Response to. Second Consultation on Possible National Rollout Scenarios for the Smart Metering Cost Benefit Analysis (CER/10/197)

Transcription

1 Response to Second Consultation on Possible National Rollout Scenarios for the Smart Metering Cost Benefit Analysis (CER/10/197) 14 January 2011

2 Introduction Given the national significance of the Smart Metering Programme and the anticipated considerable costs involved, it is imperative that right from Phase 1 of discovery, exploration and business case development that the principles of competitive economic practice are adopted. In Q.5 the consultation paper seeks views as to whether the Wide Area Network (WAN) provision and management should be provided by ESB Networks or a Third Party. Even under a cost benefit analysis, we struggle to see how a suitable comparison can be made between the costs of ESB Networks and an amorphous Third Party. Our view is that only a competitive tender process can determine the most cost effective service provider and hence there is no rational basis to pit ESB Networks against a notional Third Party. We would suggest that the question is rather one of service provision by a Single Party as against Multiple Parties. The key message we wish to underline with this is that smart metering system and business process requirements should be determined and specified in as much detail as possible, but normal competitive forces should be allowed deliver the final solutions. The other key message we wish to outline, as evident throughout our response is that, as the smart metering space is still evolving, open standards and protocols should be under consideration as much as settled upon ones. For example in Q.4 we suggest that packet switching over the Internet should be considered for the Wide Area Network (WAN) functionality and technology, as well as the proposed DLC, RF and GPRS. This is a technology option that is being backed the technology giant, Cisco and we are of the view that it merits consideration within the CBA. The next sections outline our responses in detail.

3 Section Objectives Q1. Respondents are invited to comment on the proposed objectives of the National Smart Meter Programme outlined in Section 2. Are you in favour of the proposals? Outline reasons for agreement or disagreement. As stated in our previous response, we are in general agreement with the five initial objectives identified for the National Smart Meter Programme. We welcome the new addition to the objectives, on reviewing potential synergies between smart energy and water metering. Granted that water is not under the remit of the Commission, as well as the fact that there would be several technical and legal issues to address in trying to realise such synergies, but in economic terms, doing so would be sound. On that basis we welcome the continuing work the Commission is carrying out with the Department of the Environment, Heritage and Local Government to support and realise any such synergies between smart energy and water metering. On broadening out the scope of the programme to account for other services such as heat metering, internet broadband and in-home applications such as for security and healthcare monitoring, our view is that it is probably prudent to not include them as specific objectives as doing so might make the programme unwieldy. However it will also be useful, were feasible, to cater for potential future services; for example by specifying for additional unused expansion slot capabilities on the meters. Clearly understanding the relationships between smart meter functionality, benefits derived from meter functionality, flexibility in being able to add future functionality modules and technology compatibility before roll out will be key to programme success. Section Ownership, Display and Provision of Information Q2. Respondents are invited to comment on the proposed working assumptions outlined in Section 3 relating to data ownership, display and provision. Are you in favour of the proposals? Outline reasons for agreement or disagreement. Granularity We agree with the half hourly intervals for electricity consumption data. However we would suggest that this is explicitly linked to the settlement time period in the wholesale market. A statement in the programme objectives would do. This would both to keep in view the rationale for the adopted granularity and allow for a review should the wholesale market settlement period shift away from half hourly periods. In addition we would support the view that the minimum interval for gas data be daily.

4 Data Access for Suppliers Provision of a data portal with push and/or pull service features will be welcome. Our stated preference if only one of the features can be provided will be the pull service. Data Access for Consumers Having being provided for under the EU Third Package, it is only reasonable for consumers to have access to their own consumption data and be free to give access to competing suppliers and other third parties should they choose. The outlined proposals are reasonable. Billing Content and Frequency Aside from specific content, such as fuel-mix disclosure information and specific arrangements, perhaps mandated under a customer charter, billing is one of the options available to suppliers to differentiate themselves. On that basis we do not support mandated options in relation to content and frequency of energy billing. For CBA purposes, monthly and bi-monthly billing frequency scenarios may provide only a basic view; a more comprehensive analysis will be provided if additional scenarios such as weekly, bi-weekly, quarterly, half-annually and annually were also included. Data for Prepayments We have no objection to the stated proposal. In-Home Data We reiterate our view that deployment of IHDs would be best served by combining requirements of different customer classes with diverse offerings available from service providers. We strongly object to a mandatory requirement for such devices. We are of the view that the requirements for smart meters to communicate with IHDs should be specified but the provision of such devices should be based on commercial propositions made by service providers, be they energy suppliers or energy services providers. Vulnerable Consumers We have no objection to the stated proposal. Data Security and Protection We concur with the Commission s view that full end-to-end security of smart metering systems is paramount and of the need to ensure that data protection will be a primary concern in smart metering systems design. We must point out that while the section is titled Data Security, systems security is also essential to prevent nefarious activity such as the hijack of control functionality to disconnect customers and/or cause sudden significant shifts in system load. Section Smart Metering System Functionality Q3. Respondents are invited to comment on the proposed working assumptions outlined in Section 4.2 in relation to the smart metering functionality requirements. Are you in favour of the proposals? Outline reasons for agreement or disagreement. We do not have an issue with the functionality requirements listed being used as the working assumption. However we must point out that electricity meter functionality requirement No. 2, essentially implies that settlement will continue to be done on 48 half hourly intervals. We would suggest that if the cost of registers is not significant, it may be

5 more valuable to consider 96 quarter hourly interval registers. Or consider both options side by side. To further underpin this, the current need for DSM is driven by consumer demand peaks which occur at predictable times, and under this scenario DSM metering benefits can be delivered through ToU tariffs. As wind penetration rises, the need for DSM will be driven by wind availability which is unpredictable, and under this scenario DSM metering benefits will be maximised through real-time price (RTP) tariffs. Smart meters should therefore have both ToU capabilities in the short term and already-enabled RTP capability in the medium term. Of course however, RTP may be based on various time intervals half hourly, quarter hourly, minute-by-minute, second-by-second. Hence this is only a future-proofing suggestion and not overly essential. Q4. Respondents are invited to comment on the proposed working assumptions outlined in Section in relation to the Wide Area Network (WAN) functionality and technology. Are you in favour of the proposals? Outline reasons for agreement or disagreement. Proposal for an Additional Scenario Internet Packet Switching We have no objections to the three scenarios proposed for use in the CBA. However we have a concern that the options list does not appear to include a scenario for using Internet packet switching over the extensive broadband infrastructure already in existence across the country. Given the objective of the CBA, it will be remiss to ignore this technology option which has the support of technology heavyweights such as Cisco, may be more cost competitive and would allow tailoring to the various communication solutions implemented at diverse locations including apartments blocks and rural areas. GPRS No Technical Necessity to Replace SIMs The consultation notes that the cost of changing mobile network operator post-rollout is prohibitive as a visit would be required to each meter to replace SIMs. We seriously question this view as it is technically possible to have a SIM card capable of connecting to any provider s network. The normal position where access to rival networks is prevented is often done in the commercial interest of the telecoms providers, who lock their SIM cards and phones to their networks. Hence it is not a technical necessity to visit each meter to replace SIMs. Evidence of this technical feasibility abounds: the requirement to facilitate emergency calls is one. Another is the abundance of small business services offering phone unlocking services. Furthermore the experience internationally points to an alternative operating model as compared to local experience where SIMs are specific to providers. To alter current practice it may be necessary for the Commission to engage the Department to discuss how free roaming of utilities' SIM cards could be facilitated.

6 Q5. Respondents are invited to comment on the proposed working assumptions outlined in Section in relation to the Wide Area Network (WAN) provision and management model. Are you in favour of the proposals? Outline reasons for agreement or disagreement. The consultation states that [u]ltimately the guiding principle will be to ensure that the most cost effective communications solution is put in place through a public procurement process. Yet a scenario is put forward which essentially preselects a named party ESB Networks as the service provider/operator of the smart metering communications system. While it is right to conclude that it will be uneconomical to provide separate communications infrastructure for electricity and gas, and a single solution should be deployed, we do not agree with the automatic defaulting to list an entity, ESB Networks in this case, out of the universe of potential candidates, in essentially a prequalified fashion. A number of questions arise: How do ESB Networks costs, under a CBA, align with costs which it will need to determine under a commercial tender, or an approved regulated revenue basis? How would the CBA determine the costs for all other contenders under the label Third Party, costs which may not be representative of any of the potential candidates within the diverse universe whose interests may be purely commercial, or strategic, or otherwise? Our view is that only a competitive tender process will determine the most cost effective service provider. There is no rational basis we can see to pit ESB Networks against a notional Third Party. What is crucial is to determine the requirements for a communications solution, the requirements for a service provider and/or an operator and then have a competitive selection process. On that basis, we strongly recommend that if multiple scenarios where required for this section then it should be a question of Single Party vs. Multiple Parties. Otherwise the CBA should be conducted on the basis of a Third Party, to be understood as a single party, providing the infrastructure. Q6. Respondents are invited to comment on the proposed working assumptions outlined in Section in relation to the Home Area Network (HAN). Are you in favour of the proposals? Outline reasons for agreement or disagreement. The two scenarios should be suitable. They appear to cover the two general bases of either adopting a standardised protocol or employing an open platform.

7 Section 5.0 Implementation Q7. Respondents are invited to comment on the proposed working assumptions outlined in Section 5 relating to the implementation approach and timelines. Are you in favour of the proposals? Outline reasons for agreement or disagreement. We would suggest that it is prudent, as the Commission proposes, to stay with the timelines as currently proposed. Given the fast moving pace represented in the smart meter world, the ability to respond to changing situations is much more important than having a solid plan. We welcome the Commission s decision to keep the timelines under review throughout the project implementation. To discuss this document contact: Emeka Chukwureh emeka.chukwureh@airtricity.com