Auditor-General not happy with Victorian smart meter rollout

Investigation calls for re-evaluation of economic case

The Victorian rollout of smart meters has been criticised by the state's Auditor-General's Office.

In a report titled, Towards a ‘smart grid’ — the roll-out of Advanced Metering Infrastructure, the Auditor-General hit out at the Advanced Metering Infrastructure (AMI) project, which was kicked off in 2006 to replace accumulation meters in 2.4 million homes and small businesses with smart meters by 2013.

"The AMI project has not used the checks and balances that would ordinarily apply to a major investment directly funded by the state. This highlights a gap in the project’s accountability framework," the report reads.

'There have been significant inadequacies in the advice and recommendations provided to government on the rollout of the AMI project. The advice and supporting analysis lacked depth and presented an incomplete picture of the AMI project in relation to economic merits, consumer impact and project risks."

The Auditor-General noted that while the Department of Primary Industries (DPI) was the administering agency, it only had an observer's role on the project's industry steering committee, diminishing its "ability to deal effectively and proactively with risks and issues".

DPI's advice to government and the level of engagement with the community were also inadequate, the Auditor-General said.

Additionally, the Auditor-General cast doubt on the economic case behind the state's decision to rollout smart meters and said consumers could be hit with greater costs than expected.

"The cost-benefit study behind the AMI decision was flawed and failed to offer a comprehensive view of the economic case for the project. There are significant unexplained discrepancies between the industry’s economic estimates and the studies done in Victoria and at the national level. These discrepancies suggest a high degree of uncertainty about the economic case for the project," the report reads.

As a result of the investigation, the Auditor-General provides eight recommendations including a call to re-assess the economic viability of the AMI project and to gain "assurance from Victoria’s electricity distributors that their candidate technologies for AMI are capable of achieving the expected functionality and service specification prior to the further installation of these technologies in customer premises".

The report does not question the value of smart meter technology but its sentiment is in stark contrast the interest in the field both in Australia and across the globe. In the US, for example, the government has allocated $4.5 billion to its smart energy grid programs with President Obama promising to install 40 million devices in homes across the country.

And at the Cebit IT fair in Hanover earlier this year, German utility Energie Baden-Württemberg (EnBW) demonstrated its smart meter, which has been available to customers since late 2008. The meter is available to homes for 5 Euros per month ($8) but customers who use its many reporting features can typically save more than that amount in electricity usage.

In late October, Victorian electricity distributor, SP AusNet, said it will partner with 12 companies and utilise WiMax technology to rollout 680,000 smart meters in the state over the next three years.

The deployment of the smart meters will commence in the coming months and be focused on homes and small businesses in the state's eastern and north eastern regions.

The full report can be downloaded from the Victorian Auditor-General's Office.

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