Norway adopts smart metering regulation
Smart meters for all electricity customers by 1 January 2017
The Norwegian Water Resources and Energy Directorate (NVE), the national energy regulator, adopted on 24 June 2011 new rules providing for the large-scale deployment of smart meters (amendments to Regulations of 11.03.1999 nr. 301, Forskrift om endring til Avregningsforskriften). The Regulations set that, by 1 January 2017, all customers in Norway must be equipped with smart meters. The deadline applies equally to all parts of the country.
Smart metering, also known as Advanced Metering Systems (AMS) or Intelligent Metering Systems (IMS), is yet to be developed on the domestic market. Norway must here fill a gap compared to its Nordic neighbours. It has been estimated that the new rules will require the installation of 2.2 to 2.4 million meters, which corresponds to an investment of 5-6 billion Norwegian Kroners, to which must be added investments in associated IT-infrastructures and appliances. As far as financing is concerned the installation of smart meters by grid operators will be financed through network costs.
By introducing smart metering, the Regulations will allow electricity consumers to get more precise consumption data, a more accurate billing, and to better manage their consumption (§1.1). Smart metering should also benefit grid operators by increasing efficiency in grid management. Finally, electricity suppliers can reinforce their relationship to customers through more interaction and additionally the provision of new services.
The new requirements
While electricity customers get new rights, grid operators and suppliers are subject to new requirements.
Grid operators bear the responsibility to install smart meters at all measurement points located within their concession area by 1 January 2017, with a 80% coverage by 1 January 2016 (§4-7). They are responsible for the registration, gathering and storage of metering data (§3.1, §4-5), as well as the installation of the meters (§4-1; subject to some exemptions). Operators must provide the collected information on consumption on the Internet in a manner that allows comparison (§4-4). The provision by grid operators of information to customers on the Internet is already applicable as of 1 January 2014. Grid operators also bear a series of reporting obligations as to procurement plan and deployment towards NVE. When conducting these different tasks the grid operators remain subject to the principle of neutrality (§8-1).
Electricity suppliers, which obtain information on their customers’ consumption from operators, must be able to send price related information to the display (§4-6). Both grid operators and electricity suppliers bear complementary obligations as regards the connection and use of display appliance for the purpose of sending price related information to customers (§4-6).
Challenges ahead
The full scale deployment of smart metering technologies in Norway raises a series of legal issues. First, in terms for the choice of the technology, the Regulations provide a list of functional requirements for smart meters (§4-2), but the scheme remains based on technology neutrality. This will encourage competition between manufacturers, but also raise the question of standardisation, such as the reliance on the forthcoming European standard. A second major challenge relates to the procurement rules for the purchase of smart meters, for grid operators, meters manufacturers and electricity suppliers. Pursuant to the Regulations, grid operators must already notify a procurement and installation plan to NVE by 1 January 2012. A third challenge will consist in the contractual relationship between the different actors, including amendment to existing purchase contracts to include smart metering or liability issues between grid operators and electricity suppliers in relation to the delivery of data and services. Fourth, data protection in the treatment of customers’ metering information as well as the evaluation of the contractual relationship with customers are already extensively discussed. Fifth, the Regulations open for the provision of associated services, such as those related to price information and consumption management, which entails access to metering information, including by third parties. Finally, the consequences of local production and the possibility to send electricity back into the network have been barely discussed or regulated.
What’s next from Brussels? EU smart metering requirements and initiatives
Being a party to the EEA Agreement and an active player on the internal electricity market, Norway must take into consideration EU initiatives and legislation.
The third energy package, which remains to be incorporated into the EEA Agreement, contains both general principles and a few but key binding requirements as regards smart meters. Directive 2009/72/EC concerning rules for the internal market in electricity (Third Electricity Directive) provides a general support for the implementation of Intelligent Metering Systems (IMS) (Recital 55; Article 3.1 in relation to energy efficiency). The binding requirements are contained in the provisions on consumer provision (Article 3 and Annex I). Pursuant to Annex I.1 (h), customers have the right to access their metering data without additional costs. The most stringent requirement as regards IMS is contained in Annex I.2 which provides obligation to: (1) ensure the implementation of IMSs that shall assist the active participation of consumers in the electricity supply market; (2) assess conditions for roll-out of IMS, based on an economic assessment to be conducted by 3 September 2012; and (3) prepare a national implementation plan for IMS and, when positively assessed, effectively roll out 80% of IMS by 2020 at consumption level. Additional criteria mentioned in the development of IMS relate to the interoperability of the systems, the use of appropriate standards, and the conformity with internal electricity market.
The EU has detailed its short-term regulatory approach to smart metering regulation in a recent communication “Smart Grids: from innovation to deployment” (COM 2011(202), 12.05.2011). The first step will be for the EU to develop regulatory incentives for the deployment of smart grids through: (i) the application and revision of Energy Services Directive 2006/32/EC; and/or (ii) the development of a network code or implementation measures on tariffs. Second, the EU will establish guidelines that will define a methodology for the national smart meter implementation plans, as well as for their cost-benefit analyses. Third, the EU will, through the implementation of Third Energy Package, monitor the requirements related to establishment of a transparent and competitive retail market for the development of services based on smart grids and metering. Fourth, the EU will continue its undergoing work of standardisation. The latter started in March 2009 based on the Measuring Instruments Directive 2004/22/EC and the Energy Services Directive. Mandate on smart utility meters was given to the European standardisation organisations CEN, CENELEC and ETSI. The deliverables on the mandate M/441 (smart metering) have been delayed but should be released by end of 2012.
This article is written by Associate Lawyer Catherine Banet who is specialized in energy law and is working in SIMONSEN’s Shipping Offshore and Energy Department.
27.10.2011