NSW moves to hive off power metering
The proposed sale comes hard on the heels of the industry regulator, the Australian Electricity Markets Commission, calling for metering to be hived off from the energy distributors as part of a broader industry overhaul.
It also comes as Victoria's metering sector is set to become contestable from 2015. At present, energy distributors own the metering assets, but the door is to be opened to new players.
These changes will pave the way for the likes of Macquarie Bank to move in, since it is already a big player in the UK.
In New Zealand, for example, electricity meters are run as a separate business, with a range of companies participating.
The planned sale comes as the NSW government is expected to move after the 2015 state elections to privatise its power distributors.
Victoria has mandated the rollout of so-called smart meters, but the NSW government has held back due to the high cost and uncertain payoff.
Energy retailers were the natural owners and operators of metering services, Macquarie told a federal government review last year. Through Capital Meters, it is a large player in the UK, where it has financed an unspecified number of smart meters and more than 1 million "dumb" meters.
It was an operator of gas metering for parts of British Gas for several years, for example.
About 33,000 large industrial and commercial meters are to be sold by Ausgrid and Endeavour, which are mostly in NSW but which span the national electricity market.
"It is a legacy of the retail business," said the chief executive of Networks NSW, Vince Graham, which runs the Ausgrid and Endeavour businesses.
"With the sale of the retail arm, we no longer have that relationship with the customer," he said. "It is profitable, but we don't want to invest further."
Frequently Asked Questions about this Article…
NSW plans to sell the national electricity meter arms of Ausgrid and Endeavour Energy — mainly their large industrial and commercial metering businesses. The article says about 33,000 large industrial and commercial meters are included, mostly in NSW but spanning the national electricity market.
The move follows recommendations from the industry regulator, the Australian Electricity Markets Commission, to hive metering off from energy distributors as part of a broader overhaul. Networks NSW’s chief executive, Vince Graham, also described the meters as a legacy of the retail business and said they are profitable but Networks NSW doesn’t want to invest further in them.
The article says opening metering to new players could pave the way for investors such as Macquarie Bank — which already has metering experience in the UK through Capital Meters. It also notes that in places like New Zealand meters are run as separate businesses with a range of companies participating, implying private operators and investors could be buyers.
Victoria has mandated a rollout of smart meters and is making its metering sector contestable from 2015, which opens the door to new market entrants. By contrast, the NSW government has held back on a wholesale smart meter rollout because of high costs and an uncertain payoff. These policy differences influence how competitive and attractive metering assets may be for investors.
The article states the planned sale comes as the NSW government is expected to move after the 2015 state elections to privatise its power distributors. In other words, the sale process is tied to the broader privatisation timeline following the 2015 election.
According to the article, Macquarie — through Capital Meters — has financed an unspecified number of smart meters and more than one million 'dumb' meters in the UK. The article also notes Macquarie operated gas metering for parts of British Gas for several years, showing prior operator experience in metering.
For everyday investors, the sale and the move to make metering contestable could create opportunities as new private players enter the market and metering becomes a standalone business. The article suggests the changes may attract infrastructure and financial firms (for example, Macquarie) that already invest in metering overseas, although it does not promise specific returns or outcomes.
No — at least not immediately. The article says Victoria has mandated smart meters, but the NSW government has held back on rolling out smart meters because of the high cost and an uncertain payoff. The metering sale reflects a decision to separate metering from distribution rather than fund a wide smart meter rollout from government-owned distributors.
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