Patricia de Suzzoni, Chair of ERGEG Customer Working Group Citizens’ Energy Forum, London, September 2009 Regulatory aspects of smart metering in electricity & gas – European status review

22 nd Citizens’ Energy Forum, London, September 2009 Content 1.Introduction 2.Meter value management 3.Definitions of smart metering 4.Main drivers for roll-out 5.Cost benefit analysis & status of roll-out 6.Summary & next steps

32 nd Citizens’ Energy Forum, London, September 2009 Introduction The need for a status review and detailed analysis of smart meters in Europe was expressed at the first CEF in October 2008 A worldwide trend: substantial changes are under way in the technology of utility meters (electricity, gas, heat, water) In March 2009, the EC gave a Mandate to the standardisation bodies (CEN, CENELEC, ETSI) to develop an open architecture for utility meters involving communication protocols and functionalities enabling interoperability

42 nd Citizens’ Energy Forum, London, September 2009 Legal background At European level, 2 legislative acts refer to smart meters in gas and electricity: Directive 2006/32/EC on energy-use efficiency and energy services: Member States have to ensure that, under certain circumstances, “final customers for electricity, natural gas, (…) are provided with competitively priced individual meters that accurately reflect the final customer's actual energy consumption and that provide information on actual time of use”

52 nd Citizens’ Energy Forum, London, September 2009 Legal background Directives of the 3rd package 2009/72&73/EC: Member States have to ensure “the implementation of intelligent metering systems that shall assist the active participation of consumers in the electricity/gas supply market. The implementation of those metering systems may be subject to an economic assessment of all the long-term costs and benefits to the market and the individual consumer or which form of intelligent metering is economically reasonable and cost-effective and which timeframe is feasible for their distribution.”

62 nd Citizens’ Energy Forum, London, September 2009 ERGEG status review Methodology: Based on the result of one questionnaire for electricity & one for gas administered by the NRA of EU Member States + Norway & Iceland for the situation as of May countries answered Scope: mass market i.e. households and SMEs

72 nd Citizens’ Energy Forum, London, September 2009 Content 1.Introduction 2.Meter value management 3.Definitions of smart metering 4.Main drivers for roll-out 5.Cost benefit analysis & status of roll-out 6.Summary & next steps

82 nd Citizens’ Energy Forum, London, September 2009 Meter value management Concerns collection, treatment and use of the data provided by the utility metering systems Is central to market functioning In 23 out of 25 countries in electricity and 18 out of 21 in gas the responsibility lies with the DSO Except for Germany and Great Britain (and Latvia for gas only)

92 nd Citizens’ Energy Forum, London, September 2009 Content 1.Introduction 2.Meter value management 3.Definitions of smart metering 4.Main drivers for roll-out 5.Cost benefit analysis & status of roll-out 6.Summary & next steps

102 nd Citizens’ Energy Forum, London, September 2009 Definition of smart metering (1/2) Many regulators do not have a definition and several terms are used: “smart”, “intelligent”, “advanced” meters In electricity, all regulators use the term “smart metering” or equivalent: For almost all of them, it describes a system that accurately reflects the customer’s energy consumption, provides information on the time of use and allows remote meter reading, i.e. AMR as a minimum And, for 15 of them, a system that supports 2-way communication, remote connection/disconnection, local display devices etc..., i.e. AMM

112 nd Citizens’ Energy Forum, London, September 2009 Definition of smart metering (2/2 ) In gas, 7 regulators use the term “smart metering” or equivalent For all of them, it describes a system that accurately reflects the customer’s energy consumption, provides information on the time of use and allows remote meter reading And, for 4 of them, a system that supports 2-way communication, remote connection/disconnection, local display devices, etc...

122 nd Citizens’ Energy Forum, London, September 2009 Content 1.Introduction 2.Meter value management 3.Definitions of smart metering 4.Main drivers for roll-out 5.Cost benefit analysis & status of roll-out 6.Summary & next steps

132 nd Citizens’ Energy Forum, London, September 2009 Main policy drivers for a roll-out of smart metering

142 nd Citizens’ Energy Forum, London, September 2009 Key regulatory tools in smart metering

152 nd Citizens’ Energy Forum, London, September 2009 Content 1.Introduction 2.Meter value management 3.Definitions of smart metering 4.Main drivers for roll-out 5.Cost benefit analysis & status of roll-out 6.Summary & next steps

162 nd Citizens’ Energy Forum, London, September 2009 Cost benefit analysis Electricity CBA have been conducted Not available CBA are in progress

172 nd Citizens’ Energy Forum, London, September 2009 Status of large scale roll-out Electricity Large scale roll-out achieved Not available Large scale roll-out decided Large scale roll-out under discussion

182 nd Citizens’ Energy Forum, London, September 2009 Cost benefit analysis Gas CBA have been conducted Not available CBA are in progress

192 nd Citizens’ Energy Forum, London, September 2009 Status of large scale roll-out Gas Large scale roll-out achieved Not available Large scale roll-out decided Large scale roll-out under discussion

202 nd Citizens’ Energy Forum, London, September 2009 Content 1.Introduction 2.Meter value management 3.Definitions of smart metering 4.Main drivers for roll-out 5.Cost benefit analysis & status of roll-out 6.Summary & next steps

212 nd Citizens’ Energy Forum, London, September 2009 Summary of main findings Definitions of smart metering differ: remotely readable or two-way communication meters depending on energy and on country Main drivers of large scale roll-out are common to gas & electricity and to all countries Smart metering roll-out timetables differ for electricity and gas

222 nd Citizens’ Energy Forum, London, September 2009 Conclusion and next steps At this stage, the number of roll-outs and projects differ between European countries and may well undergo substantial changes in the near future More work has to be done : to define smart meters and their functional requirements to ensure interoperability at national (& European) level to establish a transparent methodology for cost benefit analysis ERGEG therefore plans to continue its dialogue and analysis with stakeholders to develop recommendations on regulatory aspects of smart metering such as defined in the EU legislation

232 nd Citizens’ Energy Forum, London, September 2009 Thank you for your attention! Mark your diary for the World Forum on Energy Regulation IV October 18-21, 2009 Athens, Greece

242 nd Citizens’ Energy Forum, London, September 2009 Annexes

252 nd Citizens’ Energy Forum, London, September 2009 Main policy drivers for a roll-out of smart metering Main drivers Energy efficiency More frequent meter readings Peak load management 15 countries for electricity /10 for gas have mentioned all 3 or a combination of them Key regulatory tools Legal obligation Minimum functional requirements Financial incentives Meter standardisation

262 nd Citizens’ Energy Forum, London, September 2009 Status of large scale roll-out Achieved in electricity in 2 countries: Italy and Sweden (more than 90% of population equipped) In gas in 0 countries Decided to perform a large-scale roll-out In electricity in 4 countries: Denmark, Finland, Greece and Spain In gas in 1 country: Italy Under discussion in electricity in 12 countries: Austria, Czech Republic, Estonia, France, Germany, Great Britain, Ireland, the Netherlands, Norway, Poland, Portugal and Slovak Republic In gas in 5 countries: France, Great Britain, Ireland, the Netherlands and Slovenia

272 nd Citizens’ Energy Forum, London, September 2009 Cost benefit analysis Has been conducted for electricity in 8 countries: Czech Republic, Finland, France, the Netherlands, Norway, Portugal, Spain and Sweden for gas in 3 countries: Italy, the Netherlands and Spain Is in progress for electricity in 7 countries: Austria, Belgium, Denmark, Germany, Great Britain, Ireland and Poland for gas in 8 countries: Austria, Belgium, France, Germany, Great Britain, Ireland, Poland and Slovenia