Interview: Jonathan Simcock, managing director, Data and Communications Company

“We are not going to allow a sloppy go-live and hope it all comes right in the second release. We want to get it right first time.”

Seven months out from the start of the mass rollout of smart meters into every home in the UK, Jonathan Simcock, managing director of the Data and Communications Company (DCC) still cannot guarantee that the DCC network – the data and communications infrastructure underpinning the entire programme – will be ready on time.  

On the release of the DCC’s first four-year business plan, Simcock sits down exclusively with Utility Week in the Capita offices in Victoria, London, and says the company is working “incredibly hard”, but risks and uncertainties remain that leave the start date in jeopardy.

The business plan reveals that many key issues are unresolved, such as how to tackle the rising number of “foundation” meters and how to ensure distribution network operators (DNOs) receive what they need from smart metering for the transition to smart grids.

Despite these concerns, however, Simcock is confident the DCC will deliver a network capable of supporting the national smart meter rollout.

The programme is undoubtedly a monumental task for energy suppliers. Installing more than 50 million meters in under four years is already a huge ask, but if the DCC were to miss its target for an August start date, adding to a series of push-backs to the programme’s timeframe, the end date of 2020 for the programme may prove impossible to meet.

The impact of failing to hit the government-imposed 2020 deadline for a smart meter in every home is more than reputational. It would hit both suppliers and network companies in the pocket because contracts have been signed and they have paid to get everything in place for August whether the network is working or not.

Simcock says the company is doing “everything humanly possible to hit August” but he can’t guarantee anything. The reality is that the process could yet be torpedoed by the unexpected despite all the hard work, and Simcock is not prepared to cut corners in order to meet the deadline.

The business plan says that although integration testing is progressing well, the August deadline is subject to “risks and uncertainties”. An internal “baseline” specification is scheduled to be released in April that will allow the DCC and everyone else to test their systems, and Simcock says that if that April deadline is met, confidence will rise about an August go-live. But there is still every possibility that systems integration testing will throw up something that brings the process to a grinding halt – and if it does, he says he will not cover up any setback in order to save face.

“If in the course of testing we hit something that we don’t expect and we have to deal with it, we will put it on the table and let everybody know,” says Simcock. “The date is really, really important, but what’s even more important is that it is a good result. We have all kinds of governance around the go-live decision to make sure we don’t take it live unless it is right.

“What we are not going to do is get a sloppy go-live into something that is very unreliable and hope it all comes right in the second release. We want to get it right first time.”

The DCC actually has three months grace on the go-live, until the end of October. Only after that point will it be declared officially to have missed the deadline. But notwithstanding his declaration that he is prepared to take the time needed to get things right, Simcock says he does not believe he will have to draw on this contingency beyond a few days.

What is important now, he says, is stability, which is why the DCC is hoping the Competition and Markets Authority does not follow through on its initial recommendation to prioritise prepayment customers in the rollout.

In a submission to the CMA last year, the DCC strongly warned against the idea. Currently the fixes for prepayment meters will be among the last technology put in place because they are among the most complicated. Prioritising prepayment would almost certainly delay the programme, Simcock says, and subject prepay customers to the teething problems he expects after go-live.

“I’m not expecting massive issues, but realistically there will be issues. This period at the beginning when the volumes are quite low is a learning opportunity for everybody,” he says

Delays will exacerbate another bone of contention in the national smart meter programme: foundation meters.

Energy suppliers have not waited for the introduction of the DCC network before beginning to install smart meters, and around two million “foundation” smart meters have already been installed. Although these meters provide customers with smart functionality, they do not meet the necessary specification for the national rollout and a decision has yet to be made about how, or even if, these meters will be adopted on to the DCC network.

Back in November, SSE spoke out against the rise in foundation meters, predicting that a quarter of all smart meters will be of foundation specification, posing a “massive risk” to the industry’s ability to future-proof the rollout. A key concern is whether foundation meters will be adopted on the network, rather than replaced with  meters that meet the final specification.

Simcock does not agree that they pose a risk. He wholeheartedly supports the government’s decision to allow a two-staged release (foundation meters followed by certified smart meters) on the basis that it has brought a wealth of knowledge and experience to the programme. This is worth the “complexity” of having two generations of meters, he says.

“To me there is no risk about future proofing, but it does add some complexity because we have to go back and bring them in. It’s all a bit historic now, but for what it’s worth I think it was a wise decision,” Simcock concludes.

He also points out that only two million out of 50 million meters have so far been installed, so SSE’s estimate of a quarter being foundation “seems a bit high”.

The DCC is working on a feasibility report detailing various solutions to bring all foundation meters on board, and this is expected in the second half of this year. Whether a meter becomes a stranded asset or not will depend on the cost-effectiveness of the proposed solution.

“I don’t believe there will be very large numbers of stranded meters. There may be a very small number where the technical fix to get them on the DCC network is very expensive. It may well be that the right value-for-money answer is not do it. That’s purely hypothetical at the moment.”

As for how much adopting foundation meters will cost, Simcock says it is simply “too early to tell”.

What is sure is that consumers who have jumped in early to embrace smart metering will have the dubious privilege of being locked out of joining the DCC network until at least 2018, because that is when work will start on getting foundation meters on the network. In the meantime, if they switch supplier they may lose smart functionality.

The other major problem with foundation meters is that even if they are adopted, they will not provide the benefits distribution network operators need in order to transition to smart grids.

Despite all the noise made about the immediate ­benefits to consumers of accurate billing and faster switching, it is this transformation which will deliver many of the crucial elements of the more dynamic, low carbon and distributed energy system of the future.

Considering the entire smart meter programme is costing £11 billion, DNOs could be forgiven for expecting to get more from this once-in-a-lifetime level of investment than they are currently guaranteed.

One of the biggest benefits DNOs are looking for from smart meters is the ability to know via an alert when a customer has lost power, sent out by the meter as its final act before the connection goes dead. Currently, DNOs are in the dark about outages until customers phone them and tell them about it, which generally takes around three minutes. The “last breath” outage alert from the DCC, while sound in principle, takes around five minutes to reach the DNO. There is a similar delay on the “first breath” alert sent to DNOs by the meter when power is restored.

Simcock admits that these issues only came to light last year. “Because of the telecoms solutions that we have, in some circumstances they will get that alert a few minutes later than they would ideally like.

“The moment that became clear we started working with them [the DNOs] and have been for some months. We will continue to work with them until we get to the best possible outcome for them.”

Will a solution that keeps all parties happy be achieved by the go-live date? Simcock is “quite confident”. He points out that it is important to remember that the DCC will be continually tweaked and improved during the rollout. “I think that like all our customers they will rightly continue to be demanding about service levels and there will be a never ending journey of improvement.”

The DCC already has more than enough on its plate over the four years, but the business plan des also hints at the future beyond smart metering.

Built into the DCC’s licence is the ability to use the only “highly reliable, highly secure national communication and data infrastructure that is connected to every premises in the country” to offer services to other sectors once the smart meter rollout has been completed.

What these “value-added services” might be isn’t yet clear, and is a discussion for another day, Simcock says. “As of today, nobody wants to talk about that. People can fantasise about all kinds of different things, but we are sometime away from beginning.

“It’s really exciting, but its excitement we have to hold our horses on. It’s the programme that just keeps on giving.”

Let’s hope for the energy industry’s sake what the programme keeps giving is a flawless network on time, with a cost-effective solution for foundation meters and speedy alerts, rather than a series of unexpected hiccups and further setbacks.