Queensland Minister for Energy Mark McArdle
Experts Cast Doubts On Smart Meters
Victor P Taffa
Doubts about the cost benefits of smart meters have been expressed by the same experts used to model aspects of the Commonwealth’s Government’s current electricity reform package.
Frontier Economics, used to model the Australian Energy Market Commission (AEMC) Power of Choice Review which is a key plank in Julia Gillard’s electricity reform plans, states that investing in smart meters may not be justified.
According to its own website:
“The Federal Government’s recent Energy White Paper promotes smart metering as a way to provide information about electricity usage and curb peak-time demand to reduce bills. Frontier (Australia) assesses the proposal in a client briefing and finds that the benefits of the required investment in Australia may not be justified by the costs.” (Source: http://www.frontier-economics.com/australia/au/news/1360/)
Danny Price, founder and managing director of Frontier Economics (Australia) recently said on the 7.30 Report (8/11/2012):
“For most customers who have an annual bill of about $1,500 a year of which about $700 is energy, they have to actually save a lot of energy to get any benefit from those smart meters at all.” (Source: http://www.abc.net.au/7.30/content/2012/s3628932.htm )
Queensland Energy Minister Mark McArdle said Frontier Economics’ advice was being used to justify the current reforms being proposed by Prime Minister Julia Gillard.
“It begs the question whether the AEMC restricted the scope of the advice from Frontier, which may have raised important questions about the cost-benefits of smart meters.” Mr. McArdle said.
“The cost of smart meters is an important part of the debate about the Prime Minister’s reforms. She cannot spruik to the media the potential benefits without identifying the costs. This smacks of a tactic used by unscrupulous door-to-door salespeople rather than the holder of such a high office.”
Mr. McArdle said because no costing details of the Prime Minister’s proposals had been released, he had asked his Department for preliminary advice on potential costs.
“They have advised that to date, Victoria is the only jurisdiction to undertake a mandatory roll-out of smart meters. The Victorian Government’s initial cost estimate was $800 Million, but the roll-out has cost $2.3 Billion with additional projected expenditure of $1.4 Billion to 2028.” Mr. McArdle said.
“A 2008 report by NERA Economic Consulting for the Ministerial Council on Energy estimated the cost of a smart meter roll-out in Queensland to be between $0.9 Billion and $1.3 Billion. However, the same report estimated a Victorian roll-out would only cost between $1 Billion and $1.5 Billion, so this figure is likely to be an underestimate.”
“As Queensland has a more geographically diverse population than Victoria, the cost per household of a Queensland roll out is expected to be significantly higher, and total costs could reasonably be expected to be at least $1.8 Billion to $2 Billion.”
Mr. McArdle said none of these costs were contained in the Prime Minister’s plan because it had no details.
“Someone has to pay for the cost of smart meters. Even if they are voluntary, the telecommunications to support them has been estimated to cost more than $1 billion. Someone has to pay for this.” Mr. McArdle said.
“If the experts who did the economic modelling for the Power of Choice Review don’t have confidence in the cost-benefits of smart meters, then some serious questions need to be asked about it being foisted on the nation as public policy.”