Learning from smart meter rollouts abroad

Some other countries have already completed smart meter rollouts, and utilities have the scars to prove it. UK suppliers would do well to learn from their mistakes, says Angus Panton.

The challenges associated with the introduction of smart meters have been widely documented. But, as the UK prepares for one of the biggest IT overhauls in the history of the energy sector, there is a lot it can learn from countries that have already made the change.

With smart meters set to become a game changer for the industry and compulsory by 2020, it is imperative for all entrants to prepare their IT systems for the switchover and ensure the customer always comes first in the race to the finish. By taking heed of the experience of other countries, firms in the UK can go into the upgrade with their eyes open and reap the benefits. Here are three key lessons we can learn from some of these installations and how UK firms can avoid the pitfalls.

Communication. At least three of the large energy suppliers in the UK have recently been on the receiving end of customer anger – and the subsequent wrath of the regulator – because of errors in newly implemented systems. Billing-related issues accounted for 84 per cent of complaints to the Energy Ombudsman between January and June 2014, demonstrating the harm that can arise during changes to billing and customer interface systems.

The importance of communicating these changes – and potential disruption – to customers is not to be underestimated or overlooked. When Pacific Gas and Electric (PG&E) deployed smart meters in California, the project included upgrading both metering and communications networks, as well as the related computer systems and software for 5.1 million electric meters and 4.2 million gas meters. During the rollout, significant problems occurred, including accuracy of billing, which led to a consumer backlash and the company being put under assessment by a California Public Utilities Commission.

Although teething problems are inevitable with such a large-scale project, the key is how they are managed and ultimately resolved. In the case of PG&E, it was deemed that there was a lack of clear communication with customers about the new technologies and that the resulting complaints were not dealt with adequately or in a timely manner. It also highlighted that rate-related issues accounted for a very large number of customer enquiries about their new meters.

Consumer confidence. Poor communication will inevitably lead to reduced consumer confidence in both the utilities suppliers and the systems they are installing. Concerns surrounding whether these systems work is just one area that firms need to address in order to gain consumer trust and.

In Maine, US, Central Maine Power installed more than 600,000 smart meters in homes throughout the state. However, the Maine Public Utilities Commission recently voted to investigate the safety of these installations in response to public concerns regarding threats to their health from radio waves. Press stories about privacy and safety added fuel to the fire, with consumers feeling misinformed and lacking confidence in the smart meter system and the supplier.

Although the rollout of smart meters is not due to finish in the UK until 2020, a survey conducted for SQS by YouGov in late 2014 showed that 62 per cent of consumers are already sceptical that the rollout will go smoothly. Their confidence is dimmed by a track record of big IT projects being delayed or going over budget.

With reputations and market share on the line, providers cannot afford to have IT departments in disarray and angry customers knocking on the door when processes fail. Companies must not underestimate the challenge ahead and need to put appropriate due diligence in place now when overhauling systems, to ensure a smooth transition when everything goes live.

Clarity and cost. Before they venture forth into this data-dominated realm, suppliers need to provide assurances that their system upgrades will hold up. After all, in looking to make radical changes, they will find themselves stripping down the engine that keeps their business on track. Closer dialogue between information professionals and the board will be vital in understanding what is involved and the impact that software and infrastructure failures could have on the business’s ability to stay competitive if billing systems experience problems.

In Sweden, Vattenfall set an ambitious target of installing automated meter reading for all 850,000 of its distribution customers by June 2009. A field report published in 2008 highlighted several practical lessons learnt from this project which can be applied to the UK overhaul today. One of the key points made was on the clarity of the benefits for both consumers and energy suppliers.

The key to success will therefore be for utilities to have clear lines of communication, not only internally but with partners and customers, in order to apply change quickly and confidently.

Underpinning this clarity needs a slick system design, build and testing process – including end-to-end customer journey testing – as utilities look to become more adept at testing in-home devices. It is therefore imperative that when the upgrade happens, regular quality testing forms a key part of the process to ensure changes in billing are well supported and communicated throughout, leaving no nasty surprises until the end.

If not approached in this way, the costs to the business could be severe, in terms of both brand reputation and time and resource required to fix the problem. It will also hit the additional revenue that utilities are hoping will come from the increasing volumes of customer data, known as “big billing”.

With so much imminent change in the industry, suppliers have got to keep their eyes on the prize. They have to be smarter, slicker and faster at dealing with the challenges ahead, such as compliance, complaints and the things that make them money. Meanwhile, they have to deliver on other changes to keep ahead of the competition. If they just deliver business as usual, it will damage their business and future success. Communication and clarity will be key to gain consumer confidence, and there will not be a second chance to get this right.

Angus Panton, director of power and communications at SQS