BUSINESS REVIEW Unregulated Business
TECHNOLOGY
Technology division revenue rose 36.1% to $133.9 million from $98.4 million at 31 December 2016, driven by smart meter installations and the contribution of E-Co Products Group and PowerSmart which were both acquired on 31 March 2017. Technology adjusted EBITDA rose 6.9% to $64.7 million from $60.5 million, with gains from acquisitions and the smart meter roll-out diluted by continued business development expenditure associated with establishing Australian metering operations and the new energy solutions business, and changes to how we structured the services provided by Vector Communications to Vector’s electricity network.
During the six-month period, we installed 44,804 advanced meters in New Zealand and 7,515 advanced meters in Australia. Our smart meter base grew 10.8% to 1.33 million 1 from 1.20 million the year before. As communicated in August, Vector is now reaching the end of its smart meter roll-out in New Zealand, and we are targeting a reduced deployment of around 80,000 to 100,000 meters over FY18. After that, the focus in New Zealand will shift to managing the existing electricity meter fleet and installing new and replacement meters as required. For the past three years, we have been targeting Australia to deliver the next phase of growth for the metering business. We are pleased with the progress made in Australia over the past six months. In particular, over this period we successfully completed the development of the system changes required to deliver the Power of Choice, the new Australian electricity industry reforms, and achieved full accreditation from the Australian Energy Market Operator (AEMO). The Power of Choice reforms went live in the first week of December 2017, so all new and replacement residential electricity meters 2 must now be advanced meters, to be installed by metering co-ordinators appointed by electricity retailers. Vector will be deploying advanced meters on behalf of at least four leading electricity retailers in 2018 across New South Wales, Queensland, South Australia and the ACT. Metering volumes across the industry are expected to rise as the demand that had been suppressed during the wait for Power of Choice to go live is met. Late in FY17, Vector’s electricity business entered into a lease with Vector Communications over the fibre used to provide SCADA connectivity across its network. The lease is accounted for as capital expenditure, which for the period reduced Vector
We have been targeting Australia to deliver the next phase of growth for the metering business.
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AUSTRALIAN SMART METERING BUSINESS READY FOR POWER OF CHOICE REFORMS, AND WITH DEPLOYMENT CONTRACTS IN PLACE WITH FOUR LEADING RETAILERS.
1. Including 118,961 meters which are managed, but not owned, by Vector. 2. Excluding Victoria.
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