MEP and retailer obligations for verification of metering information

Background

In June 2022, we commenced an investigation into a metering equipment provider (MEP) in relation to a phase failure fault in a high voltage metering installation. The fault went undetected for about 18 months and resulted in the undercharging of energy and line charges. The under-submission of energy resulted in increased and unaccounted for electricity (UFE) of about $205,000. This was paid for by all retailers in the reconciliation balancing area.

While investigating the MEP’s actions in relation to the breach allegation, the investigator identified that the retailer who supplied electricity to an industrial premises from the metering installation should also have detected the fault, and therefore been able to take action to remedy the inaccurate metering readings.

Metering equipment provider obligations

In this case the MEP contracted out meter interrogation services including the downloading of the event log. A software fault in the contractor’s meter interrogation software meant that even though the meter’s data storage device recorded a ‘phase failure alarm’ this event was not included in the downloaded event log.

Clause 8(5)(f) of Schedule 10.6 of the Code requires the MEP, when interrogating (ie, remotely read) the metering installation to check the event log for evidence of any malfunctioning or tampering and, if detected, carry out the appropriate requirements of Part 10.

The MEP must then pass on any relevant event log entries to the reconciliation participant (ie, the retailer) to review (clause 8(7)(b) of Schedule 10.6).

In this case, the event logs had no phase failure flags and the retailer was unable to detect the fault from event logs.

The MEP has an obligation to ensure download event logs are reviewed. It also has an obligation, through the approved test house that certifies the MEP’s data storage device, to ensure the event logs record specific events including phase failure to the meter (clause 5(b)(viii)(C) of Schedule 10.8).

Outsourcing this task does not outsource the obligation, and the MEP is still responsible for ensuring the relevant events are recorded, included in the event log, and passed onto the retailer for review.

Retailer obligations

In this case study, the retailer could not directly connect to the metering installation to monitor the event log or investigate the integrity of the data itself. It relied on being provided the event log information from the MEP.

At the time of the alleged breach, the retailer was required under clause 17(4)(d) of Schedule 15.2 of the Code to compare consumption with expected or previous flow patterns, and clause 17(4)(f) of Schedule 15.2 to review meter event logs and investigate any event that could have affected the integrity of the metering data.

The retailer received no indication from the MEP that there were any “relevant” meter event log entries indicating an event that could have affected the integrity of the meter data being received.

However, the retailer’s records indicated a drop in consumption of approximately one third which should have been investigated under clause 17(4)(d) of Schedule 15.2. The retailer advised that it had observed the consumption drop but had put this down to the regular fluctuations of consumption by that customer.

The Authority’s review of the consumption graphs indicates a clear drop in consumption that is out of step with previous patterns, especially as time progressed after the event.

The Authority’s view is that comparison with expected or previous flow patterns should be over longer timeframes than just the previous month. In this example, it was clear that there had been a significant reduction in average consumption in the months following the fault – even considering monthly variation.

The retailer relied on the actions of other parties to alert it to potential faults, even though its own consumption data should have triggered an investigation that would have revealed the meter fault.

Electricity Authority decision

On 13 October 2022, the Electricity Authority decided to discontinue the investigation under regulation 23(3)(a) of the Electricity Industry (Enforcement) Regulations 2010 because reconciliation wash up reduced the amount of UFE on the reconciliation balancing area¹, and the MEP (through its contractor) had taken steps to prevent recurrence. Joined parties to the investigation had no settlement requirements.

Lessons learned

This case study provides a reminder to all industry participants that the Code often contains overlapping and complimentary obligations, and all must be complied with. A participant’s relevant compliance obligations remain even when there are contractual or other agreements in place with other participants or entities.

This means that participants may be held responsible for the action or inaction of those other parties.

The Authority advises that participants should maintain oversight regarding services provided by other parties on their behalf and undertake regular quality assurance reviews of those services. Participants should not expect that their obligations have been fulfilled just because they outsourced the service, even if that contractor is much more experienced in the subject matter.

Specifically for retailers, the lesson from this example is that comparison checks with previous flow patterns should look across more than just the previous month and should not rely on just the event log.

Penalties

Penalties for Code breaches have increased. From 1 September 2022, on determining an industry participant has breached the Code, the Rulings Panel may impose a maximum pecuniary penalty order not exceeding $2 million. Additionally, the Rulings Panel may make a pecuniary penalty order of up to $10,000 for each day or part of a day that a breach continues.

_{1. This can usually mean a single grid exit point (GXP) or group of GXPs that are interconnected on a network.}