Smart metering: but what about the benefits for DNOs?

The smart meter rollout due to start next year will bring accurate billing, increased energy efficiency and open the door to the connected home market for consumers. It also brings a raft of expected benefits to electricity distribution network operators (DNO), but those benefits are far from guaranteed.

DNOs are in an unenviable position. Hundreds of millions of pounds of income have been removed from the current price control due to the expected benefits of smart metering. But these benefits are by no means certain and are not under DNOs’ control.

Continuing problems with power alerts, differences in communication system operators, the number of foundation meters likely to be installed and any further delay to the programme will hit DNOs in the pocket and undermine customer service. While government and the Data and Communication Company (DCC) are showing willingness to improve the situation, there is no DCC contract obligation to do so.

But DNOs remain hopeful that the programme will still deliver.

The Energy Networks Association (ENA) said: “Delivering smarter networks is the real, long term prize from smart metering and the potential benefits can reduce costs, increase network efficiency and improve customer service.”

One of the main benefits expected of smart metering from DNOs is increased visibility of the network through the “last breath” notification. This is an alert sent by the meter to the DNO as the power is lost. Due to the way network’s systems operate, they cannot tell that there has been a power failure for three minutes.

One of the Communication Service Providers (CSP) behind the DCC network, Telefonica, initially presented a notification delay of up to ten minutes several months ago, by which time many customers will already have taken it upon themselves to notify their DNO by phone.

DNOs say that without this alert, the benefits of smart metering beyond the move to smart grids in the future, evaporates. So it was a concern for DNOs to discover that minimising this delay was not top of the agenda for the Department for Energy and Climate Change’s smart metering team when faced with so many other challenges.

While the alert was always part of the specification DNOs were working to, it now appears that there is no such requirement in the CSP contracts to provide instant notification and it is only through pressure from the DNOs themselves that the issue is being made a priority.

Telefonica has stated it will reduce the delay time of the alert to two minutes above the initial three minute period. But this will only be for the first two years post the mass rollout as smart meter numbers will be limited. Beyond this it plans to add another three minutes due to concerns around mass power cuts expected after storms. If high numbers of customers lose power at once, the number of alerts could overload the CSPs’ systems.

DNOs are pushing back on this extra three minutes. The way forward could be to look back at storms from the last ten years to quantify the actual numbers of customers who can be expected to lose power and be reconnected at any one time to give the CSPs confidence their systems will cope and the extra minutes will not be required.

A second and potentially more detrimental problem for five of the six DNOs is differences in the way the two CSPs have designed their systems. The alert times for Telefonica in the centre and south of the country, and the second CSP, Arqiva, in the north are unlikely to be the same, even if they are shortened, and could result in bespoke solutions being required in call centres that service both areas.

DNOs are concerned that this will result in different service levels depending on location in the country. It will also complicate the comparison process by Ofgem for measuring performance. DNOs can be understandably disappointed that the expected seamless and identical service across the board will not be the case come what may.

A Decc spokesperson said providing outage alerts is an “important benefit” to network operators and to hardworking families and businesses. “Network operators are currently in discussion with the DCC to ensure the design meets the needs of both operators and bill payers,” Decc said.

Concerns with the smart meter rollout from a DNO point of view do not end there. DNOs share the concern expressed by SSE’s director of metering and smart transformation Sara-Jane Asquith recently that foundation meters present a “massive risk” to the smart rollout.

While the DCC is confident that these early meters will be incorporated into the DCC network at some stage and will not become stranded assets, they do not have the ability to provide the “last gasp” and “first breath” alerts at all. 

These alerts reduce operational costs and are integral to customer service, especially for vulnerable customers. Neither can the meters provide maximum demand requirements necessary for future network planning or remote voltage alert changes which DNOs use for monitoring the health of the network. SSE expects a quarter of the total number of smart meters installed to be foundation meters.

It is also not guaranteed that the smart meter rollout will start on time. Any further delay will interfere with contracts already set up by DNOs in order to become DCC users and push the benefits case further back in the price control.

The ENA said: “Any further delay to the operational launch of the DCC systems is very likely to lead to an increased deployment of foundation smart meters (reduced functionality) which when coupled with the potential for differences between the systems used to deliver information from smart meters will risk erosion of the long term benefits vital to delivering long term cost savings and the enhanced end-to-end system performance that will make our energy consumption truly smart.”

“It is vital that the industry is joined up to make customer service a top priority if this is to be a success.”