Electricity Supplement Data

The costs and benefits of demand management for households (spreadsheet)
As part of the inquiry into Electricity Network Regulation, the Commission quantitatively explored the relative merits of d
analysis is intended to assist the Commission in drawing out relevant implications for issues of demand management add
recommendations. The purpose of the calculations is to illustrate the effects of different DM strategies and how these m
parameters or use the spreadsheet as the basis for other experiments. It is NOT intended to give precise estimates, whic
As such, the Commission has not independently prepared detailed assumptions concerning the implementation of smar
previous cost benefit analysis and on actual data from the recent roll out of smart meters in Victoria. By using consistent
relative merits of different approaches can still be drawn.
A range of scenarios have been examined, with the cost benefit ratios outlined in the Summary tab. For each scenario, a
case takes assumptions entailing the highest costs and lowest benefits that have been identified (as primarily outlined in
Assumption parameters tab are parameterised variables that will automatically flow through to the scenario calculations
The References tab includes the bibliographical information of studies drawn on for this analysis.
The spreadsheet also includes the (separate) calculations on the size of the subsidy to air conditioning during critical pea
This publication should be referenced as:
Productivity Commission 2013, The costs and benefits of demand management for households, Supplement to inquiry re
9 April.
See the Contents of this spreadsheet

dsheet)
plored the relative merits of different demand management approaches. The
of demand management addressed in the report - and particularly for supporting
strategies and how these may affect outcomes. Readers can also manipulate model
give precise estimates, which ranges have been used for all scenarios.
the implementation of smart meters, but instead, drawn on assumptions used in

Victoria. By using consistent assumptions across scenarios, conclusions about the
ary tab. For each scenario, a low, mid and high case has been developed. The low
fied (as primarily outlined in the Assumption parameters tab). Red boxes on the
h to the scenario calculations.
ysis.
nditioning during critical peak periods.
ds, Supplement to inquiry report on Electricity Network Regulatory Frameworks,

Contents
About this spreadsheet

Summary
Assumption parameters
(1) Constrained Peaky regions
(2) NEM phase in
(3) NEM phase TOU
(4) NEM DLC no SM
Airconditioning results
Summary LRMC and SRMC
Various LRMC
AECOM LRMC and SRMC
One off
Constrained peaky networks (V2)
References
Summary of benefit cost ratios for various scenarios
NEM-
wide roll- Direct
Regional
out with load
roll-out in
NEM-wide roll-out with weakly control
peaky
critical peak pricing targeted without
constrain
time of smart
ed areas
use meters
pricing
Cost-benefit ratios
Low 1.1 0.6 0.3 1.2
Medium 2.7 1.2 0.6 2.7
High 6.9 2.7 1.1 6.3
25th and 75th percentile of annuity value per household
25th P ($) 100 -10 -45 65
75th P ($) 200 35 -20 140
Back to the Contents of this spreadsheet
Version 2 of scenario 1 (not used in TP)
Regional roll-out in
peaky contrained area
with an additional
deferred lumpy
investment
1.15
2.75
7.00
100
200
scenario 1 (not used in TP)
Discount rate (%) 8 Discount factor
Cost of smart meters $ per meter

Lowest 270
Mid 535
Highest 800
Cost of IT update for smart meters $ per meter

Lowest 100
Mid 125
Highest 150
Annual opex cost for smart meters $ per meter

Lowest 20
Mid 25
Highest 30
Annual business efficiencies smart meters $ per meter

Lowest 50
Mid 57.5
Highest 65
Cost of direct load control (mainly labour cost and installation of control devices)
Lowest 160
Mid 210
Highest 260
Other DLC costs (operating)
Unit cost of sending signals and maintaining IT/software 25
Peak price demand elasticity (absolute value)

Lowest 0.1
Mid 0.15
High 0.2
Value of network and generation savings $/kW/year

Lowest 271
Mid 326
High 381
Maximum demand management response associated with direct load control (% effect)
Lowest 15
Mid 20
High 25
Payment for participating in DLC for 3 years ($)

Lowest 30
Mid 65
High 100
Participation in Direct load control (take up rates)

Lowest 0.02
Mid 0.05
High 0.2
Total peak demand from these households outside Victoria (MW)

Lowest 11550
Mid 13200
High 14850
Value of transmission and generation savings $/kW/year

Lowest 121
Mid 141
High 161
SRMC distribution savings $/kW

Lowest 2200
Mid 2750
High 3300
Number of meters in NEM excluding Victoria 6200000

Source of estimates Back to the Contents of this spreadsheet
Standard discount rate used in evaluating projects (eg Harrison and in Oakley Greenwood AMI Benefits and C
Lower amount presumed with economies of scale and technology change (and consistent with lower figures
Average of lowest and highest
Deloitte 2011a pp.12-13, pp. 39ff
Average of lowest and highest

Deloitte 2011a p.12, pp. 39 ff
Estimates based on Oakley Greenwood 2010 p.23 (transitional and ongoing opex of $284m) and Deloitte 201
Source and notes: All green shaded figures are fr

$ per mete$m NPV ove
Study Data source avoided costs from the AMI program, efficiencies
58 2091 Oakley Greenwood innovative tariffs and demand management. Ther
rate of 8% is assumed. The annuity over the 15 ye
43 1540 Deloitte 2011a
62 2227 Futura
Source and notes: CRA 2008a p. 127
50.9 CRA 2008a (low)
71.2 CRA 2008a (high) Given some inflation since the estimates, and a co
and the average as the middle value
Wilkenfeld 2011 p.17
Delloite 2011a (It suggests $2 per meter per month - so roughly $20 a year especially as costs fall)
Deloitte (2011b , volume 2, p. 52), which used 0.15
As discussed in chapter 11, there are different ways of calcula

See tab labelled 'Summary LRMC&SRMC" fundamentally, it measures the annualised cost of supplying t
the life of the asset. Accordingly, unlike the SRMC, the LRMC i
terms. The Commission reviewed existing estimates of the lon
delivering an additional kW to an end user during peak period
A reasonable range of estimates drawing on trial results from Futura 2011 and adjusting for selection bias
Based on Futura (2011)
Based on a mixture of assumptions and evidence from on trial studies. Selection biases, the lack of compatib
See tab labelled 'Summary LRMC&SRMC"
See tab labelled 'Summary LRMC&SRMC"
In effect this is households that would have meters installed (outside Victoria)
s of this spreadsheet
y Greenwood AMI Benefits and Costs Report, August 2010)
nd consistent with lower figures earlier estimated by NERA 2008a)
opex of $284m) and Deloitte 2011a p.45 (NPV of OPEX of $592m over 20 years)
s: All green shaded figures are from Deloitte 2011a, p. 13 and are in $million npv. They include
om the AMI program, efficiencies of network management and other benefits excluding from
and demand management. There are 2.66 million meters. Meters have a 15 year life. A discount
umed. The annuity over the 15 year value is calculated
s: CRA 2008a p. 127

tion since the estimates, and a concern to avoid extremes at either end, we have used 50 as low, 65 as high
as the middle value
especially as costs fall)
here are different ways of calculating the LRMC, but

he annualised cost of supplying the required capacity over
ngly, unlike the SRMC, the LRMC is measured in per year
wed existing estimates of the long-run marginal cost of
to an end user during peak periods
nd adjusting for selection bias
tion biases, the lack of compatible appliances and the difficulties of recruiting people without intensive marketing across the whole NE
arketing across the whole NEM suggests that the best trial participation rates are over-optimistic.
Max Limited sequential rollout of smart meters with c
Number of meters 10,000
Total peak demand from these households 35.93 Note the 1.5 multiple reflects that a limited rollout
Price ratio (after/before) 8 As per the SP Ausnet strategic pricing trial
3.4926178082
Year Transition costs of meters DM Savings

0 -$ 2,700,000 $ 665,820
1 $ - $ 1,331,640
2 $ - $ 1,997,461
3 $ - $ 2,663,281
4 $ - $ 3,329,101
5 $ - $ 3,994,921
6 $ - $ 4,660,741
7 -$ 1,000,000 $ 4,660,741
8 $ - $ 4,660,741
9 $ - $ 4,660,741
10 $ - $ 4,660,741
11 $ - $ 4,660,741
12 $ - $ 4,660,741
13 $ - $ 4,660,741
14 $ - $ 4,660,741
34.0
There is an initial
investment in smart
meters in year 0 and an
upgrade in year 7
Summary
Units low
Smart meters number 10,000
Relevant critical peak demand MWh 28
Up front cost $ per appliance 800
Refresh cost $ per appliance 150
Cost profile Install costs all occur up front. IT refresh after 7 years.
Annual cost $ per appliance per year 30
Value of demand management savings
$/kW per year 271.2728501932
(network/generation)
% of relevant critical peak
Maximum demand management response
demand 19
No demand response in first year. Maximum demand response in year 7 a
Demand management savings profile
Discount rate per cent 8
Discounted costs $ Million (npv) 11
Discounted benefits $ Million (npv) 13
Net benefit $ Million (npv) 1
Net benefit per household $ (npv) 130
Benefit cost ratio ratio 1.1
Annuity in savings per household over 15
$ 14.6
year period
25 and 75% percentiles NPV per

household
25 and 75% percentiles annuity per
household (rounded to nearest 50)
This is used to determine alpha such that it is the median between the high and low values
Inverse beta 50% probability 1370
alpha 1.661
beta 2.000
error from deviation of inverse beta from t 0.00
smart meters with critical peak pricing Back to the Contents of this spreadsheet
ple reflects that a limited rollout would target regions with high peak to average demand
net strategic pricing trial
Operating costs Operating savings Discount factor

- 200,000 0 0.96
- 200,000 0 0.89
- 200,000 650,000 0.82
- 200,000 650,000 0.76
- 200,000 650,000 0.71
- 200,000 650,000 0.65
- 200,000 650,000 0.61
- 200,000 650,000 0.56
- 200,000 650,000 0.52
- 200,000 650,000 0.48
- 200,000 650,000 0.45
- 200,000 650,000 0.41
- 200,000 650,000 0.38
- 200,000 650,000 0.35
- 200,000 650,000 0.33
mid-point high
10,000 10,000
32 36
535 270
125 100
years.
25 20
326.2728501932 381.2728501932
27 34
um demand response in year 7 and subsequently sustained. Linear increase
between years 2 to 7..
8 8
8 5
22 34
14 29
1370 2920
2.7 6.9
154.0 328.3
25 percentage points percent75 percentage points percentile
$ 880 $ 1,889
$ 100 $ 200
ntents of this spreadsheet
Discounted costs Discounted benefits

-$ 2,790,526 $ 640,686
-$ 178,195 $ 1,186,455
-$ 164,995 $ 2,184,088
-$ 152,773 $ 2,530,901
-$ 141,457 $ 2,814,350
-$ 130,978 $ 3,041,919
-$ 121,276 $ 3,220,333
-$ 673,757 $ 2,981,789
-$ 103,975 $ 2,760,916
-$ 96,273 $ 2,556,404
-$ 89,142 $ 2,367,041
-$ 82,539 $ 2,191,704
-$ 76,425 $ 2,029,356
-$ 70,763 $ 1,879,033
-$ 65,522 $ 1,739,846
Costs -$ 4,938,594
Benefits $ 34,124,820
Net benefit 29,186,225
Benefit-Cost Ratio 6.91
Min
Total peak demand from these house 27.9435483871
Year Transition costs of meteDM Savings Operating costs

0 -$ 8,000,000 $ 203,313 - 300,000
1 $ - $ 406,625 - 300,000
2 $ - $ 609,938 - 300,000
3 $ - $ 813,250 - 300,000
4 $ - $ 1,016,563 - 300,000
5 $ - $ 1,219,875 - 300,000
6 $ - $ 1,423,188 - 300,000
7 -$ 1,500,000 $ 1,423,188 - 300,000
8 $ - $ 1,423,188 - 300,000
9 $ - $ 1,423,188 - 300,000
10 $ - $ 1,423,188 - 300,000
11 $ - $ 1,423,188 - 300,000
12 $ - $ 1,423,188 - 300,000
13 $ - $ 1,423,188 - 300,000
14 $ - $ 1,423,188 - 300,000
Operating savings Discount factorDiscounted costs Discounted benefits
0 0.96 -$ 7,986,679 $ 195,638
0 0.89 -$ 267,292 $ 362,292
500,000 0.82 -$ 247,492 $ 915,671
500,000 0.76 -$ 229,160 $ 1,003,147
500,000 0.71 -$ 212,185 $ 1,072,639
500,000 0.65 -$ 196,467 $ 1,126,332
500,000 0.61 -$ 181,914 $ 1,166,185
500,000 0.56 -$ 1,010,635 $ 1,079,801
500,000 0.52 -$ 155,962 $ 999,815
500,000 0.48 -$ 144,409 $ 925,755
500,000 0.45 -$ 133,712 $ 857,181
500,000 0.41 -$ 123,808 $ 793,686
500,000 0.38 -$ 114,637 $ 734,894
500,000 0.35 -$ 106,145 $ 680,458
500,000 0.33 -$ 98,283 $ 630,053
Costs -$ 11,208,781
Benefits $ 12,543,544
Middle
Total peak demand from 31.935483871
Year Transition costs of metDM Savings

0 -$ 5,350,000 $ 398,861
1 $ - $ 797,722
2 $ - $ 1,196,583
3 $ - $ 1,595,445
4 $ - $ 1,994,306
5 $ - $ 2,393,167
6 $ - $ 2,792,028
7 -$ 1,250,000 $ 2,792,028
8 $ - $ 2,792,028
9 $ - $ 2,792,028
10 $ - $ 2,792,028
11 $ - $ 2,792,028
12 $ - $ 2,792,028
13 $ - $ 2,792,028
14 $ - $ 2,792,028
Operating costs Operating savings Discount factor Discounted costs
- 250,000 0 0.96 -$ 5,388,603
- 250,000 0 0.89 -$ 222,743
- 250,000 575,000 0.82 -$ 206,244
- 250,000 575,000 0.76 -$ 190,966
- 250,000 575,000 0.71 -$ 176,821
- 250,000 575,000 0.65 -$ 163,723
- 250,000 575,000 0.61 -$ 151,595
- 250,000 575,000 0.56 -$ 842,196
- 250,000 575,000 0.52 -$ 129,968
- 250,000 575,000 0.48 -$ 120,341
- 250,000 575,000 0.45 -$ 111,427
- 250,000 575,000 0.41 -$ 103,173
- 250,000 575,000 0.38 -$ 95,531
- 250,000 575,000 0.35 -$ 88,454
- 250,000 575,000 0.33 -$ 81,902
Costs
Benefits
Net benefit
Benefit-Cost Ratio
Discounted benefits
$ 383,804
$ 710,749
$ 1,461,511
$ 1,657,928
$ 1,817,226
$ 1,943,827
$ 2,041,702
$ 1,890,465
$ 1,750,430
$ 1,620,769
$ 1,500,712
$ 1,389,548
$ 1,286,619
$ 1,191,313
$ 1,103,068
-$ 8,073,688
$ 21,749,671
13,675,983
2.69
Max National smart meter rollout (phased) with critic
# meters 6,200,000 Phase in years
Total peak demand from these households 14,850 Before-after price ratio
Value of network and generation savings 381

0 -$ 334,800,000 $ 619,087
1 -$ 334,800,000 $ 5,813,162
2 -$ 334,800,000 $ 19,915,639
3 -$ 334,800,000 $ 49,207,425
4 -$ 334,800,000 $ 101,241,238
5 $ 182,795,418
6 $ 295,554,015
7 -$ 124,000,000 $ 437,998,094
8 -$ 124,000,000 $ 603,651,452
9 -$ 124,000,000 $ 782,315,984
10 -$ 124,000,000 $ 962,406,132
11 -$ 124,000,000 $ 1,133,440,254
12 $ 1,287,780,131
13 $ 1,421,224,992
14 $ 1,532,642,980
15 $ 1,270,379,565
16 $ 981,392,771
17 $ 670,506,339
18 $ 342,116,333
The DM savings, operating costs and savings increase over time until the whole stock of meters are deployed, and then decays over time. This is bec
successive benefits and costs of replacing them. In any real world rollout, as meters died at 15 years, they would be replaced. This would involve a n
successive 19 year periods, the demand management benefits would be realised immediately given that consumers' demand responses would be
bigger net benefits than those shown here. On the other hand, discounting reduces the impact of this effect,. Therefore, the long-run scenario is pr
which has the benefit of being far more tractable numerically.
The reason for low demand response in the initial years reflects t (a) the factors described in the worksheet labelled "One-off" and (b) that the met
occurring between t=0 and t=1. Altogether, the model results relate to 19 periods because the last tranche of meter rollouts occurs between years
Summary
Units low
Smart meters number 6,200,000
Cost profile Smart meters phased in over five years (1.24 million per year). Refresh of IT com
$/kW per year 271.2728501932
Maximum demand management response 19
demand
No demand management savings for first two years after rollout. Maximum sav
meter.
Net benefit $ Million (npv) -2682
PV of Net benefit per household $ (npv) -433
$
year period -$ 49

household
Inverse beta 50% probability 104.92818

alpha 1.778
beta 2.000
(phased) with critical peak pricing Back to the Contents of this spreadsheet
5
8

- 24,800,000 0 0.96
- 49,600,000 0 0.89
- 74,400,000 80,600,000 0.82
- 99,200,000 161,200,000 0.76
- 124,000,000 241,800,000 0.71
- 124,000,000 322,400,000 0.65
- 124,000,000 403,000,000 0.61
- 124,000,000 403,000,000 0.56
- 124,000,000 403,000,000 0.52
- 124,000,000 403,000,000 0.48
- 124,000,000 403,000,000 0.45
- 124,000,000 403,000,000 0.41
- 124,000,000 403,000,000 0.38
- 124,000,000 403,000,000 0.35
- 124,000,000 403,000,000 0.33
- 99,200,000 322,400,000 0.30
- 74,400,000 241,800,000 0.28
- 49,600,000 161,200,000 0.26
- 24,800,000 80,600,000 0.24
d, and then decays over time. This is because the experiment relates to the benefits and costs of rolling out one full tranche of meters, and not the
ould be replaced. This would involve a new set of costs for investment and operating expenses, and a new set of demand and operating cost savings. In
nsumers' demand responses would be stable at that time (and supported by the diffusion of technology). Accordingly, a long-run model would produce
,. Therefore, the long-run scenario is probably close to a multiple of the one-off scenario shown here and little is lost in adopting a finite horizon model,
abelled "One-off" and (b) that the meter rollout is staged over five years. The outcomes in the first year (shown as t=0) relate to the outcomes
f meter rollouts occurs between years 4 and 5, with this tranche finally fully depreciated by the period between years 18 and 19 (shown as year = 18).
mid-point high
6,200,000 6,200,000
13200 14850
535 270
125 100
illion per year). Refresh of IT components 7 years after installation
25 20
326.2728501932 381.2728501932
27 34
years after rollout. Maximum savings achieved 15 years after rollout for each
meter. Linear transition path from 2nd to 15th years
8 8
4317 2641
4968 7126
651 4485
105 723
1.2 2.7
$ 12 $ 81
-$ 98 $ 315
-$ 10 $ 35
ntents of this spreadsheet
Discounted costs Discounted benefits Net cumulative benefits

-$ 346,025,261.33 $ 595,717.16 -$ 345,429,544.18
-$ 342,489,882 $ 5,179,368 -$ 682,740,057.73
-$ 337,579,633 $ 82,922,856 -$ 937,396,834.89
-$ 331,517,597 $ 160,722,958 -$ 1,108,191,473.35
-$ 324,501,351 $ 242,627,170 -$ 1,190,065,655.02
-$ 81,206,544 $ 330,848,179 -$ 940,424,020.69
-$ 75,191,245 $ 423,589,887 -$ 592,025,378.80
-$ 139,243,046 $ 472,190,065 -$ 259,078,359.35
-$ 128,928,746 $ 523,331,894 $ 135,324,788.03
-$ 119,378,469 $ 570,569,384 $ 586,515,702.91
-$ 110,535,619 $ 608,572,630 $ 1,084,552,713.33
-$ 102,347,796 $ 634,077,713 $ 1,616,282,631.15
-$ 47,383,239 $ 646,085,794 $ 2,214,985,186.44
-$ 43,873,369 $ 645,442,713 $ 2,816,554,530.64
-$ 40,623,490 $ 634,133,654 $ 3,410,064,694.80
-$ 30,091,474 $ 483,156,098 $ 3,863,129,318.71
-$ 20,896,857 $ 343,560,274 $ 4,185,792,735.72
-$ 12,899,294 $ 216,298,890 $ 4,389,192,331.16
-$ 5,971,896 $ 101,791,040 $ 4,485,011,475.72
ull tranche of meters, and not the

demand and operating cost savings. In
dingly, a long-run model would produce Costs -$ 2,640,684,807
lost in adopting a finite horizon model, Benefits $ 7,125,696,283
as t=0) relate to the outcomes Net benefit 4,485,011,476
n years 18 and 19 (shown as year = 18). Benefit-Cost Ratio 2.70
Min
-37200000
# meters 6,200,000
Total peak demand from these house 11550
Value of network savings $/kW/yea 271.2728501932
0 -$ 992,000,000 $ 189,042 - 37,200,000
1 -$ 992,000,000 $ 1,775,087 - 74,400,000
2 -$ 992,000,000 $ 6,081,372 - 111,600,000
3 -$ 992,000,000 $ 15,025,812 - 148,800,000
4 -$ 992,000,000 $ 30,914,679 - 186,000,000
5 $ 55,817,786 - 186,000,000
6 $ 90,249,366 - 186,000,000
7 -$ 186,000,000 $ 133,745,605 - 186,000,000
8 -$ 186,000,000 $ 184,328,949 - 186,000,000
9 -$ 186,000,000 $ 238,885,341 - 186,000,000
10 -$ 186,000,000 $ 293,877,055 - 186,000,000
11 -$ 186,000,000 $ 346,103,451 - 186,000,000
12 $ 393,232,150 - 186,000,000
13 $ 433,980,417 - 186,000,000
14 $ 468,002,634 - 186,000,000
15 $ 387,918,772 - 148,800,000
16 $ 299,674,750 - 111,600,000
17 $ 204,743,529 - 74,400,000
18 $ 104,467,477 - 37,200,000
0 0.96 -$ 990,348,162 $ 181,906
0 0.89 -$ 950,133,221 $ 1,581,554
62,000,000 0.82 -$ 910,442,040 $ 56,165,407
124,000,000 0.76 -$ 871,417,683 $ 106,197,011
186,000,000 0.71 -$ 833,179,145 $ 153,420,023
248,000,000 0.65 -$ 121,809,817 $ 198,967,681
310,000,000 0.61 -$ 112,786,867 $ 242,703,613
310,000,000 0.56 -$ 208,864,569 $ 249,147,135
310,000,000 0.52 -$ 193,393,119 $ 256,988,757
310,000,000 0.48 -$ 179,067,703 $ 264,214,079
310,000,000 0.45 -$ 165,803,429 $ 269,152,920
310,000,000 0.41 -$ 153,521,693 $ 270,769,120
310,000,000 0.38 -$ 71,074,858 $ 268,721,103
310,000,000 0.35 -$ 65,810,054 $ 263,233,286
310,000,000 0.33 -$ 60,935,235 $ 254,880,501
248,000,000 0.30 -$ 45,137,211 $ 192,900,536
186,000,000 0.28 -$ 31,345,285 $ 136,412,309
124,000,000 0.26 -$ 19,348,942 $ 85,495,153
62,000,000 0.24 -$ 8,957,843 $ 40,085,741
Costs -$ 5,993,376,875
Benefits $ 3,311,217,837
Net benefit - 2,682,159,037
Middle
# meters 6200000
Total peak demand from 13200
Value of network savi 326.2728501932
0 -$ 663,400,000 $ 370,866
1 -$ 663,400,000 $ 3,482,389
2 -$ 663,400,000 $ 11,930,511
3 -$ 663,400,000 $ 29,477,825
4 -$ 663,400,000 $ 60,648,805
5 $ 109,504,031
6 $ 177,052,338
7 -$ 155,000,000 $ 262,383,803
8 -$ 155,000,000 $ 361,618,842
9 -$ 155,000,000 $ 468,648,256
10 -$ 155,000,000 $ 576,531,688
11 -$ 155,000,000 $ 678,990,087
12 $ 771,447,758
13 $ 851,388,221
14 $ 918,133,432
15 $ 761,023,908
16 $ 587,905,680
17 $ 401,668,421
18 $ 204,945,605
19
- 31,000,000 0 0.96 -$ 668,186,712
- 62,000,000 0 0.89 -$ 646,311,551
- 93,000,000 71,300,000 0.82 -$ 624,010,836
- 124,000,000 142,600,000 0.76 -$ 601,467,640
- 155,000,000 213,900,000 0.71 -$ 578,840,248
- 155,000,000 285,200,000 0.65 -$ 101,508,180
- 155,000,000 356,500,000 0.61 -$ 93,989,056
- 155,000,000 356,500,000 0.56 -$ 174,053,807
- 155,000,000 356,500,000 0.52 -$ 161,160,933
- 155,000,000 356,500,000 0.48 -$ 149,223,086
- 155,000,000 356,500,000 0.45 -$ 138,169,524
- 155,000,000 356,500,000 0.41 -$ 127,934,744
- 155,000,000 356,500,000 0.38 -$ 59,229,048
- 155,000,000 356,500,000 0.35 -$ 54,841,711
- 155,000,000 356,500,000 0.33 -$ 50,779,362
- 124,000,000 285,200,000 0.30 -$ 37,614,343
- 93,000,000 213,900,000 0.28 -$ 26,121,071
- 62,000,000 142,600,000 0.26 -$ 16,124,118
- 31,000,000 71,300,000 0.24 -$ 7,464,869
0.96 $ -
Costs
Benefits
Net benefit
Benefit-Cost Ratio
Discounted benefits
$ 356,866
$ 3,102,713
$ 68,663,063
$ 131,444,302
$ 194,183,649
$ 258,488,310
$ 323,536,003
$ 347,480,910
$ 373,331,298
$ 397,197,320
$ 415,859,820
$ 427,339,225
$ 431,014,660
$ 427,371,982
$ 417,581,116
$ 317,363,100
$ 225,204,551
$ 141,545,940
$ 66,520,561
$ -
-$ 4,317,030,841
$ 4,967,585,389
650,554,548
1.15
Max National smart meter rollout (phased) with poor
Phase in years 5

0 -$ 334,800,000 $ 61,909
1 -$ 334,800,000 $ 581,316
2 -$ 334,800,000 $ 1,991,564
3 -$ 334,800,000 $ 4,920,742
4 -$ 334,800,000 $ 10,124,124
5 $ - $ 18,279,542
6 $ - $ 29,555,402
7 -$ 124,000,000 $ 43,799,809
8 -$ 124,000,000 $ 60,365,145
9 -$ 124,000,000 $ 78,231,598
10 -$ 124,000,000 $ 96,240,613
11 -$ 124,000,000 $ 113,344,025
12 $ - $ 128,778,013
13 $ - $ 142,122,499
14 $ - $ 153,264,298
15 $ - $ 127,037,957
16 $ 98,139,277
17 $ 67,050,634
18 $ 34,211,633
Summary
Units low
Direct load control devices million 6,200,000
Cost profile Smart meters phased in over five years (1.24 million per year). Refres

$/kW per year 271.2728501932
demand 2
No demand management savings for first two years after rollout. Maximum sav
meter. L

Discounted costs $ Million (npv) 5,993
Discounted benefits $ Million (npv) 2,026
Net benefit $ Million (npv) -3,968
Net benefit per household $ (npv) -640
$
year period -$ 72

household
Inverse beta 50% probability -302
alpha 2.013
beta 2.000
(phased) with poorly targeted time of use tariffs only

- 24,800,000 0 0.96
- 49,600,000 0 0.89
- 74,400,000 0.82
- 99,200,000 $ 161,200,000 0.76
- 124,000,000 $ 241,800,000 0.71
- 124,000,000 $ 322,400,000 0.65
- 124,000,000 $ 403,000,000 0.61
- 124,000,000 $ 403,000,000 0.56
- 124,000,000 $ 403,000,000 0.52
- 124,000,000 $ 403,000,000 0.48
- 124,000,000 $ 403,000,000 0.45
- 124,000,000 $ 403,000,000 0.41
- 124,000,000 $ 403,000,000 0.38
- 124,000,000 $ 403,000,000 0.35
- 124,000,000 $ 403,000,000 0.33
- 99,200,000 $ 322,400,000 0.30
- 74,400,000 $ 241,800,000 0.28
- 49,600,000 $ 161,200,000 0.26
- 24,800,000 $ 80,600,000 0.24
mid-point high
6,200,000 6,200,000
13200 14850
535 270
125 100
ars (1.24 million per year). Refresh of IT components 7 years after installation
25 20
326.2728501932 381.2728501932
3 3
years after rollout. Maximum savings achieved 15 years after rollout for each
meter. Linear transition path from 2nd to 15th years.
8 8
4,317 2,641
2,445 2849
-1,872 208
-302 34
0.6 1.1
-$ 34 $ 4
-$ 419 -$ 185
-$ 45 -$ 20
Discounted costs Discounted benefits

-$ 346,025,261 $ 59,572
-$ 342,489,882 $ 517,937
-$ 337,579,633 $ 1,642,990
-$ 331,517,597 $ 126,893,892.41
-$ 324,501,351 $ 178,181,601
-$ 81,206,544 $ 223,108,132
-$ 75,191,245 $ 262,293,380
-$ 139,243,046 $ 250,861,961
-$ 128,928,746 $ 240,891,481
-$ 119,378,469 $ 231,647,949
-$ 110,535,619 $ 222,515,606
-$ 102,347,796 $ 213,091,422
-$ 47,383,239 $ 203,204,552
-$ 43,873,369 $ 192,873,876
-$ 40,623,490 $ 182,237,073
-$ 30,091,474 $ 136,333,171
-$ 20,896,857 $ 95,479,334
-$ 12,899,294 $ 59,360,325
-$ 5,971,896 $ 27,646,899
$ -
Costs -$ 2,640,684,807
Benefits $ 2,848,841,153
Min

0 -$ 992,000,000 $ 18,904 - 37,200,000
1 -$ 992,000,000 $ 177,509 - 74,400,000
2 -$ 992,000,000 $ 608,137 - 111,600,000
3 -$ 992,000,000 $ 1,502,581 - 148,800,000
4 -$ 992,000,000 $ 3,091,468 - 186,000,000
5 $ - $ 5,581,779 - 186,000,000
6 $ - $ 9,024,937 - 186,000,000
7 -$ 186,000,000 $ 13,374,560 - 186,000,000
8 -$ 186,000,000 $ 18,432,895 - 186,000,000
9 -$ 186,000,000 $ 23,888,534 - 186,000,000
10 -$ 186,000,000 $ 29,387,705 - 186,000,000
11 -$ 186,000,000 $ 34,610,345 - 186,000,000
12 $ - $ 39,323,215 - 186,000,000
13 $ - $ 43,398,042 - 186,000,000
14 $ - $ 46,800,263 - 186,000,000
15 $ - $ 38,791,877 - 148,800,000
16 $ 29,967,475 - 111,600,000
17 $ 20,474,353 - 74,400,000
18 $ 10,446,748 - 37,200,000
- 0.96 -$ 990,348,162 $ 18,191
- 0.89 -$ 950,133,221 $ 158,155
62,000,000 0.82 -$ 910,442,040 $ 51,650,127
124,000,000 0.76 -$ 871,417,683 $ 95,867,083
186,000,000 0.71 -$ 833,179,145 $ 133,741,144
248,000,000 0.65 -$ 121,809,817 $ 166,068,548
310,000,000 0.61 -$ 112,786,867 $ 193,450,662
310,000,000 0.56 -$ 208,864,569 $ 181,563,140
310,000,000 0.52 -$ 193,393,119 $ 170,743,715
310,000,000 0.48 -$ 179,067,703 $ 160,722,185
310,000,000 0.45 -$ 165,803,429 $ 151,267,864
310,000,000 0.41 -$ 153,521,693 $ 142,218,182
310,000,000 0.38 -$ 71,074,858 $ 133,484,397
310,000,000 0.35 -$ 65,810,054 $ 125,038,409
310,000,000 0.33 -$ 60,935,235 $ 116,890,903
248,000,000 0.30 -$ 45,137,211 $ 86,995,870
186,000,000 0.28 -$ 31,345,285 $ 60,659,159
124,000,000 0.26 -$ 19,348,942 $ 37,572,928
62,000,000 0.24 -$ 8,957,843 $ 17,445,339
Costs -$ 5,993,376,875
Benefits $ 2,025,556,001
Net benefit - 3,967,820,874
Middle

0 -$ 663,400,000 $ 37,087
1 -$ 663,400,000 $ 348,239
2 -$ 663,400,000 $ 1,193,051
3 -$ 663,400,000 $ 2,947,783
4 -$ 663,400,000 $ 6,064,881
5 $ - $ 10,950,403
6 $ - $ 17,705,234
7 -$ 155,000,000 $ 26,238,380
8 -$ 155,000,000 $ 36,161,884
9 -$ 155,000,000 $ 46,864,826
10 -$ 155,000,000 $ 57,653,169
11 -$ 155,000,000 $ 67,899,009
12 $ - $ 77,144,776
13 $ - $ 85,138,822
14 $ - $ 91,813,343
15 $ - $ 76,102,391
16 $ 58,790,568
17 $ 40,166,842
18 $ 20,494,561
- 31,000,000 - 0.96 -$ 668,186,712
- 62,000,000 - 0.89 -$ 646,311,551
- 93,000,000 71,300,000 0.82 -$ 624,010,836
- 124,000,000 142,600,000 0.76 -$ 601,467,640
- 155,000,000 213,900,000 0.71 -$ 578,840,248
- 155,000,000 285,200,000 0.65 -$ 101,508,180
- 155,000,000 356,500,000 0.61 -$ 93,989,056
- 155,000,000 356,500,000 0.56 -$ 174,053,807
- 155,000,000 356,500,000 0.52 -$ 161,160,933
- 155,000,000 356,500,000 0.48 -$ 149,223,086
- 155,000,000 356,500,000 0.45 -$ 138,169,524
- 155,000,000 356,500,000 0.41 -$ 127,934,744
- 155,000,000 356,500,000 0.38 -$ 59,229,048
- 155,000,000 356,500,000 0.35 -$ 54,841,711
- 155,000,000 356,500,000 0.33 -$ 50,779,362
- 124,000,000 285,200,000 0.30 -$ 37,614,343
- 93,000,000 213,900,000 0.28 -$ 26,121,071
- 62,000,000 142,600,000 0.26 -$ 16,124,118
- 31,000,000 71,300,000 0.24 -$ 7,464,869
Costs
Benefits
Net benefit
Benefit-Cost Ratio
Discounted benefits
$ 35,687
$ 310,271
$ 59,804,931
$ 111,178,919
$ 155,577,378
$ 193,946,378
$ 226,910,946
$ 214,893,782
$ 204,134,695
$ 194,165,626
$ 184,591,439
$ 175,146,383
$ 165,705,596
$ 156,259,541
$ 146,871,392
$ 109,597,999
$ 76,591,073
$ 47,531,518
$ 22,104,336
-$ 4,317,030,841
$ 2,445,357,889
- 1,871,672,952
0.57
Max Direct load control in the absence of sma
Number of DLC devices 1,240,000
Total peak demand from these households outside Vict 4455
Year Participation rates in scheme

0 0.04
1 0.08
2 0.12
3 0.16
4 0.18
5 0.2
6 0.19
7 0.18
8 0.17
9 0.17
10 0.17
11 0.17
12 0.17
13 0.17
14 0.17
15 0.17
Summary
Units
Direct load control devices number
Relevant critical peak demand MWh
Up front cost $ per appliance
Install costs all occur up front for any group of participants. Con
Cost profile
per year) ahead of first three years. Soft
Annual cost $ per appliance per year

$/kW per year
demand
Maximum demand management achieved in year 4, wit
Discount rate per cent

Discounted costs $ Million (npv)
Discounted benefits $ Million (npv)
Net benefit $ Million (npv)
Net benefit per household $ (npv)
Benefit cost ratio ratio
Annuity in savings per household over 15 year period $
25 and 75% percentiles NPV per household

25 and 75% percentiles annuity per household (rounded
to nearest 5)
Inverse beta 50% probability 887.16830

alpha 1.512
beta 2.000
error from deviation of inverse beta from the median valu 0.0
d control in the absence of smart meters
Need to take account of changing participation
New participants Transition costs of DLC DM Savings

248000 -$ 47,120,000 $ 84,928,527
248000 -$ 54,560,000 $ 169,857,055
248000 -$ 62,000,000 $ 254,785,582
248000 -$ 62,000,000 $ 339,714,110
124000 -$ 38,440,000 $ 382,178,373
124000 -$ 34,720,000 $ 424,642,637
-$ 7,440,000 $ 403,410,505
-$ 3,720,000 $ 382,178,373
$ - $ 360,946,241
$ - $ 360,946,241
$ - $ 360,946,241
$ - $ 360,946,241
$ - $ 360,946,241
$ - $ 360,946,241
$ - $ 360,946,241
$ - $ 360,946,241
low mid-point high

124000 310,000 1,240,000
76 91 4455
260 210 160
occur up front for any group of participants. Consumers also receive annual payments (30 to 100
per year) ahead of first three years. Software for direct load control updated after 7 years
25 25 25
271 326 381
15 20 25
um demand management achieved in year 4, with participation in DLC falling to 70% of maximum
participation by year 15
8 8 8
79 162 459
95 437 2875
16 275 2416
131 887 1948
1.2 2.7 6.3
$ 14 $ 96 $ 212
$ 569 $ 1,235
$ 65 $ 140
igh and low values

Operating costs Discount factor Discounted costs Discounted benefits

- 6,200,000 0.96 -$ 51,307,194 $ 81,722,514
- 12,400,000 0.89 -$ 59,659,528 $ 151,337,988
- 18,600,000 0.82 -$ 66,492,958 $ 210,191,650
- 24,800,000 0.76 -$ 66,303,519 $ 259,495,864
- 27,900,000 0.71 -$ 46,921,141 $ 270,308,192
- 31,000,000 0.65 -$ 43,039,469 $ 278,094,848
- 29,450,000 0.61 -$ 22,369,395 $ 244,620,468
- 27,900,000 0.56 -$ 17,753,488 $ 214,579,358
- 26,350,000 0.52 -$ 13,698,679 $ 187,646,558
- 26,350,000 0.48 -$ 12,683,962 $ 173,746,813
- 26,350,000 0.45 -$ 11,744,410 $ 160,876,679
- 26,350,000 0.41 -$ 10,874,453 $ 148,959,888
- 26,350,000 0.38 -$ 10,068,938 $ 137,925,822
- 26,350,000 0.35 -$ 9,323,091 $ 127,709,094
- 26,350,000 0.33 -$ 8,632,492 $ 118,249,161
- 26,350,000 0.30 -$ 7,993,048 $ 109,489,964
Costs -$ 458,865,765
Benefits $ 2,874,954,860
Net benefit 2,416,089,094
points percentile
Min
# DLC devices 124,000
Total peak demand 346.5
Maximum demand r 15.00
Number of partici 3
-360 124000
Recruitment effect all scenarios Year Participation ra

0.2 0 0.004
0.4 1 0.008
0.6 2 0.012
0.8 3 0.016
0.9 4 0.018
1 5 0.02
0.95 6 0.019
0.9 7 0.018
0.85 8 0.017
0.85 9 0.017
0.85 10 0.017
0.85 11 0.017
0.85 12 0.017
0.85 13 0.017
0.85 14 0.017
0.85 15 0.017
New participants Transition costs of DLCDM Savings Operating costsDiscount factor
24,800 -$ 8,928,000 $ 2,819,881 - 3,100,000 0.96
24,800 -$ 11,408,000 $ 5,639,763 - 3,100,000 0.89
24,800 -$ 13,888,000 $ 8,459,644 - 3,100,000 0.82
24,800 -$ 13,888,000 $ 11,279,525 - 3,100,000 0.76
12,400 -$ 6,200,000 $ 12,689,466 - 3,100,000 0.71
12,400 -$ 4,960,000 $ 14,099,406 - 3,100,000 0.65
-$ 2,480,000 $ 13,394,436 - 3,100,000 0.61
-$ 1,240,000 $ 12,689,466 - 3,100,000 0.56
$ - $ 11,984,495 - 3,100,000 0.52
$ - $ 11,984,495 - 3,100,000 0.48
$ - $ 11,984,495 - 3,100,000 0.45
$ - $ 11,984,495 - 3,100,000 0.41
$ - $ 11,984,495 - 3,100,000 0.38
$ - $ 11,984,495 - 3,100,000 0.35
$ - $ 11,984,495 - 3,100,000 0.33
$ - $ 11,984,495 - 3,100,000 0.30
Max demand manageme 6.00

Middle
# DLC devices
Total peak demand
Number of partici
Discounted costs Discounted benefits Year

-$ 11,573,948 $ 2,713,432 0
-$ 12,926,231 $ 5,024,874 1
-$ 14,014,670 $ 6,978,992 2
-$ 12,976,546 $ 8,616,039 3
-$ 6,577,730 $ 8,975,041 4
-$ 5,278,425 $ 9,233,581 5
-$ 3,383,606 $ 8,122,132 6
-$ 2,436,753 $ 7,124,677 7
-$ 1,611,609 $ 6,230,427 8
-$ 1,492,231 $ 5,768,914 9
-$ 1,381,695 $ 5,341,587 10
-$ 1,279,347 $ 4,945,914 11
-$ 1,184,581 $ 4,579,550 12
-$ 1,096,834 $ 4,240,324 13
-$ 1,015,587 $ 3,926,226 14
-$ 940,359 $ 3,635,394 15
Costs -$ 79,170,154
Benefits $ 95,457,105
310,000
990
3
Participation rates in schem New participants Transition costs of DM Savings

0.01 62,000 -$ 17,050,000 $ 12,920,405
0.02 62,000 -$ 21,080,000 $ 25,840,810
0.03 62,000 -$ 25,110,000 $ 38,761,215
0.04 62,000 -$ 25,110,000 $ 51,681,619
0.045 31,000 -$ 10,075,000 $ 58,141,822
0.05 31,000 -$ 8,060,000 $ 64,602,024
0.0475 -$ 4,030,000 $ 61,371,923
0.045 -$ 2,015,000 $ 58,141,822
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
0.0425 $ - $ 54,911,721
Operating costs Discount factor Discounted costs Discounted benefits
- 7,750,000 0.96 -$ 23,863,811.13 $ 12,432,665
- 7,750,000 0.89 -$ 25,686,741 $ 23,023,454
- 7,750,000 0.82 -$ 27,108,667 $ 31,977,020
- 7,750,000 0.76 -$ 25,100,618 $ 39,477,802
- 7,750,000 0.71 -$ 12,607,316 $ 41,122,711
- 7,750,000 0.65 -$ 10,353,834 $ 42,307,316
- 7,750,000 0.61 -$ 7,143,168 $ 37,214,768
- 7,750,000 0.56 -$ 5,482,695 $ 32,644,534
- 7,750,000 0.52 -$ 4,029,023 $ 28,547,175
- 7,750,000 0.48 -$ 3,730,577 $ 26,432,569
- 7,750,000 0.45 -$ 3,454,238 $ 24,474,601
- 7,750,000 0.41 -$ 3,198,369 $ 22,661,668
- 7,750,000 0.38 -$ 2,961,452 $ 20,983,026
- 7,750,000 0.35 -$ 2,742,086 $ 19,428,727
- 7,750,000 0.33 -$ 2,538,968 $ 17,989,562
- 7,750,000 0.30 -$ 2,350,896 $ 16,657,002
Costs -$ 162,352,461
Benefits $ 437,374,601
Year 0 1 2 3
kW A/C consumption max 2 2 2 2
Account for not all ac on at the same time or full power ( 1.1475 1.1475 1.1475 1.1475
Total savings in network and generation (LRMC) 374.398096 374.3981 374.3981 374.3981
Discount factor 1 0.925926 0.857339 0.793832
Discounted stream $ 374 $ 347 $ 321 $ 297
LRMC SRMC SRMC accounting for power and peak us

Final total real PV $ 2,713 7000
Annuity $ 374 $ 966 $ 554
Assumptions This is the equivalent to the $316

10 year lifespan of air conditioner
2kW A/C electricity consumption when running at full power
8% discount from real DNSP WACC
No trend in critical peak to average demand
Discount rate (%) 8%
% turned on at any peak time 68% Swift (2005), (CRA, 2006)

running at power 85%
Assumes that real cost of network capacity each year rises by the same growth rate as peak to average demand (could be h
As it stands, the $326 is not a net subsidy since the party using the air conditioner does
pay something. However, the bulk of their customer bill is a fixed charge (which will pay
for much of the network capacity at peak) and then a low energy use charge (which will
aslo reflect any marginal costs for retailers, generatrors as well as network businesses).
Properly priced, the true marginal costs of air conditioning at critical peak times will be
very high multiples of the actual marginal energy cost
4 5 6 7 8 9
2 2 2 2 2 2
1.1475 1.1475 1.1475 1.1475 1.1475 1.1475
374.3981 374.3981 374.3981 374.3981 374.3981 374.3981
0.73503 0.680583 0.63017 0.58349 0.540269 0.500249
$ 275 $ 255 $ 236 $ 218 $ 202 $ 187
counting for power and peak use rates
326.2729
e equivalent to the $316
to average demand (could be higher or lower than this)
nditioner does
(which will pay
arge (which will
rk businesses).
k times will be
(1) LRMC
Distribution businesses LRMC estimates
$ per KW per annum
CSIRO 197
CRA (low) 87
CRA (high) 110
Ernst & Young (low) 79
Ernst & Young (high) 264
Ausgrid proposal 163
ActewAGL proposal 158
Jemena proposal 189
United Energy proposal 168
ETSA proposal 169
Ausgrid alternative low estimat 86
Ausgrid Alternative high estima 157
Energex 157
Energex 220
Ergon 291
Ausgrid 212
Essential Energy 259
ActewAGL 228
Powercor 165
SP AusNet Distr 173
United Energy 212
Citipower 259
Jemena 173
ETSA Utilities 275
Aurora Energy 377
Average 193
Summary (using percentile model only)

Low High
Distribution LRMC 150 220
Transmission LRMC 30 70
Generation LRMC 91 91
Total 271 381
Transmission and Generation 121 161
(2) SRMC
Distribution networks Kw
Energex 2800
Ergon 3700
Ausgrid 2700
Essential Energy 3300
ActewAGL 2900
Powercor 2100
SP AusNet Distr 2200
United Energy 2700
Citipower 3300
Jemena 2200
ETSA Utilities 3500
Aurora Energy 4800
Ausgrid Info Low 1500
Ausgrid info high 2000
Summary (using percentile model only)

Low High
DistributionSRMC 2200 3300
Transmission SRMC 470 900
Generation SRMC 913 913
Total 3583 5113
Transmission and Generation 1383 1813
Tranmission businesses LRMC estimates Generation LRMC

$ per KW per annum $ per KW per annum
CSIRO 66 Sub 23 low 90
CRA (low) 29 Sub 23 Hi 110
CRA (high) 37 AECOM 74
Ernst & Young (low) 26 Average 91
Ernst & Young (high) 88
Ausgrid low estimate 31
Ausgrid high estimate 79
Energex 55
Powerlink (qld) 67
Transgrid (nsw) 71
SP Ausnet (Act) 71
SP Ausnet (VIC) 37
ElectraNet (SA) 29
Transend (TAS) 130
AusGrid low estimate 31
AusGrid high estimate 86
Average 51
Tranmission networks Generation
Powerlink (qld) 850 AECOM 940
Transgrid (nsw) 900 Energex 800
SP Ausnet (Act) 900 Ausgrid (p 1000
SP Ausnet (VIC) 470 Average 913
ElectraNet (SA) 370
Transend (TAS) 1660
AusGrid low estimate 400
AusGrid high estimate 1100
Energex 700
$ per KW per annum
Introduction
The Commission has drawn on a range of long and short run estimates of the marginal cost of electricity generation, tran
order to translate the marginal cost of electricity into an estimate of the benefits of demand management. The informatio
LRMC estimates, and the interpretation, source and date of information. The Commission has used several estimation ap
aggregation of analysis to produce LRMC estimates. The results are summarised from row 197.
Discount rate for LRMC
The value of avoided augmentation to meet peak demand has been valued
as per the previous benefit between $130/kW per year and $240/kW per
Futura 2009 year p.73)
The $240/kW per year figure has been developed up from more recent
information from DBs and other sources (cf the $130 estimate - which we
accordingly ignore). It comprises $120/kW per year for distribution and
transmission augmentation, and up to $120/kW per year for generation
augmentation cost.
Sub 23 based on the DelLRMC OCGT (generation) $129.2 - $155.9 /kW/pa (p. 22)
Energex shares of investment savings (p. 19) $2 billion from Distribution, 0.7 from Transmission, an
0.5714285714
0.2
0.2285714286
2.8571428571
0.7407407407
0.75
Network only
CSIRO $223 per kVA pa
CRA 2008 $98-124 kVA per annum
Ernst & Young $90-$300 per kVA per annum
Convert above to $/kW per annum using a load factor of 0.85 (as in Ausgrid 2012)
CSIRO $262 per kW per annum
CRA 2008 $116- $146 per kW per annum
Ernst & Young $105-$352 per kVA per annum
Average from LRMC from NEM distributors (excluding Endeavour) $144 per kVA per annum fo
Range excluding Endeavour $134-$160 per kVA per annum for LV
Range for distribution in $/kW pa $158-$189
Oakley Greenwood Review of AMI Benefits 2010 Report for Vic DPI
We believe a value of $200/kW/year is a more accurate estimate of the
combined deferral value of generation and network infrastructure.
Ausgrid (derived, with assumptions, from personal communication and Power of Choice submissio
Distribution 2011 $1.1 - 2.0m/MW. Produced by converting the cost of network assets required to deliver 1MW of pe
Transmission 2011 $0.4 - 1.0m/MW. Produced by converting the cost of network assets required to deliver 1MW of pe
Implied distribution $ per kW per annum with 50 year asset life and discoun
Implied transmission $ per kW per annum with 50 year asset life and discou
ENERGEX estimates that the average investment for each megawatt of

additional capacity is $3.5 million (comprising $2 million distribution
network assets, $0.7 million transmission asset network costs and $0.8
Energex 2011 million generation costs)
Implied distribution $ per kW per annum with 50 year asset life

Implied transmission $ per kW per annum with 50 year asset life
Distribution charges - Percentile Method (method 1)

CSIRO
CRA (low)
CRA (high)
Ernst & Young (low)
Ernst & Young (high)
Ausgrid proposal
ActewAGL proposal
Jemena proposal
United Energy proposal
ETSA proposal
Ausgrid low estimate
Ausgrid high estimate
Energex
Average
Skewness
Stdev
Low
high
Distribution charges BETA distribution Model (method 2)

CSIRO
CRA (low)
CRA (high)
Ernst & Young (low)
Ausgrid proposal
ActewAGL proposal
Jemena proposal
ETSA proposal
Ausgrid alternative low estimate
Ausgrid Alternative high estimate
Energex
Average
variance
alpha
beta
Skewness
Low
High
Transmission charges Percentile method (method 1)

CSIRO
CRA (low)
CRA (high)
Ernst & Young (low)
Energex
Average
variance
Skewness
Low
high
Transmission charges BETA distribution method (method 2)

CSIRO
CRA (low)
CRA (high)
Ernst & Young (low)
Energex
Average
variance
alpha
beta
Skewness
Low
High
Generation
OCGT LRMC min
OCGT LRMC max
Distribution and Transmission in total Percentile method (Method 1)

CSIRO
CRA (low)
CRA (high)
Ernst & Young (low)
Ausgrid proposal
ActewAGL proposal
Jemena proposal
ETSA proposal
Energex
Average
variance
Skewness
Low
high
All network and generation Percentile method (method 1)

Low
high
Distribution and Transmission in total BETA distribution method (method 2)
CSIRO
CRA (low)
CRA (high)
Ernst & Young (low)
Ausgrid proposal
ActewAGL proposal
Jemena proposal
ETSA proposal
Energex
Average
variance
alpha
beta
Skewness
Low
High
All Network and Transmission in total BETA distribution method (method 2)

Low
high
$ per kW per year

Summary (Percentile - method 1)
Low
100
30
90
230
220
Summary (BETA distribution - method 2)

Low
110
30
90
230
230
If lowest range for total is used

Low
220
Consistent estimates for parts
100
30
90
l cost of electricity generation, transmission and distribution. In

emand management. The information shown below shows various
sion has used several estimation approaches and levels of
row 197.
0.08
Date
2009
2012
ribution, 0.7 from Transmission, and 0.8 for Generation
D 2011
T 2011
G 2011
Ratio of D to T 2011
Ratio of D to network costs 2011
s in Ausgrid 2012)
avour) $144 per kVA per annum for LV (p. 21)
From Deloitte 2012, Analysis of initiatives to lower pe

Implied $ kW per annum Alternative calcs based on simple formula that commences disc
sets required to deliver 1MW of peak, with a 9 per cent real WACC and depreciation
90 163
Low High 36 91
86 157
31 79
Source is Department of
Employment, Economic
development and
Innovation, 2011,
Queensland Energy
Management Plan, May, p. 4
or sub. 23 700 Energex TNSP SRMC $ per KW
800 Energex Generayion SRMC $ per KW
157
55
Original data $ per kW per year

196.5
87
109.5
78.75
264
163.2941176471
158.4352941176
188.8588235294
167.5764705882
169.4117647059
86
157
157
153
0.33
51.9185603353
100
160
Original data $ per kW per ye Transformed to 0,1 interval This is used to determine alpha and beta using the m
197 0.6356275304 low 78.75
87 0.044534413 high 264
110 0.1659919028 Sample Ave152.60241
79 0 Average as 152.6024
264 1 Inverse bet 194 190
163 0.4563785028 Inverse bet 106.50649 110
158 0.4301500357 alpha 0.818
189 0.5943796142 beta 1.234
168 0.4794951179 error from 0
169 0.4894022386
86 0.0412059933
157 0.4227300724
157 0.4227300724
153 0.399
2696 0.0785468638
0.8180873721 0.8180873721
1.2339875561 1.2339875561
0.33 0.33
110
190
Original data
65.5
29
36.5
26.25
88
31
79
55
51
577.5505006507
0.48
30
60
Original data Transformed to 0,1 interval This is used to determine alpha such that it is the m
65.5 0.6356275304 low 26.25
29.0 0.044534413 high 88
36.5 0.1659919028 Sample Ave 51
26.3 0 Average as 51
88.0 1 Inverse bet 77 80
31.4 0.0835975576 Inverse bet 27 30
78.5 0.8466457159 alpha 0.240
55.0 0.4651216368 beta 0.352
51 0.405 error from 0.00
577.5505006507 0.1514663084
0.2395424698 0.2395424698
0.3516432991 0.3516432991
0.48 0.48
30
80
90 From sub 23
110
method (Method 1)
262
116
146
105
352
217.7254901961
211.2470588235
251.8117647059
223.4352941176
225.8823529412
118
236
212
206
4833.9923654916
0.23
140
230
230
340
bution method (method 2)

Original data Transformed to 0,1 interval This is used to determine alpha and beta using the m
262 0.6356275304 low 105
116 0.044534413 high 352
146 0.1659919028 Sample Ave 206
105 0 Average as 206
352 1 Inverse bet 262 260
217.7254901961 0.4563785028 Inverse bet 144.20691 140
211.2470588235 0.4301500357 alpha 0.837
251.8117647059 0.5943796142 beta 1.212
223.4352941176 0.4794951179 error from 0
225.8823529412 0.4894022386
117.7955594356 0.0518038844
235.5911188712 0.5287089833
212.0320069841 0.4333279635
206 0.408
4833.9923654916 0.0792340862
0.8370771724 0.8370771724
1.2123414231 1.2123414231
0.23 0.23
140
260
bution method (method 2)

230
370
High Part of electricity system

160 Distribution capacity
60 Transmission
110 Generation
340 All (aggregate measure)
330 Sum of parts

80 Transmission
110 Generation
370 All (aggregate measure)
380 Sum of parts

330 All investment

60 Transmission
110 Generation
of this spreadsheet
nalysis of initiatives to lower peak demand, Final Report, April, p. 21

formula that commences discounting at start of year
RMC $ per KW
mine alpha and beta using the methods of moments estimation

mine alpha such that it is the median between the high and low values
mine alpha and beta using the methods of moments estimation
Using load factor of 0.85
LV $/kW peLV $/KVA/annum

Ausgrid 163.29412 138.8
ActewAGL 158.43529 134.67
Jemena 188.85882 160.53
United Ene 167.57647 142.44
ETSA 169.41176 144
These calculations are based on AECOM 2012
These provide alternative set of estimates of the SRMC (and thereby LRMC), and are from a single report.
The calculation method is based on dividing growth capex by growth in maximum demand (based on AER Regulatory D
These results are higher than the estimates found from other sources, most partiuclarly, consultants' and businesses' d
estimates of SRMC and LRMC.ions)
Cost of increasing capacity in distribution networks (2011$)

Estimated Capex/Growth
DNSP ($M/MW) LRMC assuming 50 year asset life $ per kW per year
Energex 2.800 219.9
Ergon 3.700 290.6
Ausgrid 2.700 212.0
Essential Energy 3.300 259.2
ActewAGL 2.900 227.7
Powercor 2.100 164.9
SP AusNet Distr 2.200 172.8
United Energy 2.700 212.0
Citipower 3.300 259.2
Jemena 2.200 172.8
ETSA Utilities 3.500 274.9
Aurora Energy 4.800 376.9
Average 3.017 236.9
Variance 0.589 3631.1
alpha 0.603 0.6
beta 1.173 1.2
Source: Table 27, p. 59 of AECOM 2012, Impact of Electric Vehicles and Natural Gas Vehicles on the Energy Market, Final Ad
Quote from AECOM:

Our analysis suggests that the cost of capacity is between $2.1 and $4.8 million per MW. This range is
close to that proposed by AusGrid in their recent submission to AEMC, namely $1.2 to $4 million per
MW. Growth tends to be more expensive in the DNSPs that service rural areas, for example Aurora
Energy, Ergon and ETSA Utilities. This makes sense since networks in rural areas tend to be less
connected and less dense, reducing the opportunity for load sharing. In the absence of better data, the weighted avera
million per MW was used as the cost of distribution growth in Western
Australia.
TNSPs
Estimated capex growth ($m LRMC assuming 50 year asset life $ per kW per year
Powerlink (qld) 0.85 67
Transgrid (nsw) 0.9 71
SP Ausnet (Act) 0.9 71
SP Ausnet (VIC) 0.47 37
ElectraNet (SA) 0.37 29
Transend (TAS) 1.66 130
AusGrid low estimate 0.4 31
AusGrid high estimate 1.1 86
Capacity wieghted average 0.66 52
Average 0.831 65.278
Variance 0.185 1143.619
alpha 0.379 0.4
beta 0.682 0.7
Quote from AECOM:
The cost of transmission growth was estimated to be between $0.37 and $1.66 million per MW, with a
weighted average of $0.66 million. Again, the range was consistent with the estimate reported by
AusGrid (2011) of $0.4 to $1.1 million per MW, with the exception of Transend (again in Tasmania),
which had the most expensive growth. It is worth noting that Transend owns many distribution assets
which may influence their cost estimates.
Generation
Estimated capex growth ($m LRMC assuming 50 year asset life $ per kW per year
All Australia 0.94 74
Summary
SRMC $ per kw
Low High
Distribution 2330 3600
Transmission 430 1200
Generation 940 940
Total 3700 5740
LRMC $ per kw per year

Low High
Distribution 180 280
Transmission 30 90
Generation 74 74
Total 284 444
2012
rom a single report.
mand (based on AER Regulatory Determinat
ly, consultants' and businesses' direct
e $ per kW per year SRMC transLRMC transformed to 0,1 interval

0.259 0.259
0.593 0.593
0.222 0.222
0.444 0.444
0.296 0.296
0.000 0.000
0.037 0.037
0.222 0.222
0.444 0.444
0.037 0.037
0.519 0.519
1.000 1.000
0.340 0.340 These are the PC's
estimates
0.081 0.081
0.603 0.603
1.173 1.173
es on the Energy Market, Final Advice to the AEMC, 22 June.
W. This range is
$4 million per
mple Aurora
o be less
f better data, the weighted average of $2.9
e $ per kW per year LRMC

SRMCtransformed
trans to 0,1 interval
0.372 0.372
0.411 0.411
0.411 0.411
0.078 0.078
0.000 0.000
1.000 1.000
0.023 0.023
0.566 0.566
0.358 0.358 These are the PC's

estimates
0.111 0.111
0.379 0.379
0.682 0.682
per MW, with a

eported by
n Tasmania),
tribution assets
e $ per kW per year

This is used to determin SRMC LRMC
low 2.1 164.9138
high 4.8 376.9458
Sample Average 3.017 237
Average as predicted by a 3.016667 236.9
Inverse beta 75% probabili 3.59775 282.5326
Inverse beta 25% probabili2.327322 182.7654
alpha 0.603 0.603
beta 1.173 1.173
error from deviation of av 0
Rounded 25th percentile 3600 280
This is used to determin SRMC LRMC

low 0.37 29.05624
high 1.66 130.3604
Sample Average 0.831 64
Average as predicted by a 0.83125 65.27837
alpha 0.379 0.379
beta 0.682 0.682
error from deviation of av 0
Gradual demand response under hypothetical case when all smart meters w
High
Total peak demand from these households outside Victo 14850

After-before price ratio 8
Long-run value of demand management $ 1,926,439,701
Years to get full demand response 15
Year Max
0 $ 3,095,437
1 $ 25,970,373
2 $ 70,512,385
3 $ 146,458,930
4 $ 260,169,067
5 $ 410,866,337
6 $ 589,763,357
7 $ 782,732,779
8 $ 974,725,722
9 $ 1,153,491,727
10 $ 1,311,317,073
11 $ 1,444,933,969
12 $ 1,554,432,163
13 $ 1,641,950,029
14 $ 1,710,581,665
l case when all smart meters were rolled out simultaneously
Min Medium
6,200,000 6200000
11550 13200
8 8
$ 588,251,058 $ 1,154,038,297
DM Savings
Min Medium
$ 945,212 $ 1,854,329
$ 7,930,225 $ 15,557,614
$ 21,531,421 $ 42,240,612
$ 44,722,199 $ 87,736,571
$ 79,444,339 $ 155,854,900
$ 125,460,744 $ 246,130,459
$ 180,088,128 $ 353,299,146
$ 239,012,612 $ 468,897,938
$ 297,638,923 $ 583,911,768
$ 352,226,301 $ 691,001,970
$ 400,419,310 $ 785,547,620
$ 441,220,110 $ 865,591,140
$ 474,656,105 $ 931,186,294
$ 501,380,262 $ 983,614,081
$ 522,337,385 $ 1,024,728,026
Demand management savings follow a logistic curve over time,

with low initial savings. This reflects the fact that:
(a) In a national rollout, cost-reflective prices in many regions
would be set low because of an absence of constraints
(b) It would be hard to convince people of the need to time-shift

power consumption in places where infrastructure was
completely adequate to support current patterns of peak
consumption (ie 'moral suasion' would be weak). The situation
would be analogous to trying to persuade people to save water
when local dams are full.
(c) DM savings only occur if there are network savings, which are
the result of planned deferral of investment. Such planning
requires some certainty about the nature of the demand
response, which only becomes apparent over time. The benefit of
the targeted approach described in scenario (1) is that the meters
are only rolled out when there is such certainty.
Generalised logistic
a_val -0.007
K_val 1
b_val 0.3
V_val 0.2
Q_val 0.5
M_val 1.55
$ 3,095,437 0.0016068176 1
$ 25,970,373 0.0134810206
0.9
$ 70,512,385 0.0366024353
$ 146,458,930 0.0760257017 0.8
$ 260,169,067 0.1350517574 0.7
$ 410,866,337 0.2132775488 0.6
$ 589,763,357 0.3061416129
0.5
$ 782,732,779 0.4063105523
$ 974,725,722 0.505972609 0.4
$ 1,153,491,727 0.5987686645 0.3
$ 1,311,317,073 0.680694585 0.2
$ 1,444,933,969 0.7500540857
0.1
$ 1,554,432,163 0.8068937544
0
$ 1,641,950,029 0.852323604
1 2 3 4 5 6 7 8 9 10
$ 1,710,581,665 0.8879497575
6 7 8 9 10 11 12 13 14 15
Max Limited smart meter with critical peak demand m
This (SEE NOTE) model is identical to scenario 1, except that it includes a given lumpy project that isdeferred by one year (s
# meters 10,000
Total peak demand from these households 35.93 The 1.5 factor is used because regions where defer
Value ($) of avoided network and generati 381.2728501932
Absolute value of long-run elasticity 0.2
Before-after price ratio 8 As per the SP Ausnet strategic pricing trial
SRMC savings (=1 if option is on, and 0 if n 1
Year Transition costs of meters $ DM Savings LRMC$

0 -$ 2,700,000 $ 665,820
1 $ - $ -
2 $ - $ 1,997,461
3 $ - $ 2,663,281
4 $ - $ 3,329,101
5 $ - $ 3,994,921
6 $ - $ 4,660,741
7 -$ 1,000,000 $ 4,660,741
8 $ - $ 4,660,741
9 $ - $ 4,660,741
10 $ - $ 4,660,741
11 $ - $ 4,660,741
12 $ - $ 4,660,741
13 $ - $ 4,660,741
14 $ - $ 4,660,741
Note: p1 and p0 are prices after and before cost-reflective pricing. Given q0 is starting value of demand, and q1 the level
network saving from reductions in peak energy use is equal to (q0-q1)* the value of network savings from each MW of lo
dlog(q)/dlog(p) so that log(q1/q0) = e*log(p1/p0). Accordingly q1/q0 = exp(e*log(p1/p0)) and the MW savings = q0-q1 =
multiplied by the value of network and generation savings per unit of energy reduced. Note the elasticity shown as elasti
whereas the e used in the calculation is the negative of that value. It is assumed that it takes 7 years before there is a full
power after and before price changes.
Summary
Units low
Smart meters number 10,000
Cost profile Install costs all occur up front. IT refresh after 7 years.
Value of demand management savings $/kW per year all other
271.2728501932
(network/generation) years
demand 19
Seven years to get full demand response, with little demand response in first ye
subsequently sustained. Line
Net benefit $ Million (npv) 2
Net benefit per household $ (npv) 168
$
year period $ 19

household
Low
Household net benefit $ 170
alpha 1.663
beta 2.000
error from deviation of inverse beta from t 0 Must be zero
Responsiveness of consumers to peak prici Percentage reduction

high response 34%
medium response 27%
low response 19%
tical peak demand management and one-off one year deferral of distribution netw
ect that isdeferred by one year (so the additional gain is the avoided cost for one year of the entire lumpy project)
Value of deferred project (mul$ 7,157,955
sed because regions where deferral is most likely are areas with higher levels of peak demand
net strategic pricing trial

2,000,000.00
Total demand reduction (MWDM savings from deferredOperating costs $ Operating savings $
1.7463089041 0- 200,000 0
3.4926178082 25000000 - 200,000 0
5.2389267123 -25000000 - 200,000 650,000
6.9852356164 0- 200,000 650,000
8.7315445205 0- 200,000 650,000
10.4778534246 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
12.2241623287 0- 200,000 650,000
lue of demand, and q1 the level of demand following the price change, the Costs
work savings from each MW of lower demand. Now e = elasticity = Benefits
and the MW savings = q0-q1 = q0(1-exp(e*log(p1/p0))). This needs to be Net benefit
ote the elasticity shown as elasticity_high is the absolute value of the elasticity,
Benefit-Cost Ratio
kes 7 years before there is a full demand response. q1 and q0 are quantities of
Long run reduction in tot

mid-point high % reduction from base
10,000 10,000
32 36
535 270
125 100
years.
25 20
326.2728501932 381.2728501932
27 34
little demand response in first year. Maximum demand response is
subsequently sustained. Linear increase in response over time
8 8
8 5
22 35
14 30
1412 2965
2.7 7.0
$ 159 $ 333
$ 921 $ 1,932
$ 100 $ 200
Medium High
$ 1,410 $ 2,960
istribution network infrastructure Back to the Contents of this spreadsheet
Discount factor Discounted costs Discounted benefits $ Transition in response b

0.96 -$ 2,790,526 $ 640,686 640685.8 0.14
0.89 -$ 178,195 $ 22,274,316 10770882 0.29
0.82 -$ 164,995 -$ 18,440,279 2184088 0.43
0.76 -$ 152,773 $ 2,530,901 2530901 0.57
0.71 -$ 141,457 $ 2,814,350 2814350 0.71
0.65 -$ 130,978 $ 3,041,919 3041919 0.86
0.61 -$ 121,276 $ 3,220,333 3220333 1.00
0.56 -$ 673,757 $ 2,981,789 2981789 1.00
0.52 -$ 103,975 $ 2,760,916 2760916 1.00
0.48 -$ 96,273 $ 2,556,404 2556404 1.00
0.45 -$ 89,142 $ 2,367,041 2367041 1.00
0.41 -$ 82,539 $ 2,191,704 2191704 1.00
0.38 -$ 76,425 $ 2,029,356 2029356 1.00
0.35 -$ 70,763 $ 1,879,033 1879033 1.00
0.33 -$ 65,522 $ 1,739,846 1739846 1.00
-$ 4,938,594
$ 34,588,314
29,649,719
Note:
7.00 In this calculation, there is a benefit from deferring a large lumpy inves
that the value of any given reduction of kVA is worth more than its LRM
Balgowlah zone substation build, which would have cost $25m, and fou
would defer the supply-side proposal by one year.
12.2241623287 Given it is usually growth in max demand that creates the need for augm
34% unlikely to defer a project by one full year (though perhaps by some sho
Since the model is illustrative, we have assumed that the size of the def
MW saving from DM.
Min
# meters 10,000
Total peak demand from these house 27.94
Value of Network and generation s 271.2728501932
Absolute value of elasticity 0.1
Year Transition costs of meteDM Savings Total demand redu

0 -$ 8,000,000 $ 203,313 0.749476321
1 $ - $ - 1.498952642
2 $ - $ 609,938 2.248428963
3 $ - $ 813,250 2.997905284
4 $ - $ 1,016,563 3.747381605
5 $ - $ 1,219,875 4.496857926
6 $ - $ 1,423,188 5.246334247
7 -$ 1,500,000 $ 1,423,188 5.246334247
8 $ - $ 1,423,188 5.246334247
9 $ - $ 1,423,188 5.246334247
10 $ - $ 1,423,188 5.246334247
11 $ - $ 1,423,188 5.246334247
12 $ - $ 1,423,188 5.246334247
13 $ - $ 1,423,188 5.246334247
14 $ - $ 1,423,188 5.246334247
a benefit from deferring a large lumpy investment by one year, with the potential
reduction of kVA is worth more than its LRMC. For example, Ausgrid examined its
build, which would have cost $25m, and found that a 2.7MVA load reduction
e proposal by one year.
n max demand that creates the need for augmentation, small DM savings are
by one full year (though perhaps by some shorter period).
tive, we have assumed that the size of the deferred project is $25 million per 3.492
DM savings on SRMC distribOperating costsOperating savings Discount factor
0 - 300,000 0 0.96
$ 10,729,435 - 300,000 0 0.89
-$ 10,729,435 - 300,000 500,000 0.82
0 - 300,000 500,000 0.76
0 - 300,000 500,000 0.71
0 - 300,000 500,000 0.65
0 - 300,000 500,000 0.61
0 - 300,000 500,000 0.56
0 - 300,000 500,000 0.52
0 - 300,000 500,000 0.48
0 - 300,000 500,000 0.45
0 - 300,000 500,000 0.41
0 - 300,000 500,000 0.38
0 - 300,000 500,000 0.35
0 - 300,000 500,000 0.33
Middle
# meters
Total peak demand fro
Value of Network and
Absolute value of elasti
Discounted costs Discounted benefits Year

-$ 7,986,679 $ 195,637.62 0
-$ 267,292 $ 9,559,633.08 1
-$ 247,492 -$ 7,935,841.60 2
-$ 229,160 $ 1,003,146.51 3
-$ 212,185 $ 1,072,638.85 4
-$ 196,467 $ 1,126,331.80 5
-$ 181,914 $ 1,166,184.70 6
-$ 1,010,635 $ 1,079,800.65 7
-$ 155,962 $ 999,815.42 8
-$ 144,409 $ 925,755.01 9
-$ 133,712 $ 857,180.57 10
-$ 123,808 $ 793,685.71 11
-$ 114,637 $ 734,894.18 12
-$ 106,145 $ 680,457.57 13
-$ 98,283 $ 630,053.31 14
Costs -$ 11,208,781
Benefits $ 12,889,373
10000
31.935483871
326.2728501932
0.15
Transition costs of metDM Savings Total demand reduction ( DM savings on SRM

-$ 5,350,000 $ 398,861 1.2224773295 0
$ - $ - 2.444954659 $ 17,500,875
$ - $ 1,196,583 3.6674319886 -$ 17,500,875
$ - $ 1,595,445 4.8899093181 0
$ - $ 1,994,306 6.1123866476
$ - $ 2,393,167 7.3348639771
$ - $ 2,792,028 8.5573413067
-$ 1,250,000 $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
$ - $ 2,792,028 8.5573413067
Operating costs Operating savings Discount factor Discounted costsDiscounted benefits
- 250,000 0 0.96 -$ 5,388,603 $ 383,804
- 250,000 0 0.89 -$ 222,743 $ 15,592,800
- 250,000 575,000 0.82 -$ 206,244 -$ 12,976,267
- 250,000 575,000 0.76 -$ 190,966 $ 1,657,928
- 250,000 575,000 0.71 -$ 176,821 $ 1,817,226
- 250,000 575,000 0.65 -$ 163,723 $ 1,943,827
- 250,000 575,000 0.61 -$ 151,595 $ 2,041,702
- 250,000 575,000 0.56 -$ 842,196 $ 1,890,465
- 250,000 575,000 0.52 -$ 129,968 $ 1,750,430
- 250,000 575,000 0.48 -$ 120,341 $ 1,620,769
- 250,000 575,000 0.45 -$ 111,427 $ 1,500,712
- 250,000 575,000 0.41 -$ 103,173 $ 1,389,548
- 250,000 575,000 0.38 -$ 95,531 $ 1,286,619
- 250,000 575,000 0.35 -$ 88,454 $ 1,191,313
- 250,000 575,000 0.33 -$ 81,902 $ 1,103,068
Costs -$ 8,073,688
Benefits $ 22,193,944
Benefit-Cost Rat 2.75
ounted benefits
References
AECOM 2012, Impact of Electric Vehicles and Natural Gas Vehicles on the Energy Markets, Report for
AEMC, 22 June.
AEMC (Australian Energy Market Commission) 2012, Fact Sheet: Enabling Technology (Meteri
30 November.
AER (Australian Energy Regulator) 2011, Victorian Advanced Metering Infrastructure Review, 2012
budget and charges applications, final determination, October.
2012, Determination, Advanced Metering Infrastructure, 2013 revised charges, October 2012.
Ausgrid 2012, Ausgrid Network Pricing Proposal for the Financial Year Ending June 2013, May 2012.
2013, Meter Upgrades, accessed on 25 March 2013 from http://www.ausgrid.com.au/Common/O
network/Metering/Meter-upgrades.aspx.
CRA (Charles River Associates) 2007, Cost Benefit Analysis of Smart Metering and Direct Load Con
Stream 2, Network Benefits and Recurring Costs, prepared for the Department of Industry, Tourism
Resources, Phase 1 Report, September.
2008a, Cost benefit analysis of smart metering and direct load control, Report to the Ministe
Council on Energy, Work stream 2: Network benefits and recurrent costs.
2008b, Cost benefit analysis of smart metering and direct load control, Report to the Ministe
Council on Energy, Work stream 5: Economic Impacts on wholesale electricity market and greenhouse
emission outcomes.
Deloitte 2011a, Advanced metering infrastructure cost benefit analysis, Final Report to the Victo
Department of Treasury and Finance, 2 August.
2011b, Advanced metering infrastructure customer impact study, Final Report, 2 volumes, repor
the Victorian Department of Primary Industries, October.
2012, Analysis of initiatives to lower peak demand, Report for Energy Supply Association of Austr
April.
EMCa (Energy Market Consulting Associates) 2008, Cost benefit analysis of smart metering and direct l
control, Report to the Ministerial Council on Energy, Work stream 6: Transitional implementation costs.
EnergyAustralia and TransGrid 2009, Demand Management Investigation Report, Sydney In

Metropolitan Area, November.
Ernst and Young, 2011, Rationale and drivers for DSP in the electricity market demand and suppl
electricity, report for the AEMC Power of Choice review, December.
ESC (Essential Services Commission) 2002, Installing interval meters for electricity customers costs
benefits: Position paper, Melbourne.
2004, Mandatory rollout of interval meters for electricity customers: Final decision, Melbourne.
Etrog Consulting 2012, Flexible pricing of electricity for residential and small business customers, prep
for Department of Primary Industries, Victorian Government.
ETSA Utilities 2009, Annual Demand Management Compliance Report, Issue 1.0, August.
Faruqui, A. and Palmer, J. 2011, Dynamic pricing and Its Discontents, Regulation, Fall, pp. 1622.
Futura Consulting 2009, Advanced metering infrastructure program benefits realisation roadmap, re
prepared for the Department of Primary Industries.
2011, Power of choice giving consumers options in the way they use electricity, Investigatio
existing and plausible future demand side participation in the electricity market, Final Report for
Australian Energy Market Commission, December.
2012, Analysis of Initiatives to Lower Peak Demand, Final Report to the Energy Supply Associatio
Australia, April.
Harrison, M. 2010, Valuing the Future: the social discount rate in cost-benefit analysis, Visiting Resear
Paper, Productivity Commission, Canberra.
Hierzinger, R., Albu, M., van Elburg, H., Scott, A., azicki, A., Penttinen, L., Puente, F., Sle, H. 20
European Smart Metering Landscape Report 2012, SmartRegions Deliverable 2.1, www.smartregions
October, Vienna.
KPMG 2008, Cost benefit analysis of smart metering and direct load control, Report to the Ministe
Council on Energy, Work stream 3: Retailer impacts.
Langmore, M. and Duffy, G. 2004, Domestic electricity demand elasticities, Issues for the Victorian Ene
Market, paper for the St Vincent de Paul Society.
McGowan, S, 2009, Hot in the city, Ecolibrium, February 2009, pp. 1417.
Oakley Greenwood 2010a, Review of AMI benefits, report prepared for the Victorian Department of Prim
Industries, July.
2010b, Benefits and Costs of the Victorian AMI Program, report prepared for the Victorian Departm
of Primary Industries, August.
NERA (NERA Economic Consulting) 2008a, Cost benefit analysis of smart metering and direct l
control, Report to the Ministerial Council on Energy, Overview report for consultation.
2008b, Cost benefit analysis of smart metering and direct load control, Report to the Ministe
Council on Energy, Work stream 4: Consumer impacts.
Origin Energy 2012, NSW Pricing Tariffs, accessed in March 2013 from www.originenergy.com.au.
2013, Tariff details for Smart Time of Use Explained and Dynamic Saver Explained, acce
30 March from www.originenergy.com.au.
Queensland Department of Employment, Economic Development and Innovation 2011, Queensland En
Management Plan, May.
Victorian Auditor-General, 2009, Toward a smart grid the roll out of advanced metering infrastruct
Report 200910:3, Melbourne.
Wilkenfeld, G. 2011, Demand Response Standard AS/NZS 4755, Consultant to Equipment Ene
Efficiency (E3) Program, Australia. Presentation to APEC Workshop, Seoul, November 2011.

Electricity Supplement Data

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Electricity Supplement Data

Uploaded by

Copyright:

Available Formats

The costs and benefits of demand management for households (spreadsheet)

This publication should be referenced as:

See the Contents of this spreadsheet

the implementation of smart meters, but instead, drawn on assumptions used in

nditioning during critical peak periods.

ds, Supplement to inquiry report on Electricity Network Regulatory Frameworks,

About this spreadsheet

Version 2 of scenario 1 (not used in TP)

Cost of smart meters $ per meter

Cost of IT update for smart meters $ per meter

Annual opex cost for smart meters $ per meter

Annual business efficiencies smart meters $ per meter

Other DLC costs (operating)

Unit cost of sending signals and maintaining IT/software 25

Peak price demand elasticity (absolute value)

Value of network and generation savings $/kW/year

Payment for participating in DLC for 3 years ($)

Participation in Direct load control (take up rates)

Total peak demand from these households outside Victoria (MW)

Value of transmission and generation savings $/kW/year

SRMC distribution savings $/kW

Number of meters in NEM excluding Victoria 6200000

Average of lowest and highest

Source and notes: All green shaded figures are fr

Deloitte (2011b , volume 2, p. 52), which used 0.15

As discussed in chapter 11, there are different ways of calcula

Based on Futura (2011)

See tab labelled 'Summary LRMC&SRMC"

See tab labelled 'Summary LRMC&SRMC"

nd consistent with lower figures earlier estimated by NERA 2008a)

s: CRA 2008a p. 127

especially as costs fall)

here are different ways of calculating the LRMC, but

Year Transition costs of meters DM Savings

25 and 75% percentiles NPV per

Operating costs Operating savings Discount factor

25 percentage points percent75 percentage points percentile

Discounted costs Discounted benefits

Total peak demand from these house 27.9435483871

Year Transition costs of meteDM Savings Operating costs

Total peak demand from 31.935483871

Year Transition costs of metDM Savings

Year Transition costs of meters DM Savings

25 and 75% percentiles NPV per

Inverse beta 50% probability 104.92818

Operating costs Operating savings Discount factor

Discounted costs Discounted benefits Net cumulative benefits

ull tranche of meters, and not the

Year Transition costs of meters DM Savings

Annual cost $ per appliance per year 30

Discount rate per cent 8

25 and 75% percentiles NPV per

Operating costs Operating savings Discount factor

Discounted costs Discounted benefits

Year Transition costs of meteDM Savings Operating costs

Year Transition costs of metDM Savings

Year Participation rates in scheme

Annual cost $ per appliance per year

Discount rate per cent

25 and 75% percentiles NPV per household

Inverse beta 50% probability 887.16830

Need to take account of changing participation

New participants Transition costs of DLC DM Savings

low mid-point high