There is scope for improvement in some areas of the Smart Grid, Smart City Program originally announced by the Australian Government in the 2009-10 Federal Budget, the Australian Audit Office (ANAO) has found.
The program is currently the joint responsibility of the Department of Industry and the Department of the Environment.
The former Federal Government had committed up to $100 million to create, in one city, town or region, an energy network that integrated a smart grid with smart meters in homes, thereby enabling greater energy efficiency, reduced emissions and use of alternative energy sources such as solar power.
The ANAO said the objective of its audit was to assess the effectiveness of the administration of the Program, including its establishment, implementation and ongoing management.
It said Smart Grid, Smart City was a demonstration program established to implement or trial a range of new technologies in a challenging environment.
Challenges to its effectiveness included technological issues, consumer resistance to smart metering technologies, regulatory reform in the electricity sector and responsibility for the program being transferred across four Departments between 2009 and 2013, the ANAO found.
Key components of the program had presented additional challenges, such as the retail trial. This trial, which cost $20 million and represented the largest component of the Program, sought to test consumers’ interaction with a range of electricity retail tariffs and feedback technologies.
“Technological difficulties, combined with customer resistance and problems in securing an electricity retail provider, contributed to significant delays in rolling out the retail trial and, ultimately, the achievement of lower‑than‑expected numbers of customers participating,” the ANAO said
“Overall, the administering Departments did establish appropriate arrangements to support the implementation of the Smart Grid, Smart City Program”.
There was, however, scope for improvement in several areas of the Departments’ administration of the program, including aspects of the grant assessment and selection process, probity arrangements and the measurement and reporting of program performance.
“There was scope for aspects of the process to be strengthened to enhance transparency and accountability. In particular, it was not evident from Departmental records that the Independent Assessment Panel had assessed each applicant against the five published merit criteria,” the ANAO said.
“The probity arrangements established for the process were not in keeping with those expected for a grant of this scale and complexity.”
It said given the scale of the Program and the involvement of independent assessors, there would have been merit in the preparation of a probity plan. The probity adviser should have been required to attend assessment panel meetings and the panel’s selection report should have been reviewed to confirm that the assessment process undertaken aligned with published program guidelines and that any identified conflicts of interest had been appropriately managed.
The ANAO said information provided by the Departments during the course of the plan had not specifically addressed the extent to which the Program’s objectives were being achieved.
“Developing and reporting against an appropriate set of outcome-focused key performance indicators would have better informed the Departments’ senior managers, Parliament and other stakeholders about the progress being made towards achieving the Program’s objectives,” it said.
The ANAO said the audit had highlighted the challenges in maintaining administrative continuity for complex programs that were transferred across Agencies.
“It is particularly important for Departments assigned responsibility for continuing programs to undertake a ‘health check’ at the point of transfer, to ensure the key governance elements in place are appropriate and operating effectively,” it said.
The ANAO has made two recommendations.
The first, directed to the Department of Industry, relate to measuring and reporting program achievement against established objectives.
The second, directed to the Department of the Environment, relate to implementing appropriate probity arrangements, and appropriately documenting grant assessment and selection processes.
The Departments agreed to their respective recommendations.