Canberra, Australia --- (METERING.COM) --- February 12, 2013 - In what has been a lengthy investigation Victorian distributor SP AusNet has had its request for increases in its smart meter expenditures for the 2012-2015 period rejected by the Australian Energy Regulator (AER).
At issue is SP AusNet’s choice of WiMAX for its communications technology, and whether or not the company should have switched to mesh radio – the technology of choice of the other Victorian distributors – when a cost overrun became apparent and to enable it to reach its AMI delivery targets.
In a 120 page “Final decision,” the AER argues that “a reasonable business in SP AusNet's circumstances would have switched to mesh radio” in 2011. The AER estimates that the cost to retain the WiMAX solution as at 28 February2011 would have been $321 million in present value terms, compared with $191 million to switch to mesh radio.
These compare with the estimates by SP AusNetand its consultant Kema of $305 million for WiMAX retention and $355 million for the mesh radio switch.
The AER’s final decision is in essence the same – although differing in some details – to its previous decision on the application made in October 2011. That decision was subject to a legal challenge, which resulted in the Australian Competition Tribunal requiring the AER to revisit certain parts of the decision.
The final outcome is that SP AusNet has an approved budget of $322 million for the 2012-2015period, against its submission of $411 million.
SP AusNet hasn’t issued a comment on the decision, but there are clear points of both agreement and disagreement, which the AER reviews in its decision document, and which would be worthy of further analysis.
The decision also highlights the importance of continually monitoring the costs (and benefits) and the cash flow/accounting during AMI rollout.