Clause
79
Gas
meters
Question
proposed, That the clause stand part of the
Bill.
The
Chairman:
With this it will be convenient to discuss the
following: New clause 1— Smart
meters
—
‘(1) The
Secretary of State shall make regulations which require smart meters to
be installed for gas and electricity in all homes by the end of a
specified period of ten years from the date on which the regulations
are made.
(2) In this section a
“smart meter” means a gas or electricity meter with
two-way communication capabilities including communication capability
to a display which illustrates household usage and cost per unit
consumed.
(3) Regulations made under this section must be made
within a period of 12 months beginning on the date on which this Act is
passed.’.
New
clause 2—Information on ETS
allocations
—
‘(1)
Companies involved in the generation of electricity must publish
information in their Annual Reports on the amount and value of any
allocation they have received from the EU ETS and the amount that has
been paid for such an
allocation.
(2) Companies
failing to publish the information required under subsection (1) shall
be guilty of an offence, and shall be liable on conviction to a fine
not exceeding level 5 on the standard
scale.’.
New
clause 4—Information on contributions towards environmental
taxes
—
‘(1) The
Secretary of State shall make regulations requiring energy utilities
companies to specify the proportion of those consumers’ energy
bills that contribute towards environmental
taxes.
(2) In this section
“environmental taxes”
means—
(a) the
Renewables Obligation
Certificates,
(b) charges
resulting from the EU Emissions Trading Scheme,
and
(c) charges resulting from
the Carbon Emissions Reduction Targets and future additional
environmental
charges.’.
New
clause 20—Implementation of new metering
arrangements
—
‘(1)
The relevant licensees for the purposes of this Part
are—
(a) gas suppliers
and gas transporters within the meaning of Part 1 of the Gas Act 1986
(c. 44); and
(b) electricity
suppliers and electricity distributors within the meaning of Part 1 of
the Electricity Act 1989 (c.
29).
(2) The effective date for
the purposes of this Part is the date which is 10 years after the date
on which section 79 comes into
force.
(3) Expressions used in
this Part have the same meaning as in Part 1 of the Gas Act 1986 or
Part 1 of the Electricity Act
1989.
(4) As from the effective
date, a relevant licensee must not supply gas or electricity to any
premises that is not subject to the provisions of this
section.
(5) The Secretary of
State may exempt any relevant licensee from the prohibition imposed by
subsection (4) in relation to such premises, for such period of time,
and subject to such conditions as he considers appropriate in all the
circumstances of the case.
(6)
References in this Part to new metering arrangements are to
arrangements (including the provision and operation of any necessary
communications and data-handling infrastructure) designed to ensure
that, by the effective date, all premises supplied with gas or
electricity in Great Britain will continue to be so supplied through a
meter that conforms to the following three
requirements—
(a) that
the meter must record and be able to store measured consumption data
for multiple time periods;
(b)
that the meter, either on its own or with an ancillary device, must
facilitate remote access to such data;
and
(c) that the meter must
meet any specifications that may be set out in any regulations made by
the Secretary of State under this Part, pursuant to his duties under
Part 1 of the Gas Act 1986 and Part 1 of the Electricity Act 1989, for
the purposes of facilitating the introduction of new metering
arrangements.
(7) This section
may not be brought into force before 1st January
2010.
(8) The Secretary of State may, in accordance with
this section,
modify—
(a) the
conditions of a particular licence held under section 7(1) or 7A(1) or
(2) of the Gas Act 1986 or under section 6(1) of the Electricity Act
1989;
(b) the standard
conditions of licences of any type mentioned in those
subsections
if he considers it
necessary or expedient to do so for the purpose of securing the
implementation of the provisions of this
section.
(9) The power to make
modifications under paragraph (a) or (b) of subsection (8) includes
powers—
(a) to make
modifications requiring licence holders, or classes of licence holder,
to cooperate together, under arrangements approved by the
Authority;
(b) to make
modifications requiring any relevant licensee to take or refrain from
taking any specified action, whether in relation to premises supplied
with gas or electricity or
otherwise;
(c) to make
modifications relating to the operation of, access to, or use of
pipe-line systems and distribution systems;
and
(d) to make incidental,
consequential, or transitional
modifications.
(10) Before
making modifications under this section, the Secretary of State must
consult the Authority, the holder of any licence being modified, and
such other persons as he considers
appropriate.
(11) Subsection
(10) may be satisfied by consultation undertaken before, as well as by
consultation undertaken after, the commencement of this
section.
(12) Any modification
under subsection (8)(b) of part of a standard condition of a licence
shall not prevent any other part of the condition from continuing to be
regarded as a standard condition for the purposes of Part 1 of the Gas
Act 1986 or Part 1 of the Electricity Act
1989.
(13) Where the Secretary
of State modifies the standard conditions of licences of any type under
subsection (8)(b), the Authority must make the same modifications of
those standard conditions for the purposes of their incorporation into
licences of that type granted after that
time.
(14) The Secretary of
State must publish any modifications under this section in such manner
as he considers
appropriate.
(15) The power of
the Secretary of State under this section may not be exercised after
the end of the period of five years beginning with the passing of this
Act.’.
New
clause 21—Reports on
meters
—
‘The
Secretary of State shall, in each calendar year following that in which
this Act is passed, lay before Parliament a report
on—
(a) the number of
smart meters that have been installed in that period, including their
effect on reducing carbon emissions and fuel
bills;
(b) the discussions he
has held with energy supply companies
about—
(i) pre-payment
meters,
(ii) the number of such
meters in use, and
(iii) their
tariffs;
(c) the progress that
has been made in reducing carbon emissions
through—
(i) increased
use of renewable generation,
and
(ii) energy conservation
measures in households;
(d) the
discussions he has held with energy supply companies about the impact
of pre-payment meters and their
tariffs.’.
Charles
Hendry:
We are moving into an area where there will
continue to be issues of difference with the Government and we have now
reached the particular issue of smart meters. During our debates on
Second Reading, the evidence sessions and in Committee, there has been
huge support for smart metering. We are certainly in favour of its
introduction. The technology for smart metering is feasible. Industry
is ready to begin its installation throughout the country, but it
believes that we must have legislation to back it
up.
Smart meters are
in operation in Sweden, Italy, Australia, the United States and Canada.
Italy has almost completed its programme to convert 30 million homes to
two-way smart meters. Sweden has plans to introduce 5.2 million meters
by 2009 and 5 million homes in Ontario, Canada will have smart meters
by 2010. It is widely accepted that it will take about 10 years to roll
out smart meters to all 45 million gas and electricity meters in the
United Kingdom with two to three years of planning and five to seven
years of
replacement.
Smart
meters will achieve a number of things. They will cover both gas and
electricity and help to tackle fuel poverty directly, enabling
real-time information to be provided on the amount of gas and
electricity being used by any given household. That will bring an end
to the estimated bill, which will be widely welcomed by groups
campaigning on issues such as fuel poverty. Secondly, smart metering
will help to improve energy efficiency, because consumers will have a
technology enabling them to reproduce their consumption figures
readily—they could see when they were going to be charged most.
There will be a whole range of tariffs available, at different times of
the day. If people notice that it will be cheaper to put their washing
machine on in the middle of the night, rather than at 6 o’clock
in the evening, they will be encouraged to do so. They can choose which
sort of tariff suits them. That is good for consumption and for helping
tackle fuel poverty. Smart metering will also encourage new
technologies. Smart meters will support microgeneration technologies,
as they will allow individual homes to sell back to the grid when they
are in surplus.
There
is a significant amount of evidence in favour of smart meters. In
briefings to the Committee, there was a lot of backing from industry.
Scottish and Southern
said:
“We
should therefore decide now that smart meters should be rolled out and
include broad enabling powers in this Bill to facilitate a mandated
roll-out.”
Centrica said
that it was disappointed that the Bill
contained
“no provisions
to mandate the roll-out of smart meters...Without a mandate from
Government it is highly unlikely that energy suppliers would be able to
facilitate a roll out to 45 million UK households in the timescale
envisaged. A mandate would give the industry the ‘green
light’ it needs to initiate a coordinated and managed roll out
programme.”
The Energy
Retail Association called on the
Government
“to provide a
mandate to the energy retail industry to roll out smart meters to all
45 million British households. A change that would end estimated
billing and put consumers in full control of their domestic energy
use.”
The Energy Networks Association
said:
“We
believe that a mandate for smart metering rollout is necessary. Any
national rollout of gas and electricity smart metering will need to be
taken forward on the basis of a clear statutory
mandate.”
Malcolm
Wicks:
I am impressed by the number of organisations on
whose advice the hon. Gentleman can draw. There are undoubtedly many
benefits associated with smart meters, but has he been able to gather
any estimates of the other side of the balance sheet—what the
costs might be? That would include costs, ultimately, to the
consumer.
Charles
Hendry:
That is work being done by Ofgem, which is
actively supporting the roll-out of the programme. Some of the costs
would be absorbed by industry, some by the consumer. One cannot know
how that will work until a decision is taken about what the roll-out
programme would involve. Depending on who was going to be doing that,
it would result either in a direct cost to the consumer at that point
or, otherwise, in the cost being spread over the 10 years, through a
small incremental cost to the individual’s energy bill. One
cannot answer that question without knowing the preferred method of
going
forward.
Martin
Horwood:
I am following the hon. Gentleman’s
argument with great interest. I support much of what he says. Does he
agree that any incremental cost to the consumer from the introduction
of smart meters might well be largely or even entirely offset by the
reduction in energy use, which often seems to result from the
introduction of such
meters?
Charles
Hendry:
The hon. Gentleman is absolutely right. That is
one of the reasons why energywatch was so supportive of the move
towards smart
metering.
The National
Consumer Council, the champion of the consumer interest, said that
it
“supports the
wide-spread roll out of two-way smart meters (within the next 10 years)
because they offer considerable consumer
benefits”
including
“Eliminating
inaccurate and estimated bills...Removing many of the
disadvantages of pre-payment meters...and...Providing clearer
information about the costs of current energy
consumption”.
Mr.
Swire:
The Minister asked my hon. Friend about the costs
of installation, but is there not another saving here in terms of human
life and costs? Smart meters can monitor inactivity with gas and do
real-time monitoring of gas leaks and carbon monoxide emissions. I
suspect that many lives would be saved on an annual basis by the
introduction of smart
metering.
Charles
Hendry:
My hon. Friend is right to pick on another aspect.
That is one of the reasons for such overwhelming backing, from
industry, consumer groups and environmental
groups.
The Energy
Saving Trust wants the Bill to mandate the introduction of smart
metering. Alistair Buchanan, on behalf of Ofgem, talked about the event
that he had been to that was hosted by the hon. Member for
Sherwood and about the encouraging feedback he got
on that occasion that the Government would introduce smart metering and
make an announcement shortly. Allan Asher, from energywatch,
said: “The key
for us, though, is that smarter metering allows us to do two hugely
important things. First, we will at last be able to get rid of what I
think are these dreaded ‘poor pay more’, or PPM, meters;
you might know them as pre-payment meters, but we know them as the
‘poor pay more’
meters”.
He also talked
about how that would be improved when he
added:
“There
is also what I consider to be the clearly emerging evidence from around
the world that shows that, if consumers get this accurate, timely
information about their consumption and their options, they will use
less energy.”——[Official Report, Energy Public
Bill Committee, 5 February 2008; c. 45-6,
Q87.]
That is exactly the point
that has been made, which is that consumers would benefit
directly.
3.45
pm
Mr.
Swire:
There is, of course, a further saving: the costs of
about £150 million per annum of carrying out manual inspections
of meters. That would be a saving to the energy supplier, which could
well be passed on to the consumer.
Charles
Hendry:
My hon. Friend is absolutely right, smart meters
will make it possible for a van to drive down the street and simply
take the reading of every single meter for gas and electricity with
complete accuracy and without a single person needing to have access to
the home or to find somebody at home to be able to do it. That is a
modern way of delivering the service and it is unfortunate that the
Government are not helping it to move forward as much as we would
wish .
[Interruption.] I am not sure what the hon. Member
for Glasgow, North-West is chuntering from his sedentary position, but
I am sure that it would enlighten the Committee to know what it
was.
Russell Marsh,
who gave evidence to us from the Green Alliance,
said:
“It is
clear that the current framework is not going to deliver a roll-out of
smart meters to every house in the country. We need to see the
Government taking a lead and mandating it to
happen”——[Official Report, Energy Public Bill
Committee, 5 February 2008; c. 75,
Q144.]
This Bill is an
opportunity to start laying down a timetable to get smart meters out as
widely and as quickly as we can. I shall not go through all the quotes
that were given to us, but not a single person who gave evidence as we
were preparing for the Bill came to any other conclusion than that
smart metering was a good idea and that it should be included in the
Bill.
Anne
Main:
The other aspect of smart metering is not just
getting rid of the dreaded PPM meter—the poor-pay-more
meter—but alleviating fuel poverty, which is a missed Government
target. Many people who are most disadvantaged by the current system
are those who cannot change tariffs easily, and this proposal would
allow people to change tariffs without having to negotiate complex
systems on the website and so on, if they are not so technologically
aware.
Charles
Hendry:
It gives the consumer absolute transparency, as my
hon. Friend has rightly pointed out. It gives them a complete ability
to choose when
they want to use electricity and know that they will
be offered a different tariff. One can have a whole range of different
tariffs at different times of the day and on different days, so
weekends would be charged differently from weekdays. There can be no
doubt whatsoever that the consumer would benefit significantly from the
proposal.
There is a
Government proposal for what they call clip-on meters for electricity
display devices. People will be expected to clip them on to their own
meters, but they will be lethal and advice will have to be provided
saying, “You shouldn’t do this without being a trained
electrician”; otherwise, there will be lots of old grannies
around the country giving themselves rather nasty shocks. That is not
the way in which we should look to take forward the debate. What will
happen with such devices is that people will use them for a couple of
days, and then they will get bored. They will put them away in a
cupboard and never use them again, whereas with smart metering they
would have an accurate reading and the ability to control their use of
energy in a way that they have never had
before.
Mr.
Swire:
There is also a huge missed opportunity here,
because the installation of smart metering would herald an entirely new
way, as my hon. Friend says, of monitoring people’s consumption.
It is thought that it will have the capacity to monitor water
consumption, which is another form of energy saving and incredibly
useful when we have drought areas, as we have experienced over the last
few years.
Charles
Hendry:
My hon. Friend is absolutely right, and that is
why the new clause that we have proposed is not prescriptive. It does
not say what should or should not be done; it opens up the issue for
the Government to be able to say that they want a smart metering
programme, and for the technology then to be allowed to develop to its
maximum
potential.
Malcolm
Wicks:
The hon. Gentleman will agree that we need rigour
in this argument. We need some arithmetic and economic analysis about
the costs and benefits. We should not be so optimistic that meters can
monitor water, carbon monoxide or elderly people.
[
Interruption.
] My hon. Friend the Member for
Southampton, Test says that perhaps it is the new identity card. I am
slightly disappointed. By any measure the roll-out will be expensive,
so we need to look at the expenses and the costs, as well as the
benefits, if we are to have a sensible
discussion.
Charles
Hendry:
Unfortunately, the Government do not appear to
have looked at the issue at all. They have 100 people within the
Department for Business, Enterprise and Regulatory Reform supporting
the Minister on the Bill. They have not carried out those cost-benefit
analyses, and we have only two people between us, including the nephew,
or whoever, of the hon. Member for Cheltenham doing
research.
Martin
Horwood:
I am
sorry.
Charles
Hendry:
My remark goes back to an exchange on an earlier
part of the Bill, and it was so good that it was worth reprising.
Surely the Minister has the greatest ability to find out what those
facts and figures are.
Malcolm
Wicks:
I agree with hon. Gentleman; I do have the greatest
ability. When I speak, probably next week, I hope to discuss the issues
around cost-benefit analysis, which are central to my debate, if not
his.
Charles
Hendry:
I understand that the cost of a smart meter is
about £60 or £70. If that is spread over a 10-year period
for the consumer, it is not a significant addition to their
bill.
Mr.
Swire:
The Minister scoffs at the Opposition for raising
these points and for talking about what smart meters can do. However, a
lot of this information is provided by the Parliamentary Office of
Science and Technology, which is
“an office of both Houses of
Parliament, charged with providing independent and balanced analysis of
public policy issues that have a basis in science and
technology.”
So, by
rubbishing or by scoffing at some of the aspirations that I have
expressed on smart metering, he is contradicting an independent report
from the Parliamentary Office of Science and
Technology.
Charles
Hendry:
The Minister cannot intervene on an intervention.
He is getting slightly carried away with
himself.
There is a
paucity of vision. If smart metering is going to be so bad for the
consumer, why would energywatch support it? Why would the National
Consumer Council support it? These organisations support smart meters
because they believe that they are financially better for consumers in
the long term.
Dr.
Alan Whitehead (Southampton, Test) (Lab): I was not
intending to intervene, but we should not polarise the debate in
Committee as if certain people thought that smart meters were great and
others thought that they were terrible, because that is not the case. I
think that smart meters are great; they are the answer to many energy
problems and to a great deal of fuel poverty. However, how they are
rolled out, under what circumstances and arrangements, and at what cost
are the real issues. I understand that a great deal of work has been
done on that. I, for one, will want to see smart meters rolled out on a
basis that ensures that they work as well as they possibly can.
Therefore, we should be temperate in the debate and not polarise it in
terms of who thinks that they are a good or bad idea. Everybody in the
room thinks that they are a good idea. I look forward to their roll-out
at an early stage.
Charles
Hendry:
I am grateful to the hon. Gentleman for a
constructive and sensible intervention, which I would expect from him.
The frustration is because, outside the House, there is overwhelming
endorsement for including them in the Bill. If it is going to happen,
it needs to be mandated to happen. We have suggested that there should
be a roll-out for it to happen within 10 years. There is overwhelming
agreement that that is a sensible time scale and it does not make a big
difference from where we are now. At the moment 8 per cent. of meters
are replaced or installed every year, so one would simply be moving
from 8 to 10 per cent. Industry and consumer groups believe that that
is achievable. The frustration which people feel is that the
Bill, which is the opportunity to make that happen, could go through
without it being included. While the fundamental disagreement is not
about whether smart meters can make a good contribution, what we are
saying is that the Bill must be used to try to take forward their
implementation and roll-out. However, from the Minister’s
responses, one sometimes senses that he does not see that they can make
a good contribution, or that he has not made up his mind. We do not get
a clear view from the
Minister.
Malcolm
Wicks:
My point is that I support smart meters—they
have undoubted potential benefits—but we need some rigour in the
debate. I will have an opportunity later to address that. I am afraid,
in the real world of both costs and benefits, it is clear that the more
functions a smart meter has the more expensive the technology becomes.
We need to reflect on both the cost and the
benefits.
Charles
Hendry:
I hope that the Minister will also understand the
frustration of others. This is the one opportunity that we will get to
roll out the programme and mandate it to happen in an Energy Bill. If
that opportunity goes by, there will be tremendous
frustration.
Dr.
Whitehead:
I invite the hon. Gentleman to join in what I
suspect will be a collective campaign to oppose the Daily Mail
when it comes up with slogans such as “Spy below our
stairs—resist it”. I trust that there will be universal
support for opposition to that aspect of the
debate.
Charles
Hendry:
I am sure that we can rely on the new Daily
Mail to lead that campaign. I hope that if industry, consumer
groups, energy groups and environmental groups were all saying that
that was the right way forward, the Daily Mail might be
persuaded that it was a campaign that it should support, or perhaps it
would then see it as an even greater
conspiracy.
Malcolm
Wicks:
Or it might lead the
campaign.
Charles
Hendry:
If the Daily Mail decides to lead the
campaign, as the Minister said, the Prime Minister will be backing it
by Tuesday and that will be good
news.
Malcolm
Wicks:
They will not be delivered in plastic
bags.
Charles
Hendry:
As the Minister says, they will not be delivered
in plastic
bags.
Anne
Main:
I would like to ask my hon. Friend to reflect on the
Minister’s remark that smart meters, because they may be
complex, would be expensive. Electricity display devices are simple and
might be a cheaper option, but they do not deliver the complex benefits
of the smart meters. They will prove a distraction, will cost in their
roll-out, and will be nothing other than an electricity
pedometer.
Charles
Hendry:
As the situation stands, the electricity companies
will be required to make them available to everybody who wants one.
That cost has somewhere to be passed on to consumers as well. One
therefore ends up with consumers paying for something that is of no
benefit to people whatsoever. I hope that the Minister will be able to
give us some encouragement in his
response.
There are
three new clauses on smart meters. We have gone for a non-prescriptive
one, but we have said that implementation should be within 10 years
because all the evidence that we have heard and the advice that we have
been given suggests that that is a possible time
scale.
I understand
that although we want to have a debate about smart meters, it is right
that I should also introduce at this point the other two new clauses
that stand in my name. The Minister and the Committee will be glad to
know that I shall do that with great
brevity.
Regarding
new clause 2, there has been a great deal of debate about whether the
energy companies should be required to do more to tackle fuel poverty,
and there are indications that the Chancellor might be planning to make
an announcement on that soon. In particular, Ofgem has suggested
looking at the benefits that the companies receive from the European
Union emission trading scheme. In his evidence to us, Alistair Buchanan
said that that should be considered. At the moment, there is
considerable mystery surrounding what allocations companies receive and
what the financial benefit is to them. It is ironic, perhaps, that at
the moment the greatest benefits from the EU ETS go to the greatest
polluters because they get the largest number of allocations. The new
clause would give us a much better understanding of the issue. It would
mean that the level and value of allocations received by companies from
the EU ETS would be shown and would have to be published in their
annual report. That would enable us to see what they have been
allocated for free, what they have had to pay for and how much they
have had to pay. The issue may go away as we move towards full
auctioning, and if the Minister felt that it was appropriate to build
in a sunset clause saying that the measures would expire over time
unless re-enacted by Parliament, we would certainly be happy to agree
to that. I hope that he is willing to agree to it in principle,
although I suspect that that is a vain
aspiration.
4
pm
New clause 4
was stimulated by what Allan Asher and Alistair Buchanan told us in the
evidence sessions. People should know how much of their bill is going
towards supporting the Government’s environmental aims. Alistair
Buchanan commented particularly on that issue in his contribution,
saying that he did not necessarily advocate it but certainly felt that
it should be considered. He
said:
“Some
£80 of roughly £1,000 dual fuel average household bill is
now a combination of ROC, which is about £10, your energy
efficiency, which is about £35 to £36, and your European
Union Greenhouse Gas Emission Trading Scheme (EU ETS), which is around
£30. So, it is very much part of your bill, and there is only
one way that that is going, and that is up. The ROC will go from
£10...I am not saying whether it is a good or bad thing. This is
Government policy. I believe that consumers are starting to address
what they are paying for. Allan raises a very reasonable
issue, which is whether the companies start to put that on the
bill...Maybe its time has
come”. ——[Official Report, Energy Public Bill
Committee, 5 February 2008; c.
47. Q90.] New clause 4
would build on those comments, as it would provide for electricity
bills to show what elements of the bill would go to ROCs, to the ETS
and to carbon emissions reduction targets, so that people could
understand how their money was being used. The issue is part of the
debate about openness. I think that we all desire that consumers should
be better
informed and able to make informed choices, and the new clause is a way
for us to help them achieve that. I cannot see a good argument against
it, unless the Government do not want people to realise what portion of
their bill relates to environmental issues and charges. I hope that the
Minister will have a chance to respond to those points in due
course. Debate
adjourned.—[Alison
Seabeck.]
Adjourned
accordingly at one minute past Four o’clock until Tuesday 11
March at half-past Ten
o’clock.
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