Smart metering and its benefits for consumers Roberto Malaman General Manager, AEEG - Italy

1. Smart meteringand its benefits for consumersRoberto MalamanGeneral Manager, AEEG - Italy

2. Introduction • In this presentation, smart metering refers to the entire meter infrastructureIntroducing a smart metering infrastructure for consumers is not an objective in itself. • International experience indicates that the reasons for metering innovation vary between countries. • The first step in assessing the case for a policy that favours investments in more innovative metering is to carefully weigh the potential costs against the expected benefits

3. 1. COST 2. BENEFIT Assessment of costs and benefits • Improvements in reading and billing • New price structure and services for customers • Benefits for security and quality of supply • Capital costs (meters, communication, associated system for data handling, etc.) • Operational and management costs (reading, service and re-verification)

4. ERGEG activities on smart metering infrastructure • “Smart metering with focus on electricity regulation” (2007, available on www.energy-regulators.eu) • “Meter value management” (in progress) • Status Review Report on smart metering (under discussion for the 2009 Work Programme)

5. Policy aspects for regulators • Obligatory roll-out of smart meters • Financial incentives • Introduce minimum functional requirements • Require more frequent meter reads or bills based on actual consumption

6. ERGEG Recommendations (1/2) • Minimum Functional Requirements • Offer the same minimum options to all customers • Apply at system level rather than the equipment level • Be independent from architectures implemented by operators, manufacturers or system integrators • Be independent from telecommunication systems • Guarantee interoperability • Standardisation • Meter (– data concentrator) – AMR/AMM control centre; towards market participants; the customer (external display); home/building automation applications; gas, water, heat meters

7. ERGEG Recommendations (2/2) • Costs and benefits • Country-specific assessment needed when a large-scale smart metering infrastructure is introduced • Access to meter data • To ensure non-discriminatory access to meter data and functionalities • Market model • New market processes (switching process, replacement of standardised load profiles with individual interval data for small customers, more frequent meter reads, quality standards, etc.)

8. Italy: 30 million smart meters installed • Remote supply activation/deactivation • Monthly/bimonthly readings  no estimated billings • Temporary reduction of the contractual power for bad payers  less disconnections • Disconnection/reconnection • Easy switch • Theft detection • Supply interruptions will be individually recorded from 2010  quality standards and economic incentives/penalties

9. Italy: 30 million smart meters installed • 4.5 Million customers’ consumptions recorded according to three bands (peak/off-peak/mid-level) • 2.5 Million customers today in the free market with time-of-use prices • All customers billed according to time-of-use prices (from 2010)  the distance between end-user pricing and volatile wholesale market prices is reduced • Opex reduction - 2008-2011 X-factor is: • metering activities: 5% • distribution: 1.9%

10. Italy: Gas smart meters • July 2006: smart metering implementation in the gas sector announced • 2006-2008: cost-benefit analysis, technical benchmark, survey on the use of AMR/AMM systems in Europe, two consultation documents • October 2008: Regulatory Order expected • Main topics discussed: • Cost and benefit • AMM vs AMR • Safety • Potential synergies with AMM systems for electricity

11. Conclusions • Smart metering is a revolutionary development • Cost and benefits are (partially) country-specific • The diffusion of smart meters can be promoted independently of the metering regime adopted • Some degree of harmonisation is needed (minimum functional requirements)