And we can’t forget market and technology forces.

Advanced Metering (AMI) and smart grids are the subject of countless white papers, reports from consultants and now government backed implementations the world over. Although the ability of AMI to shift peak load much beyond current demand control initiatives may be questioned by some, its roll out in New Zealand, Australia and parts of North America is well underway, albeit with varying degrees of success, and is likely to accelerate as the cost of technology falls.  While energy retailers will eventually look beyond meter reading benefits to leverage such technology to manage energy consumption, many network companies will have access to tools that could be used to further shape peak consumption behaviour and supply security.

Network companies that want to successfully navigate the rapidly evolving energy environment must look to tackle the areas of their business most likely to have the biggest impact on their ability to adapt to the market changes and opportunities such as:

-       Tariff management: With more uniform network pricing methodologies likely, how can a network company adapt? Or, as AMI technology advancements continue, can network companies adopt a cost reflective pricing structure that more accurately reflects both supply capacity and assessed co-incidence demand?

-       Utilising advanced metering data: Although energy retailers may be currently leading the smart metering charge in New Zealand, network companies in other regions have been quick to lock into the benefits the technology offers are actively engaged in enabling a ‘Smart Grid’. But the right complex data handling ‘real-time’ grid monitoring capabilities need to be in place for any gains to be realised.

-       Strengthening customer relationships: Can network companies go it alone? One network company in New Zealand did exactly that. By invoicing customers separately for distribution charges they were able to more accurately charge for both supply demand and contribution to peak consumption. Establishing a direct relationship with their customers, they now produce their own bills saving thousands of dollars each year in invoicing and handling costs typically outside of a network company’s control.

The business case for smart meter roll out New Zealand wide is far from water tight – there are cases for and against the deployment at local industry forums and conferences. And yes, moving to mandatory pricing standards may distort rather than improve price signals at the local level. But change, whether it is market, regulatory or technology driven is inevitable. It might not be change many believe in, but with the right tools in place it will, at least, be change that market participants and their customers can make the most of.