Nearly 1.3 million households are expected to have "smart" electricity meters installed by 2012 - but the nation's environmental watchdog today warned most of those meters will not be smart enough.
"I heard mutterings that the smart meters being installed in New Zealand are actually "dumb meters", the Parliamentary Commissioner for the Environment, Jan Wright, said today.
She said in a report tabled in Parliament today that New Zealand appears to be unusual in the developed world because the roll-out of its smart electricity meters is being done without Government control.
"I recommend that the Government takes a more hands-on approach," she said today.
Smart meters that provide two-way communication between households and electricity retailers, and have potential to deliver significant environmental and consumer benefits, provided that they are capable of the right set of functions.
They could help households use electricity more efficiently, reducing both consumption and peak demand, carbon dioxide emissions and other environmental impacts.
One example is that people often leave their spa pool heaters switched on while the Government's fossil-fuel fired generators kick in during drought years -- because they get no indication that the price of electricity has just been sent soaring.
Electricity generator-retailers are currently deploying most of the smart meters and choosing to skip the functions crucial to delivering environmental and consumer benefits, said Dr Wright.
"This is not surprising given that encouraging more efficient electricity use appears to offer little financial benefit to retailers," she said. "Regulatory intervention is needed to ensure environmental and consumer benefits can be delivered".
Electricity distributor Vector has already signed a contract with Genesis Energy for the roll-out of advanced metering to 500,000 homes and businesses, using a joint venture with Siemens (NZ), Advanced Metering Services (AMS).
Power metering and supply company Pulse Utilities is launching its consumer retail brand, with the aim of 25,000 installations within two years and 65,000 within four years.
And Meridian Energy has installed 50,000 smart meters in more than 112,000 households in Canterbury which are mostly part of the Orion network.
When Meridian initially trialled computerised electricity meters in central Hawke's Bay, Dr Wright's predecessor Morgan Williams told the Electricity Commission he was concerned that ownership of meter technology did not become a barrier to competition.
"It would be more logical for lines companies, independent meter companies, or the consumer to own electricity meters, rather than (power) retailers," he said. This would stop meter ownership being used for constraining business rivals.
He recommended the Commerce Commission consider the impact of meter ownership on the operation of the competitive electricity market.
Today, Dr Wright said that with smart meters already being rolled out by power companies, delays by the Government could mean consumers were stuck with "dumb" meters.
They should at least have home area network (HAN) communication capability and real-time in-home displays, which will allow for load shedding and shifting.
Householders could programme their smart meters to manage their household electricity consumption automatically, shedding load at peak times.
"Without HAN capability, the benefits from smart meters almost entirely accrue to the retailer," she said. "Consumers will end up paying for meters that provide them with minimal benefits".
Retrofitting the function later would cost over $60 million.
In her report to Parliament, Jan Wright asked that:
* Cabinet ministers urgently require power companies to only install smart meters with the capability for home area network communication;
* ministers consider a public information campaign for consumers about how the meters can save them electricity charges;
* government become involvement in a pilot study to set out the benefits of in-home power-consumption displays.
* meters provide measurement of power sold back to the network, for when households are able to generate their own electricity;
* retailers offer householders tariffs that make clear the costs of generation and transmission at different times;
* a study be done to clarify the relationship between carbon dioxide emissions and electricity demand and supply patterns.
* a low fixed-charge tariff be retained.