Energy and Climate Change CommitteeWritten evidence submitted by Energy UK (SMR105)
Energy UK is the Trade Association for the energy industry. Energy UK has over 70 companies as members that together cover the broad range of energy providers and suppliers and include companies of all sizes working in all forms of gas and electricity supply and energy networks. Energy UK’s members generate more than 90% of UK electricity, provide light and heat to some 26 million homes and invested over £10 billion in the British economy in 2011.
Executive Summary
(i) Consumers are at the heart of the smart meter roll-out and will benefit the most from it. By providing them with accurate and up-to-date information on energy being used in the home, smart meters will be a vital way for them to monitor, take control of, and help to reduce their energy consumption. Other benefits will include accurate billing, automated meter-reading, and time-of-use tariffs (which enable customers to manage their usage according to how expensive it may be at different times of day, thereby reducing their overall energy costs).
(ii) The roll-out is one important way in which suppliers are looking to rebuild trust with their customers. As the customer experience improves, smart meters will establish significant improvements in the relationship between customer and supplier. Having a successful roll-out of smart meters has the potential to help to assist other important long term programmes such as the Green Deal and Energy Company Obligation.
(iii) Suppliers have already invested millions of pounds in smart metering readiness and will be investing millions more in: training people; information and communications technology; and energy services over the roll-out period. The installation programme will likely create jobs at a time of economic uncertainty.
(iv) Raising awareness and educating consumers on smart metering is key to ensuring that the roll-out is a success. Recognising this, Energy UK has:
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(v) The Department of Energy and Climate Change’s (DECC) Impact Assessment has demonstrated a positive cost/benefit case for the smart meter roll-out, and in Britain’s competitive energy market, cost efficiencies will be passed onto consumers.
(vi) Suppliers will also benefit through the accurate information a smart meter provides. This will help them improve the standard of service that they offer, and to personalise communications through better understanding of their customers’ energy use.
(vii) Energy UK recognises the importance of transparency and working with consumer groups and other key stakeholders to ensure that their views are taken into consideration when planning the smart meter roll-out. For example, Energy UK has facilitated a number of workshops on the Smart Meter Installation Code of Practice for all key stakeholders (see Appendix 1). We will continue this joint working on other key issues such as data privacy, consumer engagement and the establishment of the CDB.
(viii) DECC’s programme management is vital if the 2019 installation deadline is to be met successfully. Decisions still need to be made with regards to some of the key enablers that need to be in place by the end of 2014. These must be made in a timely, transparent way for investor certainty, and for delivery confidence. Energy UK is working alongside DECC on the key issues (eg technology requirements) in order for industry to meet its requirements for the roll-out. Given the sheer scale of the smart meter roll-out (it will be the biggest home visit since the move to North Sea Gas), delays to decisions being made (outside of suppliers’ control) could have adverse consequences on the achievement of the 2019 roll-out target. Energy UK would also, therefore, welcome clarity around Ofgem’s requirement for suppliers to take “all reasonable steps” to successfully complete the roll-out.
1. Introduction
1.1 By the end of 2019, 53 million meters will need to be installed with 30 million households and small businesses visited. The installation of a smart meter is one of the first steps towards empowering energy customers, and suppliers view the roll-out as a serious opportunity to build trust and engage with their customers. Using an In Home Display (IHD) which displays real time consumption in pounds and pence as well as kWh, customers will become more aware of their energy usage. Combining real time energy feedback with the energy efficiency guidance provided during and following the installation visit, customers will be able to make informed choices about their energy usage and begin to alter their consumption behavior.
2. Consumer Engagement and the Central Delivery Body
2.1 The customer is at the heart of the smart meter roll-out, and Energy UK and its members recognise the importance of consumer engagement and awareness. Improving the customer experience and building trust are both being taken very seriously by suppliers.
2.2 Navigating the smart energy services market may be complex for some customers. To ensure that awareness-raising activity can begin to ramp up, and so that customers will have an independent source of free impartial advice about smart meters to refer to, Energy UK is working on a programme of activity to establish the Central Delivery Body (CDB). During the first quarter of 2013 Energy UK will be working with all key stakeholders to establish the CDB as a legal entity and to support the appointment of the Board of Directors (10 supplier representatives and four consumer representatives). Regular updates on this programme will be provided to stakeholder groups including the Implementation Co-ordination Group, the Consumer Engagement and Roll-Out Group, and the Consumer Advisory Group. It will be crucial for the CDB itself to be trusted by consumers so all key stakeholders ie Government, Ofgem, suppliers and consumer groups will all have a part to play to make sure this happens.
2.3 Given how important its consumer engagement work will be, the CDB is being established as a licence condition. Its key consumer engagement objectives are to:
Build consumer confidence in the installation of Smart Metering Systems by gas and electricity suppliers.
Build consumer awareness and understanding of the use of Smart Metering Systems (and the information obtained through them).
Increase the willingness of Energy Consumers to use Smart Metering Systems to change their behaviour so as to enable them to reduce their consumption of energy.
Assist consumers with low incomes or prepayment meters, or consumers who may encounter additional barriers in being able to realise the benefits of Smart Metering Systems due to their particular circumstances or characteristics, and to realise the benefits of Smart Metering Systems while continuing to maintain an adequate level of warmth and to meet their other energy needs.
2.4 Both social and traditional media will be essential aids to raising awareness of smart metering and acting as vehicles for answering questions customers may have relating to the smart metering roll out. Evidence from international roll out suggests that having readily available information on smart metering will support customer engagement with, and for, the roll out. Energy UK is working with a social media agency to build up an evidence base regarding smart metering awareness, common trends/questions and an analysis of social media influencers who could be used to act as smart metering advocates. This information will form the baseline evidence set for the Central Delivery Body to develop its engagement plan. This will be complemented by research activity undertaken by DECC.
2.5 One of the key objectives for the consumer awareness activity that will be undertaken by the CDB is to ensure that all messages are clear and concise and address customer concerns. Research undertaken by DECC in 2012, demonstrated that customer concerns about data privacy are currently low1 and this is also supported by Consumer Focus and supplier analysis. As mentioned above, suppliers recognise the importance of providing unambiguous information to customers setting out their smart meter data choices and will be producing a Data Charter for Smart Metering to deliver this.
2.6 Building on the lessons learned from the Digital Switchover, third sector delivery partners’ involvement with the CDB will help to make it a success. Leveraging the specific skills and local reach delivered by such organisations will be fundamental to engaging with all customers and specifically the vulnerable and those on low incomes. It is crucial that these groups are made aware of the benefits of smart metering and how they utilise smart metering data and services to become more energy efficient, reduce their energy expenditure while remaining warm.
3. Smart Meter Installation Code of Practice
3.1 Suppliers recognise how important the installation visit will be in order that customers will benefit from smart metering. They have been working along with DECC, Ofgem, Consumer Focus and a range of other industry stakeholders (see Appendix 1) on the Smart Meter Installation Code of Practice (SMICoP). By complying with the provision of the SMICoP, suppliers will deliver a consistent set of services to customers, before, during and after the installation. There will be no energy sales during the installation visit.
3.2 Additional protections for vulnerable customers have been included within the Code of Practice to ensure that their particular circumstances are taken into consideration when planning and undertaking the smart meter installation. For example, if the customer would prefer to have a friend or relative with them to receive instruction on how to use the IHD and to receive energy efficiency guidance, suppliers will ensure that this is supported.
4. Data Access and Customer Protection
4.1 Recognising the importance of providing certainty to customers regarding the data that will be collected by smart meters, who will have access to that data and the choices customers have in relation to access to their smart metering data, suppliers have been working with DECC and Consumer Focus to develop a Data Charter for Smart Metering. This Charter will be provided to customers in advance of their smart meter installation to provide plain English information on smart metering and the data choices available.
4.2 Access to their consumption data either via an online web portal provided by their supplier or by an energy services company of their choice, will enable customers to monitor over time their consumption behavior and the effect of any changes they have made to their energy usage. Suppliers and energy services companies will be developing additional energy efficiency hints and tips that customers may wish to sign up to in order to continue to reduce their consumption over time.
4.3 Access to better quality data will deliver an end to estimated bills and a better switching process for consumers. Consumers will then be able to choose to allow access to more detailed data that would allow more targeted products and services to save customers money eg time-of-use tariffs, and energy efficiency advice.
5. Pay-As-You-Go Meters
5.1 Smart meters will all have the capability to operate in credit and pre-payment mode. This will remove the dependency on smart cards or keys which are currently a cause of customer service issues, when such devices are lost/faulty or need to be replaced as a result of change of supplier. It will also improve customer service, for example they will be able to top up credit onto their meter at home, via the internet, or over the phone which will increase the attractiveness of smart pay-as-you-go tariffs. This could mean that more customers choose to use this option as a budgeting tool to assist with better managing their energy finances.
6. Energy Services and other Initiatives: Considering Smart Metering Holistically
6.1 The British smart meter roll-out is unique in that it is a supplier rather than network operator led roll-out. This creates opportunities for innovative consumer engagement, enhanced product design and improved customer service. One of the market opportunities created by smart metering is energy services. For domestic customers and small businesses there will be additional energy management services which are directly driven from smart metering technology and smart metering data availability. These will vary from data analytics and tracking services which monitor the effectiveness of behavior change to physical products and services such as home automation. The smart metering roll out creates a route to market for a number of energy service offers. This will create additional investment in the economy as technology companies partner with heating and lighting companies.
6.2 Empowering consumers by providing them with information, and time of use tariffs, which impact on energy demand, will also help facilitate the electrification of heat and transport and efficient investment in grid and generation infrastructure. In turn, these will help to meet the UK’s carbon reduction targets and result in cost savings that can be passed on to consumers.
6.3 Given the benefits that smart meters will bring both to consumers as well as helping to reduce carbon emissions, it is important that other initiatives and programmes are considered holistically alongside. For example, given the changes that are due to take place under Ofgem’s Retail Market Review, it is important that consumer benefits, such as time of use tariffs, are not constrained. Should this happen, it would make the realisation of the Impact Assessment considerably more challenging.
6.4 Another new initiative is the Government’s midata programme. This will allow people to view, access and use their personal and transaction data in a way that is portable and safe. Energy companies signed up to the midata vision last year and are at various stages of rolling out their midata solutions. Again, this programme must be taken into consideration alongside the smart meter roll-out. When smart meters are installed, the data available for customers is likely to be even more useful.
6.5 It will be important for all parties to monitor the roll-out in order to react and make adjustments should anything unexpected occur.
APPENDIX 1
SMICOP STAKEHOLDER ENGAGEMENT ACTIVITY SUMMARY
July 2010 Ofgem published the Smart Metering Implementation Programme Prospectus. Included a proposal to develop an installation code of practice to protect consumer interests.
July–September 2010: Energy Retail Association began development of the Smart Metering Installation Code of Practice (SMICoP), in consultation with Consumer Focus, Age UK, etc., and referencing overseas experiences.
September 2010 Draft v0.1 of SMICoP produced.
September & November 2010 Ofgem convened two industry workshops to discuss what should be in the code of practice. Workshops attended by consumer groups, large and small suppliers, and the ERA.
December 2010 SMICoP updated from workshop feedback. Draft of SMICoP published for consultation.
February 2011 Consultation feedback recorded, reviewed and SMICoP draft updated.
March 2011 Government published Prospectus response document. SMICoP draft updated to reflect Prospectus Response conclusions.
April 2011 Stakeholder seminar convened to review updated SMICoP draft and provide feedback. Over 40 attendees from various consumer groups, suppliers, unions, meter operators, networks, Government, Ofgem, etc.
April–June 2011 Seminar feedback recorded, considered and SMICoP draft updated.
June 2011 Stakeholder seminar convened to review updated SMICoP draft and provide feedback. Over 40 attendees from various consumer groups, suppliers, unions, meter operators, networks, Government, Ofgem, etc.
August–December 2011 Formal consultation on SMICoP content. Open to all stakeholders. 278 items of feedback received from 12 different stakeholders. Consultation run in parallel with the Government’s consultation on supply licence conditions.
November 2011 SMICoP Interim Steering Group (SISG) convened monthly meetings, independently chaired by Government and attended by Ofgem, Consumer Focus, energy suppliers—both large and small, ICoSS, Energy UK, and the ENA. All feedback from 2011 consultation recorded, and considered by SISG. SMICoP routinely updated and reviewed by the SISG.
March–May 2012 SISG convened four all-day workshops (in addition to the monthly steering group meetings) to work through SMICoP consultation feedback.
July 2012 Final stakeholder seminar. Over 30 attendees. Feedback provided from SISG to stakeholders on responses/conclusions to 2011 consultation feedback, update on SMICoP content, and group discussions around key areas. Additional 138 items of feedback from attendees recorded and considered by steering group.
November 2012 Final draft of SMICoP sent to all licenced suppliers for sign-off.
December 2012 Published v1.0 of SMICoP submitted to Ofgem.
February 2013
1 “Data / privacy concerns relating to Smart Metering seemed low other than the possibility of receiving more unwanted marketing contact as a result of Smart Meter data. Respondents concerns were negated once they had a clear understanding that the framework dealt with this concern.” Smart Metering: Data Access and Privacy Public Attitudes Research December 2012