NSMP Business Process and Procedures Work Stream SMWG query

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					National Smart Metering Program




                         NSMP Business Process and
                         Procedures Work Stream
                         SMWG query - Estimation
                         and substitution during
                         Critical Peak Pricing
                          Version number:   Version 1.0

                          Status:           Final

                          Author:           Peter Egger

                          Date published:   26 May 2010

                          File name:        NSMP BPPWG SMWG query on
                                            estimation and substitution v1.0.doc
NSMP Business Process and Procedures Work Stream
SMWG query - Estimation and substitution during Critical Peak Pricing




Table of Contents
1      DOCUMENT CONTROL .......................................................................................................................... 3
    1.1        VERSION CONTROL ............................................................................................................................... 3
    1.2        APPROVAL ............................................................................................................................................ 3
    1.3        REFERENCES ......................................................................................................................................... 3
2      INTRODUCTION ....................................................................................................................................... 4
3      ANALYSIS AND FINDINGS ..................................................................................................................... 5
    3.1        CONTEXT FOR THE QUERY..................................................................................................................... 5
    3.2        ANALYSIS OF METERING DATA .............................................................................................................. 6
    3.3        ANALYSIS OF PRICING ......................................................................................................................... 10
    3.4        FINDINGS RELATING TO METERING DATA ............................................................................................ 11
    3.5        FINDINGS RELATING TO PRICING ......................................................................................................... 11
4      CONCLUSION AND RECOMMENDATION ....................................................................................... 12
    4.1        CONCLUSION....................................................................................................................................... 12
    4.2        RECOMMENDATION ............................................................................................................................ 14
APPENDIX A – GLOSSARY ............................................................................................................................ 15




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SMWG query - Estimation and substitution during Critical Peak Pricing




1           Document Control
                    1.1        Version Control

 Version       Date                     Description                                Amended by

 0.1           21/04/2010               First Draft                                P Egger
 0.2           10/05/2010               Includes comments from team                P Egger
 0.3           12/05/2010               Includes further comments from team        P Egger
 0.4           14/05/2010               Includes further comments from team        P Egger
 0.5           26/05/2010               Updated post NSSC meeting to               P Egger
                                        include one change to the
                                        recommendation in Section 4.2. b).
                                        The recommendation has been
                                        amended to read “The application of a
                                        price to substituted metering data is to
                                        be further investigated by the
                                        SMWG.”
 1.0           26/05/2010               Baselined post approval by the NSSC        H Williams
                                        on 26 May 2010



                    1.2        Approval

 Authorised by                            Signature                                          Date

 NSSC Program Director                                                                       26 May 2010




                    1.3        References
The following documents are referred to in this document.

 Document Name                                                                        Version

 Metrology Procedure Part A                                                           31 July 2008
 Metrology Procedure Part B                                                           31 July 2008




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SMWG query - Estimation and substitution during Critical Peak Pricing




2            Introduction
In February 2010, a letter was received by the NSSC from the MCE/SCO Smart Meter Working Group
(SMWG) on the suitability of the NEM estimation and substitution of metering data for smart meters.
The NSSC at their meeting on 23 February 2010 resolved to ask the BPPWG to examine this matter and
report back to the NSSC at the May 2010 meeting.
Specifically, the NSSC was requested to advise whether the current estimation and substitution
methodology in the National Electricity Market (NEM) metrology procedures is appropriate for the new
                                                                                      1
tariff types that are likely to be offered following the introduction of smart meters.
In their letter, the SMWG stated that “under the current methodology where a zero read is registered it is
assumed some energy was used during this period and a substitution is made”. This may not necessarily
be appropriate in a future environment where a tariff may be explicitly designed to encourage customers to
reduce consumption at specific times. The experience of trials in Australia includes some instances where
a customer turns their energy off at the meter box in response to a critical peak price (CPP) event,
meaning a zero reading would be the correct reading for that period.
The SMWG also advised that under the current methodology, where meter data is missing or lost, the
estimated or substituted data is based on historical usage or on a like customer. The SMWG indicated that
problems could arise in several ways:
a)        Historical usage may not be an appropriate substitute for data which is missing or lost in a CPP
          event as this type of tariff is predicated on encouraging a change in customer behaviour. The
          SMWG is aware anecdotally of a large customer executing a demand response strategy who
          subsequently found that their reduced demand had not been recorded because the meter was faulty
          and substitutions had been made based on their historical usage;
b)        A reasonable set of “like customers” would constitute those on the same tariff, however if a CPP
          tariff were a retail product the meter data agent may not have access to a set of like customers on
          which to base the substitution. One resolution to this problem may be for the metrology procedure to
          allow the retailer to identify to the meter data agent sets of sample customers that should be used
          for calculating substitutions. NSSC may also wish to consider other solutions to this problem.
The NSSC was asked to consider these examples and any other potential issues it deemed relevant to
estimation and substitution in the current metrology procedures. If the NSSC considered the existing
procedures to be appropriate, justification is requested by the SMWG. If they are not found to be
appropriate, alternatives may be explored through the process outlined in the National Smart Metering
Program Roadmap in accordance with the NSSC’s existing timeline for this work.
The advice provided by the NSSC will be used to assist SCO to consider if any policy response is
necessary in the NECF (or elsewhere) to address this matter.
The BPPWG noted this request at their February 2010 meeting. Subsequently, a team of people Malcolm
Hempel (Origin Energy – representing retail), Rod Jones (Energy Australia – representing Network, Retail,
MDP), Brian Osborne and Dino Ou (Integral Energy – representing MDP), Matt Coleman (CitiPower /
Powercor Australia – representing Victorian DNSP), Tim Lloyd (Country Energy – representing MDP) and
Peter Egger (Working Group Leader) participated in an analysis of this query.
The analysis and findings are presented in Section 3 of this paper. The conclusions and recommendation
are presented in Section 4 of this paper.
In this paper, ‘Type x’ refers to a ‘type x metering installation’.




1
    Note that underlining has been added by the BPPWG.
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3           Analysis and findings
A customer’s bill is made up of two essential elements: (a) a metering data element and (b) a price. These
two elements are examined in turn in relation to the query.

3.1         Context for the query
The context for this query is shown in Figure 1.

                         Power            Measurement            MDP                 NEM
                         conductor        device              processing             settlements



                                            metering                  metering
                                           data transfer             data transfer


                                                                                     wholesale
                                                                                     market bill



                                                                 metering                              Customer
                                                                                     Retailer
                                                                data transfer                          bill

                                  Figure 1: production of a customer’s electricity bill


From the Figure it can be seen that processing of the metering data occurs as a central activity (by the
     2
MDP ) after the data is extracted from the measurement device. The MDP then sends that data (in one
form) to AEMO for NEM settlements (wholesale market billing). The same underlying data is sent to the
Retailer (FRMP) for subsequent billing of the customer, however, the timing of the two metering data
transfer actions is different.
In regard to the wholesale market bill (that AEMO sends to a retailer):
         The detailed description of the metering data that appears on the retailer’s bill (and the integrity of
          that data) is governed by the NER (and procedures under the NER). The metering data is in the
          form of aggregated qualities for any one retailer (per transmission node) and is NOT identifiable to
          any individual customer. Note that the emphasis at this point is more on data integrity and less on
          bill related description.
    
                                                                                                   3
          The price on the retailer’s bill is controlled explicitly by the NER .
         The relationship between the metering data used in any one bill and the price applied to that
          metering data is explicitly described in the NER. Retailer’s are given the opportunity to examine
                                                                             4
          and query that relationship at several steps in the billing process . This examination forms a
          recognised validation step in wholesale market billing.
In regard to the customer’s bill (that a retailer sends to its customer):
         The detail description of the metering data that appears on the customer’s bill is governed by
          jurisdictional Acts, Regulations and other similar instruments (dependent only on the jurisdictional
          regulatory arrangements). However, the integrity of the metering data that is use on any one bill is
          governed by the NER. That is, the retailer will accept and pass on to the customer the quality of
          the metering data provided to it by the MDP.


2
  MDP is used in this paper to mean both the Metering Data Agent and the Metering Data Provider.
3
  The retailer’s bill is known as a ‘pool statement’ and references the pool price per NEM trading interval.
4
  These steps are known as ‘prudential’, ‘preliminary settlements’, ‘final settlements’, ‘revision 1, and ‘revision 2. Therefore the retailer
has several opportunities to resolve metering data discrepancies..
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         The price on the customer’s bill is either a regulated price or a negotiated price. The regulated
          price is governed by jurisdictional Acts, Regulations and other similar instruments (dependent only
          on the jurisdictional regulatory arrangements). The negotiated price is a private matter between
          the retailer and the customer.
         The relationship between the metering data used in any one bill and the price applied to that
          metering data not described in any instrument. It is assumed that retailers will apply the approved
          price to the approved metering data. There appears to be no control step to validate the
          application of the price to the metering data, as is available in the wholesale market billing
          process. The fact that the metering data quality may change from time to time against a regulated
          price has not been given attention up to this point in time, even though this variation in data quality
          has been occurring since the introduction of Time of Day pricing structures over two decades
              5
          ago .

3.2         Analysis of metering data
Based on the above context, the focus for the analysis of metering data becomes the procedures imposed
on the MDP for processing that metering data. There are four procedures:
         Metrology Procedure Part A.
         Metrology Procedure Part B.
    
                6
          SLR for MDA (metering installation Types 1 to 4).
         SLR for MPD (metering installation Types 5 to 7).
The key document is the Metrology Procedure Part B. The other three documents simply cross reference
to this document.
An analysis of the Metrology Procedure Part B indicates that the following terms are relevant for this
analysis:
         Validation means “a process undertaken by the Metering Data Provider [or MDA] to test the
          veracity and integrity of metering data prior to transfer to AEMO and other Registered
          Participants”.
         Substitution means “a process undertaken by a Metering Data Provider [or MDA] or AEMO for the
          substitution of erroneous metering data or where the metering data has failed the validation
          process”.
         Estimation means “the processing of data undertaken by a Metering Data Provider [or MDA] for
          the estimation of metering data where the scheduled meter reading cycle does not support the
          delivery time frames of metering data to AEMO and other Registered Participants”.
A couple of quick points arise from these definitions:
     (a) The ‘estimation’ process is not relevant to this analysis. This specific process is used to estimate
         future datastreams sent to AEMO for wholesale market. These estimated datastreams are only
         used prior to the receipt of actual datastreams from manual meter reading schedules, or prior to
                                                                                        7
         the construction of substituted datastreams after actual data fails to emerge .
     (b) The term ‘estimation’ as used in the NEM procedures has an entirely different meaning to the
         same term use in the Act and Regulations regarding the quality of the metering data.



5
  As a rule, it would be expected that retailer billing systems should have the ability to adjust a customer’s bill when new or better
data becomes available.
6
  SLR means Service level Requirements.
7
  That is, in the NEM ‘estimation’ is defined to apply to situations that are ahead of the current date, whereas ‘substitution’ is defined
to apply to situations that are historical to a current date.
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     (c) The term ‘estimation’ as use in the Act and Regulations regarding the quality of the metering data
         is almost synonymous with the term ‘substitution’ used in the NER and associated procedures.
     (d) A substitution can only occur when a validation has failed. Hence, the initial part of the analysis
         should be around the nature of the validation process rather than on the substitution process.
     (e) By definition, only the MDP can perform a validation process.
Validation of metering data:
The Metrology Procedure Part B specifies the following actions to be taken when validating metering data:
         Check against a nominated maximum value.
         Check the maximum value of the datastream.
         Perform a minimum check:
          o     Check against a minimum value; or
          o     Check against an acceptable number of zeros.
         Check for null records in the metering installation database.
         Check for meter alarms against the datastream and confirm their relevance.
         Check interval datastreams against cumulative datastreams where these two separate
          datastreams are available.
NULL (no data value): It is noted that the null check is performed on the data in the metering installation
database. This is because it is rare to experience a null record arising from a meter and hence only
checking the incoming datastream from the meter would not detect any problems further downstream in
the database.
For Types 4 and 5, the MDP either gets a complete datastream or no datastream from the meter.
Electronic meters have in-built integrity checks to identify nulls and if this check produces a meter alarm
then the meter is classified as having failed. If a Type 4, or a remotely read Victorian Smart Meter, then
the meter is replaced quickly, generally within a few days. If a Type 5 other than a Victorian Smart Meter,
the meter would not be replaced until the metering data was manually read, processed and then acted on.
This could take up to 3 months after the failure occurred.
The null usually occurs when two datastreams don’t synchronise (in day and time) at their interface within
the metering installation database. This can occur for a number of reasons, such as:
         A ‘butt up’ or ‘Gaps and Overlaps’ problem has occurred between the existing and new
          datastreams;
         A failure of the communication system has occurred resulting in the need to prepare a substitute
          datastream needs prior to the communications network being restored;
         A probe failure event has occurred at the meter during a local meter reading event.
In the situation where a meter failure has occurred and it has taken some period before it has been
replaced, this period looks like a string of nulls. This string of nulls is first seen in the metering installation
database. This means that the validation check will deliver a ‘failure’ and substitution actions are
consequently invoked.
If a single null record was to occur in a meter it will generate an alarm to identify that the meter has failed.
From that point onwards the metering data is considered to be a string of nulls, with the validation check
delivering a ‘failure’. This string of nulls is first seen in the metering installation database.
It can be seen from these examples that the creation (by a meter) of a single null in a datastream followed
by a string of valid metering data will not happen, or be allowed to happen.



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ZERO: It is noted that a zero value will be identified if a validation check is performed against a nominated
minimum value. Hence, the minimum value check is usually performed, rather than a check against an
acceptable number of zeros.
When a zero value is detected, it is manually assessed for large customers (and may be system checked
for small customers) against other information (including the existence of quality flags) to determine the
integrity of that value.
Some flags combine with zero to confirm that the value is accurate. For example, a zero with a power
outage flag is classified as an actual zero. Some flags indicate that further investigation of the zero value
is required. No flag requires some other piece of information to confirm that the zero is OK (for example, a
return to a positive value in some later period where that return is reasonable in value and timing). A zero
with no flag for a reasonable period will trigger an investigation, even though it may be genuine as the
consumer could be on holidays and has turned the main switch off.
If there is no additional information to raise a doubt about the quality of that value, then the zero value is
accepted as ‘actual’ data.
LOST DATA: Lost data is generally thought of as a null condition.
However, lost data can occur when a non-zero value is recorded. For example, if the meter develops a
scaling factor problem and goes into pulse overflow, the meter doesn’t record the overflow values. That is,
the customer is still consuming power but the meter is not correctly recording that power. In this case a
quality flag is attached to the interval data to indicate a problem that needs to be investigated.
Substitution of metering data:
The onset of an investigation means two things. First, that the validation check has failed. Second, that a
substitution of the metering data will be performed.
When a zero occurs and the need for a substitution is established, the general policy is to substitute a
value that best reflects the perceived energy flow at that time.
The Metrology Procedure Part B contains rules for substitution of metering data. For residential customers
           8
with Type 4 , the substitution techniques are as follows:
         Like day (nearest equivalent day);
         Average like day;
         Linear Interpolation (period no greater than 2 hours)
         Agreed Method (for a period greater than 7 days); and
    
                                                                          9
          Alternate Method (as agreed between the parties) .
         Zero (only for 3 specified circumstances).
For residential customers with Type 5, the substitution techniques are as follows:
         Previous Years Method (Nearest Equivalent Day or Like Day);
         Previous Meter Reading Method (with the nearest equivalent day or like day method);
         Revision of Substituted Metering Data;
         Linear Interpolation;

8
  Substitution types for Type 5 are generally similar to the substitution rules applied to Type 4. One difference is that for a Type 5, a
customer class method of substitution is available to the MDP, but it can only be used for substitutions that apply prior to the first
reading.
9
  The ‘Alternate’ method for Type 4 permits the MDP to use values that cater for local conditions or adopt a globally justified value
provided that agreement for the change has been obtained from the FRMP and the LNSP. This method permits the FRMP to query a
substituted value with the MDP and seek an alternate value providing that the MDP and LNSP agree. Note however, that the
substitution rules do not emphasise the rights of the FRMP to seek this change for Type 4, nor do they provide rights for the
customer to seek a review of the substituted value through the FRMP.
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     
                                              10
          Agreed Substitution Method ;
         Prior to First Reading – Agreed method (no previous metering data history exists);
         Prior to First Reading.- Customer Class Method (no previous metering data history exists); and
         Zero (only for 2 specified circumstances).
These substitution techniques are general industry techniques that have been tested over many decades.
The substitutions are made without any reference to other conditions such as retail products and network
tariff structures, which is the most significant point in regard to the SMWG query, The rules do not
emphasise the rights of the customer and the FRMP to seek changes to a substituted value, although they
permit these parties to question the value and allow the MDP to revise the value to improve the quality of
the metering data. The Local Retailer and the LNSP provide an independent check that the revised value
                                                  11
can be substantiated on the facts of the matter .
For example, if a meter failed, there would be no meter datastream for the period from the commencement
of the failure until the commissioning of the replacement meter. During this period, substitution of the
metering data would be performed by the MDP. The substituted metering data would be determined in
accordance with the type of customer (residential, commercial), the customer’s history and any other
known information about the customer. But the substituted data would not consider the impact of daily
pricing structures. Hence, if the substitution was in an off-peak price period or a peak price period or a
critical price period, this information would not be taken into special account during the substitution by the
MDP.
The substituted data would be marked as ‘S’ (in the first instance) or ‘F’ (in the final instance) and it would
be left up to the retailer to determine how to apply the price to that substituted data.
This sets the scene for an analysis of the application of price to metering data.
Timing of metering data delivery:
The MDP distributes the processed metering data in two directions.
In one direction, the processed metering data (actual and/or substituted) is sent to the MSATS system
controlled by AEMO. AEMO uses this metering data for preparation of the wholesale market bills. The bills
are required to be distributed once per week. To meet this timetable, the MDP is required to submit the
metering data to AEMO on a weekly basis at the worst, and on a daily basis at the best. It is normal
practice for an MDP to send data daily (for remotely read meters) and within 2 business days of receipt of
the datastreams for manually read meters.
In the other direction, the processed metering data (actual and/or substituted) for any one retailer or
distributor is sent to that entity. It is usual to sent the data coincidently at the time data is sent to MSATS
because the retailer (at least) requires that metering data as an input into reconciling the wholesale market
bill received from AEMO. A retailer, on receipt of the daily/weekly metering data would not inspect that
data for the purpose of customer billing. If the data was inspected, it would be at the time of the customer
bill preparation, which is generally every three months. At this time, the retailer will rely on the latest
stream of processed metering data received from the MDP to prepare the bill.
Generally, the identification of substituted metering data, and an examination of the impact of this data on
the retail product purchased by the customer are not practices adopted by the retailer in the first instance
of bill preparation, although this may vary from retailer to retailer. In trial periods, business rules may differ
from those finally adopted after the trial period ends.


10
    The ‘Alternate’ method for Type 5 is almost identical to the ‘alternate’ method for Type 4.The variation is only to include the Local
Retailer in the agreement. That is, it permits the FRMP to query a substituted value with the MDP and seek an alternate value
providing that the MDP and LNSP agree. Note however, that the substitution rules do not emphasise the rights of the FRMP to seek
this change for Type 5, nor do they provide rights for the customer to seek a review of the substituted value through the FRMP.
11
   If the FRMP, LNSP and/or MDP can’t reach an agreement, one of the parties may invoke the NER dispute resolution procedures.
Whilst this formality is available to the parties, it is an expensive process in terms of time and possibly third party expenses. The
procedure is more suited to large customers, and less suited, to small customers with Smart Meters.
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Figure 2 summarises where validation and substitution is performed within the context of Figure 1.

                                                          (this is the point where substitution,
                                                                   if needed, takes place)

                           Power conductor                            processing
                                                                                                            NEM settlements
                                                                     by MDP


                                                          data transfer                     data transfer
                                                 A                                 B                              C
                                                          by MDP                            by MDP
                                                                                                             bill transfer
                                                                                                            by AEMO
                  Measurement &
                  initial storage

                                                                                                 Retailer wholesale bill
                                                                                       data transfer
                                                                                                            Retailer                 Customer bill
                                                                                       by MDP

                                       area of interest
                                                                                                                             Note: pricing rules only
                                                                                                                             apply at this point

  Note: the validation and substitution rules established in
  the electricity market apply at this point, NOT at this point

                                    A  meter
                                    B  metering installation database
                                    C  AEMO MSATS data storage & settlements processing

                                    Figure 2: validation, substitution and billing actions
The Figure also highlights the difference between the wholesale market bill sent to the retailer and the
customer’s bill, which is prepared by the retailer. It is noted in the Figure that pricing rules are only
applicable at the point of customer bill preparation.
Audit regime:
Chapter 7 of the NER requires AEMO to perform regular audits of MDPs. The market relies on these
audits to confirm that the NEM rules for validation and substitution are performed as prescribed. In
particular, it is required by the National Measurement Act to ensure that no conflict of interest exists within
the metering data processing environment.

3.3         Analysis of pricing
For residential customers (and commercial customers up to 100 MWh per annum) the main price
structures are conceptually known as:
         Flat price (same price for all hours of the day);
         Declining block price (one price for first block of consumption followed by a lower price for the
          second block of consumption);
         Increasing block price (one price for first block of consumption followed by a higher price for the
          second block of consumption);
         Controlled load price;




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SMWG query - Estimation and substitution during Critical Peak Pricing



      
                                   12
            Time of Use (TOU) price  different prices are applied to the peak period, shoulder period and
            off-peak period;
      
                                           13
            Critical Peak Pricing (CCP)  an imposed price for a pre-nominated period that only occurs
            after formal advice has been published in accordance with agreements between the parties.
The concept of CPP can be thought of as a ‘peak’ price profile that can be applied at any time of the day
and has a higher price than a ‘peak’ price. It is a relatively new pricing concept.
The price for a regulated customer is determined by a jurisdictional regulator. The price for a negotiated
customer is determined between the parties.
Billing of customers:
The billing of a customer is made up of the agreed price applied to the approved metering data stream
obtained from the consumer’s connection point.
As highlighted in Figure 2, the application of the agreed price is under the control of the retailer. It occurs
at the time the bill is created. This is generally an automated process and doesn’t contain any rules for
dealing with processed metering data that is flagged as being ‘substituted’, other than recording on the bill
that the metering data is ‘estimated’,
The approved datastream is that datastream received from the MDP (irrespective of whether it is of actual
quality or substituted quality). The MDP does not know the relationship between the application of a price
and the quality of the metering data.
The problem described by the SMWG is not confined to CPP, as this problem can arise under any price
structure. However, the consequences are worse under a CPP.

3.4           Findings relating to metering data
From the analysis of the metering data for retail customers, the following points were found;
           Metering data must fail a validation check before substitution is performed.
           A null record usually indicates a problem with the communication networks or the alignment of
            successive datastreams in the processing database or a failed meter awaiting replacement.
            Substituted data is used to replace the null records.
           A zero value is assumed to be ‘actual’ data unless it is accompanied by information that raises a
            doubt about the quality of that value.
           The general policy is to substitute a value that best reflects the perceived energy flow at that time.
            NEM rules govern the substituted value. AEMO performs regular audits of the MDP to remove any
            doubt as to the application of the NEM substitution rules.
           Substitutions are made by the MDP without reference to retail products or pricing considerations.
           MDPs distribute processed metering data to both AEMO (MSATS), the retailer and the distributor
            at approximately the same time (daily and/or weekly).
           The retailer usually bills a small customer quarterly and will rely on the latest stream of processed
            metering data received from the MDP to prepare the bill.

3.5           Findings relating to pricing
The concept of CPP can be thought of as a ‘peak’ price profile that can be applied at any time of the day
and has a higher price than a ‘peak’ price.


12
     TOU is also known as Time of Day
13
     CPP is also known as Dynamic Peak Pricing
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SMWG query - Estimation and substitution during Critical Peak Pricing


There is no known relationship between the application of a price and the quality of the metering data.
That is, the billing calculation will not treat substituted metering data any differently to actual metering
data. However, the bill content will be different, as the quality of the metering data must be appropriately
described on the bill as information for the customer.
The application of a peak price to substituted metering data has been occurring as acceptable industry
practice since the introduction of TOU pricing several decades ago. The introduction of CPP has simply
highlighted this practice.


4           Conclusion and Recommendation
The following conclusion and recommendation is based on the analysis and findings in Section 3.

4.1         Conclusion
The SMWG stated that “where a zero read is registered it is assumed some energy was used during this
period and a substitution is made”. The findings from this analysis indicate that the occurrence of a zero
usually means that the datastream will fail its validation and an assessment of that value will be made.
          The assessment is performed against additional information, including meter quality flags. In some
          cases, the doubt about the quality of the zero value is completely eliminated and the zero value is
          declared to be an actual value. In other cases, there are doubts raised about the quality of the
          zero value and an investigation is initiated.
          At this point, the zero value is replaced by a substituted value for the purpose of the wholesale
          market. The retention of the substituted value for the customer bill depends on the timing of the
          investigation in relation to the billing cycle.
          Accordingly, where a zero read is registered, it can not be assumed that some energy was used,
          as the zero value may be an actual value.
          The MDP is required to examine a zero value in a methodical way. AEMO performs regular audits
          of the MDP to remove any doubt as to the application of the NEM substitution rules.
The SMWG stated that trials in Australia include some instances where a customer turns their energy off
at the meter box in response to a critical peak price event, meaning that a zero reading would be the
correct reading for that period.
          The findings indicate that this outcome will always be reflected in the metering data used for the
          customer’s bill unless the meter was faulty at the time, in which case the metering data will be a
          substituted value that best reflects the known usage pattern of that customer. That is, the
          customer’s consumption will be metered as a zero value and this zero value will be validated as
          actual data, unless other information indicates that the meter was faulty at the time of the reading.
          The metering data will be flagged as a substituted value and this information will be passed to the
          retailer.
          The decision of the MDP to substitute a value for the failed meter will be performed in accordance
          with accepted rules and independent of any retail product used by the consumer. This is an
          important feature of the metrology rules and is required to ensure that there is no conflict of
          interest introduced within the metering data processing environment.
          A zero reading does not indicate a faulty meter in the first instance of applying the validation
          techniques to the datastream.
          The NEM substitution rules provide for an FRMP to seek to change a substituted value (which
          may be as a result of an issue with the metering data raised by a customer when reviewing its bill
          which the customer believes is not reflective of the actual load). The rules allow the FRMP to bring
          the query to the attention of the responsible person for that metering installation (or the MDP on

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          behalf of the responsible person), who in turn is required to obtain agreement from the Local
          Retailer and the Local Network Service Provider that the data can be re-substituted based on a
          different data profile at the time of the problem. However, the rules don’t emphasise the rights of
          the FRMP to query substituted values, particularly if the query is driven from the customer (this
          aspect may be revised during the NSMP analysis). Nor do the rules specify any rights for the
          customer to make a query to the FRMP in regard to the substituted values. Clause 7.14.3(b) of the
          NER does not permit Metrology Procedures to include matters associated with customer
          protection. Such rights for customer will need to be covered in another instrument, such as the
          NECF.
          Whilst this ‘agreed’ method is a useful technique for large customers, it is doubtful of its merit for
          residential customers. A better method may be to move the focus away from the numerical value
          of the substituted value to a variation in the price (each time a substituted value occurs in higher
          price periods), which is under the control of the FRMP. This would be more consistent with the
          National Measurement Act, which has no jurisdiction on the quality of metering data when the
          value used in the billing calculation is not derived from a meter (as is the case when a meter has
          failed).
The SMWG advised that under the current methodology, where meter data is missing or lost, the
estimated or substituted data is based on historical usage or on a like customer.
          The findings indicate that the intent of this statement is generally correct. In detail, however, it is
          incorrect in regard to ‘like customer’. Instead the NEM substitution rules provide for ‘like day’,
          ‘average like day’ and ‘linear extrapolation’ of the same customer. In Type 5 only, there is one
          substitution rule that allows a ‘customer class method’ but this rule can only be applied prior to the
          first reading. This subtlety in wording has a significant implication for the subsequent comments
          provided by the SMWG.
The SMWG indicated that problems could arise where historical usage may not be an appropriate
substitute for data which is missing or lost in a CPP event as this type of tariff is predicated on
encouraging a change in customer behaviour. The SMWG is aware anecdotally of a large customer
executing a demand response strategy who subsequently found that their reduced demand had not been
recorded because the meter was faulty and substitutions had been made based on their historical usage.
          The findings indicate that metrology rules are carefully constructed under the National
          Measurement Act to ensure that no conflict of interest arises where metering data is processed
          beyond the meter. This conflict of interest falls squarely on the integrity of the validation and
          substitution rules. The conflict of interest is partly managed by making the rules transparent to the
          market, and partly by obtaining assurance updates through regular AEMO audits.
          In particular, the conflict of interest is managed by separating the technical reasons for achieving
          the highest quality metering data from the price that will be subsequently applied to that data.
          Accordingly, the NEM substitution rules do not rely on information about retail products to inform
          the substituted value.
The SMWG indicated that a reasonable set of “like customers” would constitute those on the same tariff,
however if a CPP tariff were a retail product the meter data agent may not have access to a set of like
customers on which to base the substitution. One resolution to this problem may be for the metrology
procedure to allow the retailer to identify to the meter data agent sets of sample customers that should be
used for calculating substitutions. NSSC may also wish to consider other solutions to this problem.
          The findings indicate that the NEM substitution rules do not provide for ‘like customer’ values to be
          available for substitution. The closest the substitution rules get to ‘like customer’ is to allow a
          global value to be chosen during the Type 4 ‘Alternate’ method and the Type 5 ‘Agreed’ Method,
          but only if an agreement is reached with the FRMP, LNSP and the LR. The restriction on using
          ‘like customer’ minimises the conflict of interest for the MDP in forcing the MDP to consider each
          datastream on its merits for the customer to who it relates.


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          Instead, the findings indicate that the current problem is predicated on the basis that there is no
          relationship established in the retailer billing environment between price and substituted metering
          data. The establishment of a relationship between these elements at this point would enable the
          problem identified by the SMWG to be detected and adequately managed, either voluntarily or
          through regulatory arrangements.
In summary, it is concluded that:
         The existing NEM Metrology Procedure Part B is adequate to cater for all situations that could
          affect the quality of metering data. There appears to be no technical problems with the NEM
          validation and substitution rules and that these rules work in accordance with the intent of the
          National Measurement Act, which is to ensure that the integrity of the metering data is upheld not
          only within the meter but also within the processing of metering data from that meter on its journey
          to the billing routines.
         However, the substitution rules don’t emphasise the rights of the FRMP, or specify the rights of a
          customer, to query substituted metering data. A clear description of these rights would be an
          improvement to the existing arrangements. It is not clear in which instrument the customer’s rights
          should be located. The NER (clause 7.14.3) doesn’t permit the Metrology Procedure to include
          provision for customer protection; hence the more likely location for the customer’s rights is in the
          NECF.
         There are no relationship rules in place (either self-regulated or otherwise) that govern how price
          is applied to substituted metering data. Whilst there are regulations on the declaration that
          metering data is substituted, there are no regulations on what price should be applied when
          substituted metering data has been used in the billing calculation. The agreed price simply
          becomes a pass-through.
         The lack of a relationship in the application of a price to substituted metering data is a problem
          broader that the CPP product. It applies to any retail product. In particular, it applies to the ‘peak’
                                                         14
          price that is offered as part of a TOU product .
These conclusions enable the following recommendation to emerge.

4.2         Recommendation
It is recommended that:
     (a) Subject to any recommendations arising from the normal course of the BPPWG work, where the
         substitution rules for remotely read small customers may be amended to accommodate smart
         metering infrastructure, no change be made to the NEM validation and substitution rules to
         address the matters raised by the SMWG.
     (b) The application of a price to substituted metering data be further investigated by the SMWG.




14
  For example, consider the situation where a customer’s load rises during peak periods on a consistent basis, but on one day the
customer is not at the premise during the peak period and as a consequence there is no reason for the load to rise during that period.
On this same day, the meter fails in the morning and the failure is not detected until the next day (daily interval reads). The MDP
performs a substitution for the data, as normal. What value is likely to be substituted in the peak period? If the value is higher than
the ‘actual’ load then the customer will pay more for that period than if the meter had been working correctly.
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Appendix A – Glossary
The following acronyms are in the NSMP Glossary.

ACOSS           Australian Council of Social Services
AEMC            Australian Energy Market Commission
AEMO            Australian Energy Market Operator
AER             Australian Energy Regulator
AMI             Advanced Metering Infrastructure (Victorian smart metering program)
AS              Australian Standard
B2B             Business to Business
BPRG            B2B Procedures Reference Group (established under the IEC)
BPPWG           Business Processes and Procedures Working Group (established under the NSSC)
BRDRG           Business Requirements Definition Reference Group (established under the AMI
                program)
BRWG            Business Requirements Working Group (established under the NSSC)
CATS            Consumer Administration and Transfer Solution
COAG            Council of Australian Governments
DNSP            Distribution Network Service Provider
DRET            Commonwealth Department of Resources, Energy and Tourism (also referred to as
                RET)
EEEC            Equipment Energy Efficiency (E3) Committee
ENA             Energy Networks Association
ERAA            Energy Retailers Association of Australia
ESC             Essential Services Commission
FRC             Full Retail Contestability
FRMP            Financially Responsible Market Participant
HAN             Home Area Network
IEC             Information Exchange Committee (established under section 7.2A.2 of the Rules)
IHD             In-home Display
LNSP            Local Network Service Provider
MCE             Ministerial Council on Energy (established under the COAG)
MDA             Metering Data Agent
MDP             Metering Data Provider
MDF             Metering Data File
MDFF            Metering Data File Format
MOU             Memorandum of Understanding
MRG             Metrology Reference Group (established under the RMEC)
MSATS           Market Settlement and Transfer Solution
MTWG            Metering Technology Working Group (established under the AMI program)

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NCRE            National Consumer Roundtable on Energy
NECF            National Energy Consumer Framework
NEL             National Electricity Law
NEM             National Electricity Market which excludes Western Australia and Northern Territory
NEMMCO          National Electricity Market Management Company
NEO             National Electricity Objective (as set out in section 7 of the NEL)
NER             National Electricity Rules
NSMP            National Smart Metering Program
NSSC            National Stakeholder Steering Committee (National Smart Metering Program)
NT              Northern Territory
OMRV            Operating Model Requirements Version (Victorian AMI Program)
PDRG            Business Process & Data Reference Group (established under the RMEC)
PwC             PricewaterhouseCoopers
PTWG            Pilots and Trials Working Group (established under the NSSC)
RET             Commonwealth Department of Resources, Energy and Tourism
RIS             Regulatory Impact Statement
RFP             Request for Proposal
RMEC            Retail Market Executive Committee (an advisory committee to AEMO)
RP              Responsible Person
RPWG            Retail Policy Working Group (established under the MCE)
RWG             Regulation Working Group (established under the NSSC)
SCO             Standing Council of Officials (as established under the MCE)
SM              Smart Metering
SMCN            Smart Metering Communication Network
SME             Subject Matter Expert
SMI             Smart Metering Infrastructure
SMMS            Smart Metering Management System
SMWG            Smart Metering Working Group (established under the SCO)
SWIS            South Western Interconnected System in Western Australia
TFWG            Testing Framework Reference Group
TOR             Terms of Reference
TRWG            Technical and Regulatory Working Group (established under the AMI Program)
WA              Western Australia
WAIMO           Western Australian Independent Market Operator
WEM             Wholesale Electricity Market (Western Australia)
WIGS            Wholesale Inter-connector Generator and Sample
WG              Working Group




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