IN A bid to stop overspending on the electricity network, SP AusNet has been blocked by the Australian Energy Regulator from raising charges to pay for its smart meters.
The regulator, an arm of the competition watchdog, also criticised the company for failing to switch to cheaper technology to avoid an increase in costs.
Earlier, the regulator cut to $304.1 million from $410.7 million SP AusNet's proposed expenditure for the introduction of the meters between 2012 and 2016, triggering a legal challenge by the power distributor.
Since the legal challenge failed, consumers will not be charged for cost overruns. SP AusNet has not ruled out challenging the decision, saying it would "carefully review" it before deciding on a response.
The regulator argued that "a reasonable business" would have reconsidered which equipment to install following a rise in costs.
"The allowance for 2011 that the [regulator] originally approved would have been more than sufficient to cover the costs of switching to the alternative technology," the chairman of the regulator, Andrew Reeves, said.
If SP AusNet's proposal had been approved, meter prices would have risen by approximately 16 per cent each year in 2014 and 2015 on top of the 7 per cent allowed previously by the government.
No price rise was considered necessary to account for the cost of switching technologies, the regulator said, although some provision was agreed to be made for foreign exchange contracts and project management, which would increase SP AusNet's allowance by $17.5 million.
"The effect is that current meter prices will increase by approximately 3 per cent each year in 2014 and 2015 on top of the 7 per cent previously allowed," the regulator said.
For the standard meter, this means prices will increase by $12.93 in 2014 and $14.22 in 2015.
The Victorian government approved a state-wide introduction of smart meters in 2006. Since then the cost of the introduction has risen steeply even though the cost of the basic technology has declined.
SP Ausnet could not be contacted to respond to the decision.