Electricity: cost and promotion scheme recognition methods defined for new 2G Smart Meters

Milan, November 11, 2016

Italian version

Transparency of installation plans, invariability of metering tariffs for consumers due to new benefits related to the strong improvement in meter performance and new mechanisms incentivizing costs reduction. These are the fundamental principles of Resolution 646/2016/R/eel, whereby the Regulatory Authority defined the new tariff regulations for electricity distributors for the recognition of the installation costs of low-voltage second-generation (2G) Smart Meters, whose characteristics, functional specifications and performance levels were already defined by the Regulatory Authority last March (Resolution 87/2016/R/eel, approved pursuant to Legislative Decree 102/2014, which provides for the Regulatory Authority to define the specifications of the 2G Smart Meters [1]).

The new regulatory framework, based on incentive approaches,  that are innovative for our country and in line with the international best practices of infrastructure service regulators, forecastsfor the Regulatory Authority to consider and approve the plans for the installation of the new low-voltage second-generation (2G) Smart Meters through a transparent public process; these plans should be developed in detail over a fifteen-year period, including progress and expenditure forecasts.   A fast-track approval process shall apply in case the installation and commissioning plans ensure substantial invariability of metering tariffs for customers (net of inflation) in terms of costs, i.e. they make it possible to offer consumers advanced metering service, with updated information available on a daily basis (instead of every two months as it is now), faster and more efficient supplier change and transfer procedures and new services in terms of flexibility (such as prepaid contracts), without additional  costs in real terms. After an extensive consultation process carried out in two steps with the participation of the various stakeholders, the Regulatory Authority established rules which on  one side allow distributors flexibility in planning and on the other side exclude the recognition of costs related to the possible early disposal of first-generation meters if the distributor does it voluntarily or intentionally.        

Therefore, the new regulatory framework promotes the development of a more efficient and modern electricity metering service, with mechanisms that ensure transparency and neutrality also in relation to other business activities, such as the national development plan of the optic fiber. On this issue, the new rules confirm the existing requirements for separate accounting of costs and revenues for business activities other than the service subject to tariff recognition and provide specific monitoring standards to pass on potential benefits from synergies with said business activities to the electricity sector customers.   Resolution 646/2016/R/eel with detailed technical data sheet available on www.autorita.energia.it



[1] In Italy, the installation process of the current first-generation (1G) meters was launched in 2001 and completed in 2006 for the main distributor (about 85% of end customers), in 2011 for the remaining distributors, with a useful life of 15 years.