Victorian Premier Ted Baillieu has given a begrudging go-ahead order to the multibillion-dollar roll-out of smart meters to state homes after an independent report into the scheme declared it too big to scrap.
The results of a review into the so-far costly smart-meter roll-out program were aired today by Victorian Energy and Resources Minister Michael O'Brien.
The audit revealed that "at this stage of the program's life, the maximum benefit is delivered by continuing the roll-out", and that "the former Labor Government underestimated the cost of the program by $415 million".
Baillieu pledged to continue the smart-meter roll-out, adding that instead of giving taxpayers the devices proposed by the previous Brumby-led government, a more advanced version of the existing scheme would be implemented.
The modified Baillieu smart-meter scheme would see the Victorian government:
- Subsidising in-home displays to help households control their energy bills, with some basic in-home displays available at low cost by mid 2012
- Progressively offering remote connections for Victorians moving house from 1 January 2012, saving customers around $15, or more than $100 after hours
- Extending the delay on the introduction of flexible pricing until at least 2013, to allow time for consumers to learn more about their options
- Ensuring Victorian consumers can choose to remain on flat rates even when flexible pricing is introduced
- Toughening the regulation of smart-meter cost recovery by distribution businesses through removing the automatic allowance for cost overruns of 10 to 20 per cent put in place under the former Labor government
- Providing greater oversight by government and giving consumer and welfare groups a much stronger voice in the smart-meter roll-out process through a new Ministerial Advisory Council.
Despite the improvements that Baillieu promised, the premier expressed his anger over the results of the report at a press conference in Sydney today.
"We are as frustrated about this as anybody. This was a scheme devised by our predecessors. It's been assessed at some length, and the advice that we now have is that we should now proceed with the roll-out, or the further replacement of meters, which is what's happening," he said.
Baillieu added that it is too hard to undo existing contracts made with energy companies with a view to deploying a second smart-meter scheme.
"[Energy providers] have a right to replace their meters. They're choosing to replace them with smart meters, and that was a contractual basis on terms of the previous government. We can't undo that contract. So we're seeking to improve what was left to us," Baillieu said.
O'Brien agreed in his statement today, saying that two concurrent smart-meter programs would only cause more headaches.
"Stopping the roll-out now and continuing with two metering systems in the future will cost Victorians much more on their electricity bills than completing the roll-out and moving to a single system," he said.
The Baillieu government expects to complete the smart-meter roll-out to all Victorian households and small- and medium-sized businesses by 2013. The government was unable to place an exact number on how many smart meters this would encompass, but, in January 2006, Tenants Union Victoria reported that there were over 1.67 million households in Victoria.
Victoria's smart-meter deployment started in 2009, and was planned to replace 2.5 million electricity meters around the state in total, with the Brumby Government promising 680,000 smart meters to consumers by 2013.
An initial report into the project said that it would lead to savings totalling $5 billion.
However, the plan came under fire after the Victorian auditor-general handed down a report slamming the project's lack of governance and sloppy trial process. The report also said that there was limited value for Victorians in the project, and pulled apart the original cost-benefit analysis, labelling many of its conclusions as false.