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Deployment of European IDEX

Metering
Topic Fact Sheet

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Dietmar-Hopp-Allee 16 Version: 1.0
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 Metering Topic Fact
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Table of Contents
1 Management Summary ...................................................................................................3
2 Introduction / Background .............................................................................................3
3 Facts.................................................................................................................................5
3.1 European Level ............................................................................................................................5
3.2 Country Level...............................................................................................................................6
4 Perspectives ....................................................................................................................6
5 Conclusions.....................................................................................................................7
6 Appendices ......................................................................................................................7

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1 Management Summary
EU legislation only regulates the separation of energy distribution companies from energy suppliers.
Specialized companies for all other services are allowed but not enforced.
Metering is subject to liberalization and substantial technical changes. The velocity of changing
requirements is mainly determined by the new EU directives on technical standardization and their
transposition into national law, as well as the advancement of liberalization in the member states.
In the area of technical aspects of measuring devices, national specifics will be substituted by EU-wide
standards. This will have an impact on the administration and communication of these assets in existing IT
landscapes.
EU substitution of national requirements has already started and will develop high momentum after 2008.
Specialized metering companies will achieve bigger market shares due to advantages in cost structure and
unbundling pressure.
Besides, metering will increasingly become subject to changed service processing due to the division of
labour and unbundling requirements.
The complex environment of liberalized markets calls for integrating meters as intelligent and interoperable
system entities. The new technology needs to be integrated into existing business processes and to
improve these without major efforts as well as being more cost-effective.

2 Introduction / Background
Political

The general objective of the EU Commission is to continue to open up national utility markets in order to
create an EU-wide truly competitive market. Different directives and guidelines are preparing the roadmap
to reach this goal.

The Measurement Instrument Directive (MID) is an EU Directive (2004/22/EC) published in the Official
Journal of the European Union. It proposes to facilitate the trade of measuring instruments across the
borders of the EU member states and to provide common rules for the use of these instruments.

This directive mainly supports producers of measurement instruments. Metering companies, however, will
not necessarily benefit from an international market. Thus, the directive will not necessarily foster
specialized metering companies.

The directive harmonizes the requirements relating to ten types of measuring instruments for several
purposes including electricity, gas, and water meters. The MID is applied upon traceable measuring
instruments with corresponding “public interest” such as energy consumption, meteorological control,
levying taxes, etc.

Nevertheless, the MID will have a significant impact on the processes for approving meter devices in the
EU and will most certainly require national legislative changes, particularly with respect to the use of
meters and certifications.

Moreover, it particularly aims at ensuring that regulatory controls of the member states do not hinder the
free movement of meters within the EU.

Member states need to incorporate the MID into their laws by April 2006 not including a further six-month
period before it becomes enforceable on October 31st, 2006.

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Community legislation should specify essential requirements that do not impede technical progress and
should impose conformity norms to be assessed to fulfil these requirements.

Coordination of the EU legal framework on measurement devices by technical standardization,

harmonization of interfaces, and preparation for opening the device and service market is under way.

Liberalization
As an introduction to the liberalization concept, some fundamental positions of Ofgem (UK regulatory body)
are quoted below:

„Ofgem considers that competition in electricity metering will promote choice, innovation, new
investment and has the potential to reduce costs in the provision of electricity metering
services.“(Ofgem: Competition in Electricity Metering Services, 2003, S. 1)

„Ofgem considers that until there is effective competition in the provision of metering services
either the incumbent DNOs [Distribution System Operator, note form the author] should continue to
provide metering services to any person within their distribution services area or all DNOs should
be obliged to offer to enter into an agreement for metering services on their own
networks.“(Ofgem: The provision of metering services by new electricity distribution network
operators, 2003, S. 4)

Metering makes up for approximately 5% - 8% of the costs of a DSO. From a regulatory point of view the
maximal leverage of effectiveness of deregulation is determined by the percentage of costs subject to
deregulation relative to the company’s general cost structure.

In addition to the aspect of increasing the effectiveness of the liberalization policy, there is considerable
effort in some countries to focus on the area of metering in order to limit cross-subsidies in any way. This
political goal has triggered (in some countries) the separation of metering not only by means of balance
sheet transparency but attempts to establish unbundling rules between vital DSO functions and metering
functions. A strict unbundling including the establishment of separate business units with specialization on
metering is only known in the UK, but seems to influence decision-making for possible future EU directives.

The installation of new market roles (cf. Paper European Role Model) is visible in some EU countries. The
tendency of a broader differentiation within deregulated market roles can be seen in the following list. This
development is partly driven by the regulators specification of national unbundling and partly by
industrialization of the utilities market:

• Metering point administrator/Gas point registration operator

• Metered data collector
• Metered data responsible
• Metered data aggregator
• Meter administrator
• Meter operator

In the Netherlands however, new legislation is being developed with the aim of establishing metering as a
regulated activity. Further analysis of possible implications is necessary.

Technology/Industrialization

Digital meters become cheaper every year due to the increased production output and corresponding
economy of scale effects, as well as the decreased component costs for electronic parts. A technical

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revolution in device technology by the use of smart meter technology and the connection of these meters
to central AMR/Billing/EDM1 systems is a vital and influential change for utility companies.

Driven by the need of utility companies to optimize their business processes, the metering device becomes
an essential feature of an integrated metering and billing system. In the past the commercial value of a
meter was determined by its data acquisition and processing powers; today interoperability and system
integration are the main factors, while in the future bi-directional data exchange will be state-of-the-art
technology.

3 Facts
3.1 European Level
A number of instruments are covered by specific directives measuring the approximation of the laws of the
member states. Provisions should be made for an EU-wide CE (Communauté Européenne) marking to be
affixed during manufacture.
Member states should take national legislative and executive action to avoid non-complying instruments by
establishing conformity assessments. The manufacturer shall indicate the conditions for compatibility with
interfaces and sub-assemblies.
Member states shall notify the EU Commission which bodies under their jurisdiction have been designated
to assess conformity. Criteria are set and must be confirmed by the designated bodies; the national
regulators become candidates as long as their national objects of regulation include metering and
measuring instruments.
The requirements are as follows:
Measurands; influence quantity; rated operating conditions; disturbances; allowable errors; reproducibility;
repeatability; discrimination; durability; reliability; suitability; protection against corruption; result indication;
further data processing; conformity evaluation.
Furthermore, specifications and requirements are described to allow conformity declarations by various
processes such as:
• Internal production control
• Internal production control including product testing
• Type examination
• Notified body
• Final product inspecting and testing
The use of smart meter technology for all customers is being enforced in several European
countries/companies. The decrease in price for smart meters (around EUR 40) makes it a profitable
investment even for residential customers. Total implementation costs per smart meter are estimated at
about EUR 150 to 200. The question is who is likely to take over these costs.
Whether the EU Commission will require the unbundling of metering from core DSO functions is uncertain.
This could eventually occur by applying similar rules and guidelines derived from the retail/generation and
distribution unbundling.
In addition, international organizations have started to address the rising demand of system integration,
standardization of meters, and metered data. The COSEM (Companion Specification for Energy Metering)
addresses these challenges by looking at the meter as an integrated part of a commercial process, which
starts with the measurement of the delivery (kWh etc.) and ends with revenue collection.

1
Automated Meter Reading Systems, Energy Data Management Systems

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Furthermore, smart meter technology will allow for other services such as alert in case of burglary, lighting
(and heating) the house on return, and so on.

3.2 Country Level

In Sweden, the law states that as of 2009, estimated meter readings will be no longer be permitted. As a
consequence, all meters are currently being replaced by smart meters.
ENEL in Italy will end the replacement of all residential meters with smart meters by end of 2005 (approx.
20 million devices).
Denmark’s largest utility NESA placed an order for 20,000 three-phase meters with an integrated GSM
communication system. The contract includes an option for the delivery of 500,000 meters. The integrated
system technology comprises power supply for the GSM module, as well as Bluetooth communication.

On a worldwide scale, in the state of Ontario, Canada, as well as in most states in Australia and some
areas in the US, the use of smart meters is being discussed.
The reasons for using smart meters are manifold:
- Prevent theft and ease of disconnection/reconnection process (Italy, South Africa, Bahrain,
Malaysia others)
- Avoid load peaks (US, Australia)
- Cost reduction by reducing work force (Denmark)
- Simplification of business processes (Sweden)
The separation of the metering business is most advanced in the UK. The metering business has been
separated into several meter-related roles such as meter reader/data collector, meter operator, meter
asset manager, data collector, and so on. This separation is a result of a national regulatory directive.
In the UK, committees are in place to transform the EU MID in national laws.
German law is currently transforming the EU directive in form of paragraphs specifying metering as being
subject to regulation and subject to further national regulatory intervention.
In the Netherlands, national law is considering changing the metering aspect in regulation.

4 Perspectives
The unbundling of metering will continue in the EU. The actual transformation of EU directives into national
law, as well as the discussion about MID implementation into the national legal framework shows
undisputable signs of splitting metering from core DSO. Further developed markets such as the UK have
even developed several market roles, which must be unbundled from each other.

The MID will impose EU market conditions by establishing technical rules and frameworks. Within the
years 2006-2010 national bodies will start to adapt national frameworks to meet EU conformity.
Manufacturers will be able to sell measuring devices in all member states without national technical
versions. Utility companies will be able to be supplied by any manufacturer.

Harmonization within the national legal frameworks of procedures to prove the conformity of the measured
results will produce standardization of business and technical support requirements.

In addition, unbundling requirements are changing the current organizational structure of DSOs. This has
already had an impact on the processes assigned to metering, such as meter data collection, aggregation,
billing, and revenue collection.

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Dietmar-Hopp-Allee 16 Version: 1.
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The main drivers for the reengineering of these processes are MID, unbundling, and outsourcing for cost
reduction, as well as specialization of service providers at national and EU level.

Rising competition in the energy markets require real time information concerning the use of energy.
Recent technological developments enable utilities to install devices to capture the metering data and
communicate it to all involved market participants.

5 Conclusions

EU directives will change the legal framework for metering from several sides.
• MID, standardization and harmonization of technical standards, conformity controls and
manufacturing processes.
• This political impetus is strengthened by a parallel technical wave of changes which is a result of
the availability of cheaper digital metering devices and the replacement of old devices. Metering in
a developed market with a high quota of customer switches requires considerable synchronization
and communication efforts for the involved market partners.
• If so, this would suggest a scenario where service support (for example, metering) is carried out to
a great extent by energy distributors. Otherwise, national regulation specifies metering as being
subject to regulatory impositions. Specialized metering companies would then have to compete
with energy distributors for their access to customers and energy providers.

Fundamental organizational changes are also triggered by industrialization and automation in the industry.
For example, trade barriers will fall with national directives, the EU meter device registration will enable EU
competition beyond national frontiers, and only major manufacturers will survive. Competition will enable
international players to enter national markets and growing quantitative and qualitative requirements for
metering will lead to outsourcing, mergers, and structural changes such as changing service and product
portfolios. The number of different manufacturers and device types will decrease and more standardized
technical features will be established.

6 Appendices
http://www.sachsen.de/de/bf/verwaltung/eichbehoerde/infos/pdf/MID_DBI_Freiberg_2004.pdf
http://europa.eu.int/eur-lex/pri/en/oj/dat/2004/l_135/l_13520040430en00010080.pdf
http://www.dlms.com/documents/Excerpt_BB6.pdf
http://www.dlms.com/en/index.htm
http://www.dk.capgemini.com/NewsMailSystem/energy/APR2005/documents/Trends%20in%20Energy%2
02005%20Final.pdf

Ofgem: Competition in Electricity Metering Services, 2003,

Ofgem: The provision of metering services by new electricity distribution network operators, 2003

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Dietmar-Hopp-Allee 16 Version: 1.
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