Unaccounted for Energy
UFE refers to the difference between the amount of energy being drawn into a distribution zone and how much is recorded on the meters as being consumed by end customers after technical loss factors are applied. There are many possible sources of UFE; these include electrical losses, unmetered loads and estimation errors.
The shift from settlement by difference to global settlement
Since 1998, the AEMO has used the settlement by difference method which resulted in the ‘local retailer’ for a distribution area bearing the risk for all ‘unaccounted for energy’ (UFE). This approach has meant that the market was able to operate without the need for expensive metering upgrades for all customers. However, there have been significant changes in metering, with the roll-out of smart meters and advances in communication technology. There has been a significant number of customers that have changed retailers, meaning the concept of using the incumbent retailer was no longer applicable in many jurisdictions.
Global Settlement will mean that AEMO settles the market using the same process for all retailers. This means all retailers will be billed for the energy uncertainties or UFE within a distribution area. Under the new rule, every retailer will be billed for the loss-adjusted metered electricity that is consumed by their customers within a given region. AEMO will then allocate the UFE to market customers in that local area, pro-rated based on their “accounted-for” energy. These charges will then be passed on to customers by their retailer via their energy rates, or as separate market charges.
Why are you charged with UFE?
Under the new rules, the cost of UFE may be passed on to consumers. AEMO believes that the process will lead to fewer settlement disputes because of the improved ability to identify metering errors and will assist in other areas such as forecasting and the management of distributed energy resources.
For more information, refer to AEMC website or AEMO’s factsheet.
