Energy and Climate Change CommitteeSupplementary written evidence submitted by Baroness Verma, DECC

Thank you for the opportunity to provide evidence to the Committee on 4 June with regards to the Smart Meter roll-out. At that evidence session I agreed to write to the Committee on three issues.

Firstly, you asked me to look into an issue with regards to the DECC website, whereby it did not provide for a complete summary of Ministerial portfolios. I am pleased to inform the Committee that this has been corrected and the website has been updated. You can find the relevant pages here: https://www.gov.uk/government/organisations/department-of-energy-climate-change

Secondly, the Committee asked about the value of energy suppliers installing SMETS 1 meters ahead of SMETS 2 meters being available. SMETS 1 provides a sound basis for suppliers to deploy smart meters during foundation, bringing forward important consumer benefits and supporting companies’ preparations for their full scale roll-out in a way that best suits their own strategies. SMETS 1 enables suppliers to replace traditional “dumb” meters now (when they have reached the end of their lives) with smart meters and to count these against their roll-out targets—SMETS 1 meters will not need to be replaced before the end of the roll-out. This helps suppliers avoid the cost of having to revisit the premises for a further meter replacement before the end of the roll-out and optimise the operational requirements of their roll-out over a longer timeframe.

SMETS 2 includes some additions over SMETS 1, for example functionality to benefit network operators as well as communication standards to further facilitate interoperability. We have proposed that governance of amendments to the equipment technical specifications should be industry driven in future, allowing them to reflect the latest technological and communication innovations, where evidenced and cost effective to do so.

Overall on central assumptions there is a broadly neutral/marginally positive economic benefit in permitting SMETS 1 deployments. Of course this does not take account of the qualitative non-monetised benefits stemming from suppliers preparation of their full scale roll-out.

Thirdly, the Committee raised the issue of back-billing. Back-billing issues arise where suppliers have not secured regular meter readings. Ofgem has already directed (1 July 2007 onwards) the industry not to back-bill domestic customers for periods greater than 12 months, where the supplier is at fault. One of the key benefits of smart metering is that suppliers will be able to take remote meter readings and so the issue of back-billing should no longer arise.

I hope that this letter will address the Committee’s concerns on these matters.

June 2013