Supplementary memorandum submitted by
RWE npower (EEFP 10c)
ENERGY EFFICIENCY AND FUEL POVERTY—SMART
METERING
RWE npower supports the early, rapid and universal
roll-out of smart metering. We believe that the only way to achieve
this is through a managed and co-ordinated market way—the
Regional Franchise model. Interoperability and coordination are
the key considerations to a market model choice that will ensure
the timely delivery of dual fuel smart metering.
Interoperability reduces the risk of asset stranding,
where a meter is removed before the end of its economic life while
significantly reducing the cost to the end consumer. Interoperability
in meter functionality, communications and commercial arrangements
is critical.
A co-ordinated roll-out is the most cost effective
and efficient way of delivering the benefits of smart metering
into communities. The Regional Franchise model enables:
— targeted, street-by-street, dual
fuel roll-out;
— targeted and timely a combined campaign
to raise awareness and educate consumers of the benefits of smart
meters; and
— density of smart meters and their
associated benefits—either to communities or to other parties
e.g. network managers.
These factors provide greater stability and
surety, but we do recognise that there is less flexibility. A
balance must be struck and consideration given to where, in all
elements of a smart metering solution, flexibility is best placed.
Innovation and differentiation are critical to the success of
a functioning, competitive market, but this should happen in the
products and services that are delivered through the technology
provided, not in the communication infrastructure or the meter
assets.
A market model with centralised data storage
would improve data accuracy and accountability whilst simplifying
industry processes. Improvements to standing data will improve
customer experience through increasing billing accuracy further,
and it could deliver speedier and even more accurate switching
processes. There are benefits to other data from a single, central,
correct version of data that all stakeholders could access. With
fewer parties passing information between themselves, the likelihood
for data corruption is significantly reduced.
The target to roll-out smart meters to all domestic
consumers, for gas and electricity, by 2020 is challenging and
is unlikely to be met under current market conditions. The whole
industry will need to move together, at the same speed and to
the common goal; this we believe, will require levels of coordination
and cooperation not seen in the energy industry since deregulation
of supply. Other countries have managed to roll-out smart meters
in quicker timescales but the GB market faces unique challenges—dual
fuel, levels of competition, interoperability, and pre-payment.
The industry needs clear and unambiguous direction.
No one party will begin to plan, to make the investment decisions
of the scale required whilst there is an absence of central government
direction. A managed and coordinated market model, with the regulator
playing a key role, is critical to the success of this programme.
We believe that such a market model is the only credible way that
we can deliver smart metering to the 2020 timescale.
Our preference of a market model may extend
the planning phase but time invested now to establish the right
market conditions will improve our chances of success.
If it is an ambition of government that we exceed
expectations of a 2020 delivery then we would call for clear direction
to this effect as soon as possible. The need for management and
coordination would require immediate action and the cost and effort
required to do this would be greater. It is therefore a significant
challenge for the industry to exceed the 2020 target, but with
the right support, market model choice and planning, we believe
it is possible.
Economic Regulation
RWE npower
March 2009
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