MPs blast Decc over smart programme

The department of Energy and Climate Change (Decc) was left defending its smart meter rollout programme in the face of fierce criticism from the Public Accounts Committee (PAC) and consumer groups. The committee questioned the department’s assumptions, timetable and whether suppliers would pass on any savings to customers or merely see the programme as a sales ­opportunity.
The PAC called for Decc to conduct “proper” trials to address remaining uncertainties about consumer acceptance. “We think it is unrealistic to expect every householder to volunteer for a smart meter [by 2019],” said
the report.
Decc must ensure that suppliers report costs and savings transparently and set out how it plans to monitor them, said the committee. It must also outline suppliers’ and government’s responsibilities on consumer engagement in order to deliver the promised benefits.
The committee said consumer groups were concerned both that the consumer engagement part of the programme was “nowhere near ready”, and that the department had not worked out how it would spend the £100 million it has set aside for engagement.
“This committee does not share the department’s optimism [that it has accounted adequately for risk] and expects the department to proceed [with the rollout] only on the basis of detailed plans underpinned by robust evidence, preferably from other trials,” the PAC report concluded.
Energy minister Charles Hendry said the last thing the programme needed was “more dither and delay”. He said safeguards for consumers would be built in to the programme and “we want to realise [the £7 billion benefit] sooner rather than later”.
A Decc spokesperson said a full response to the report and further consultations on elements of the rollout, including privacy and data protection, would follow “between now and Easter”. He said Decc would set out consumer engagement and code of practice plans and pointed out that the department had “already suggested that nobody be subject to extra sales activity unless people opt in to that”. He did accept that the timetable was “ambitious”.
Metering solutions company Orsis was the only company apart from Centrica and (separately) British Gas to give written evidence to the PAC. It warned that a trial would seriously squeeze an already tight rollout schedule. Lynne Sharp, Orsis commercial business manager, said Decc’s announcement on 23 December on the technical specification had effectively “pushed sending the specification through to the European Union for approval to the end of Q3 next year”. She said that adding a trial meant “we will be into 2015 before the
rollout starts”.
Sharp said the costs of the rollout could be brought down “to the single billions” if a simpler metering solution was implemented. “The fully specified meter that they are working on now as designed by the Energy Retail Association three years ago may be over-egged,” she said.
Sharp suggested that ­policymakers instead examine each function, work out a cost-benefit for each one, and work backwards. “We would like to see what the benefits are [for each element] and who pays for it,” she said. “A lot of the benefits in the cost-benefit analysis come from suppliers passing on reductions to cost. History would suggest that is not a given.”
Alicia Carrasco, director regulatory affairs at eMeter, agreed that the “timescale was tight” and that time for testing and proving was required. The requirement to store 13 months’ worth of data in the meters was “an unnecessary cost” because it could be stored “in the cloud” much more cheaply, she said.

by Brendan Coyne

Bills won’t fall any time soon
Tara McGeehan, director of utilities at Logica, said that bills could go up before they fell because suppliers would provide the investment for the rollout and the business case was around saving money through not doing manual reads. “In reality,” she said, “smart will just mean a slower rise in energy prices, at best. There will be no dramatic price reduction.
“The question is what if they don’t roll out smart meters? Prices will continue to rise at a faster rate. Home generation will be difficult because smart gives a means to flow back on to the network and [there would be] no real way of introducing energy efficiency ­measures.”

Ministers ‘naive’ on smart meter costs
Customers regard the government’s reliance on commercial pressure to keep down the costs of the smart meter rollout as “naive”, according to a report for Which?.
The report, by the Centre for Sustainable Energy (CSE), looked at the rollout “through the lens” of the consumer, and warned that lack of consumer support could threaten both the programme implementation and the realisation of the benefits of the meters.
It said metering costs should be identified to consumers, and that the government should act aggressively and publicly to keep costs down and reassure consumers who believe there is little competition in the energy ­industry.
The government should also act fast to inform customers about issues such as data and customer privacy, and meter safety, to head off a small but vocal opposition to smart meters that could derail the implementation, the CSE said.
The good news was that a strong customer engagement programme could help reduce the risks to the rollout.
The group said there was a simple message that could be used to persuade customers about the benefits of smart meters – correct billing. That was more compelling for customers than innovative tariffs and energy saving, it said.

This article first appeared in Utility Week’s print edition of 20 January 2012.
Get Utility Week’s expert news and comment – unique and indispensible – direct to your desk. Sign up for a trial subscription here:  http://bit.ly/zzxQxx