Ofgem warns suppliers over slow smart meter rollout

Ofgem has written to energy suppliers expressing its concerns over the pace of the smart meter rollout for prepayment meter (PPM) customers, as well as those relying on Radio Teleswitch (RTS) technology.

While more than 60% of homes in the UK are now fitted with a smart meter, the current installation rate for PPM customers is fewer than 50% for some large suppliers.

In the energy regulator’s open letter, Melissa Giordano, deputy director for retail systems and processes, states Ofgem has concerns about the “large variance between the larger suppliers’ smart prepayment meter customer portfolios”.

“In addition, large energy suppliers are required to state the number of smart prepayment meter installations they plan to conduct in each year of the current target framework. In 2022 most large suppliers did not achieve their own forecasted prepayment installations. We expect a similar outcome for 2023 when suppliers report to Ofgem at the end of this month,” said Giordano.

She added that the regulator is concerned that PPM customers, particularly those in vulnerable situations, “have not received the benefits of smart meters at the same rate as credit customers” and warned that the regulator expects “to see a greater focus from suppliers in delivering smart meters to these customers”.

The letter raises further concerns relating to the approximately 900,000 homes, mostly in rural Scotland and some parts of England and Wales, that are still reliant on RTS meters that operate via long-wave radio signals.

RTS supports versions of multi-rate, or other complex meter types with certain functions such as switching between peak and off-peak rates or turning on heating or hot water. Meters are switched between rates via a signal transmitted from radio masts.

There are ongoing discussions about extending the technology beyond its end date of 31 March 2024 into mid-2025.

“When an extension is agreed by industry…we expect all RTS meters to be replaced at least 3-4 months in advance of the prospective close down date. We will be writing to individual suppliers, following confirmation of the proposed extension setting out our expectations for when all RTS replacement activity should be concluded to avoid any prospective consumer detriment or further delay,” said Giordano.

She explained that like in the case of PPM customers, the smart rollout for RTS consumers has been at a “considerably slower pace than expected”.

A recent request for information in relation to RTS replacement progress saw suppliers attribute the slow pace to complex metering arrangements, issues with identifying RTS consumers and general consumer apathy around replacing and upgrading their current metering arrangements.

“However, it was also demonstrated that these issues were only contributing factors in approximately 10% of RTS meter replacements,” the letter added.

Further Ofgem analysis has shown a “significant variation” in the progress of suppliers replacing RTS meters. Some replaced more than 75% of their RTS portfolio, whilst others have replaced less than 10%.

Giordano  continued: “We are concerned about the lack of progress in this area. We consider that consumers who remain on traditional RTS meters are not only being left at a disadvantage, as they are unable to take advantage of the benefits smart meters bring, but more importantly may be exposed to risks should their meter not be replaced prior to the closing of the legacy service.”

The letter closes by stating that Ofgem will be monitoring supplier performance in these areas going forward and that it expects “to see a marked improvement in delivery of smart meters in both these categories”.

“We will be writing to suppliers directly on these issues in the near future,” it added.

The latest figures from Electralink show that smart meter installations appear to have hit a ceiling in the past three years, with the total number of annual installs levelling out.

Electralink’s figures show that more than 2.4 million smart electricity meter installations were recorded in 2023, a fraction higher than the 2.37 million installs in 2022 and marginally lower than 2021 which saw 2.41 million installs.