Institute of Economic Research makes the following key points:

profiling and half hourly metering can develop simultaneously
the cost of half hourly metering could reduce significantly when large numbers of small consumers start to use it. Furthermore its additional benefits would help off-set the costs.
the annual costs of profiling and metering introduced on a wide scale are likely to be around $10 and $40 respectively at the lowest estimate, compared with a gross margin in retailing of around $100 per small customer per annum.
Mr Bradford said the profiling and hi-tech metering were being considered in the context of the package of electricity reforms currently being prepared by the Government.