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The government has accused energy suppliers of “deprioritising” non-domestic smart meter installations and is proposing a shake-up of the rules in the final two years of the rollout.
Following a mid-point review of its four-year smart meter framework, the Department for Business, Energy and Industrial Strategy (BEIS) has outlined new installation targets and tolerance levels for retailers as they push to install the devices in the remaining c.46% of homes and small businesses.
In a consultation BEIS proposes to amend the requirements regarding domestic and non-domestic installations in Year 3 (2024) and Year 4 (2025) of the framework.
Currently, retailers that supply both customer types have a single annual installation requirement that reflects both components of their portfolio. This means they can meet their requirement through any combination of domestic and non-domestic installations.
Going forward BEIS is proposing this flexibility is removed so that suppliers are required to meet both the domestic and the non-domestic components of their installation requirements.
It said: “Each component will become a separately binding requirement set out in licence conditions.
“This proposal is made as we have seen growing evidence that mixed portfolio suppliers are deprioritising their non-domestic rollouts and that this is posing a risk to benefits realisation for small businesses and public sector consumers.”
Further proposals include a partial extension of the “churn adjustment” applied to the formula used to set supplier targets.
To mitigate the impact of smart meter customers switching supplier in Year 1, Year 2 of the framework has seen an adjustment introduced to the calculation of installation requirements across both customer groups.
BEIS is proposing this adjustment is extended in relation to suppliers’ non-domestic installation targets in Year 3 of the framework, but is not proposing the same for domestic targets.
It explained that convergence in the levels of smart meter coverage across suppliers’ domestic portfolios has reduced the potential for unfairness as a result of switching.
“However, we consider that given the greater variation in smart coverage between suppliers in the non-domestic sector, this potential for unfairness may remain for an additional year in relation to non-domestic installation requirements,” it added.
Additionally, BEIS has published the tolerance levels for 2024 and 2025.
According to the latest figures more than 30 million smart and advanced meters have been installed in Great Britain.
As of the end of September 2022, 30.3 million of the devices had been installed, meaning 54% of all electricity and gas meters are now either smart or advanced.
Despite the milestone, 3.8 million of these devices (13% of smart meters) are operating in “dumb” or “traditional mode” which means they do not have their smart capabilities. However, the number of smart meters operating in smart mode increased by 4% when compared to the previous quarter.
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