Energy and Climate Change CommitteeSupplementary written evidence submitted by Consumer Futures (formerly Consumer Focus)

This additional note outlines Consumer Futures’ (previously Consumer Focus) initial response to the Ministerial Statement by The Rt. Hon Edward Davey MP: Secretary of State for Energy and Climate Change, on smart metering 10 May 2013.

Timescales

1. Consumer Futures believes that delaying the date for smart meter rollout is a sensible move. The Programme and suppliers are not ready. The focus should be on getting it right, not rushing to get the meters on the walls. Customers won’t remember when they got a smart meter but they will remember if it worked and if they had a positive experience.

2. This delay should enable sufficient time for robust end to end testing, the procurement of compliant SMETS2 smart metering equipment and the setting up of key communications infrastructure, which is needed to ensure faster and easier switching and deliver better customer service.

3. However, it is essential that energy companies and Government do not now take their foot off the gas. Work is urgently needed to ensure customers actually benefit from this programme. Suppliers should focus on how they are going to help households achieve the energy savings from smart metering, how prepayment meter customers in particular will benefit, and work to develop an Extra Help Scheme for low income and vulnerable consumers as part of a wider consumer engagement programme.

4. In particular, we urge companies and Government to use this time to identify opportunities to better coordinate installation activity, both with each other and with wider government energy efficiency, fuel poverty and water schemes, to offer better value, service and experience to customers. Community level consumer engagement and rollout trials must be a priority.

Switching

5. We welcome recognition by Government of the on-going barriers to switching faced by domestic customers who are receiving smart meters during Foundation stage. At present if a customer switches supplier they could loose smart functionality, have to have their meter replaced, or in the worst cases be prevented from switching to a particular offer. The delayed DCC set-up will add to the scale of this problem, as industry plan to roll out in excess of 2 million compliant smart meters in the next two years, before full interoperability is delivered and switching is easier and faster.

6. However, we remain to be convinced that these proposals will address the problems customers face:

We support in principle the “no backward step” approach. This means when a customer switches from a supplier who has provided them with a compliant smart meter, the new supplier cannot replace that smart meter with a dumb meter and must either rent the previous supplier’s meter or install their own new smart meter. However, we query how this will work in practice and what the cost implication will be for customers. Supporting these meters is likely to cost more. While suppliers have a duty to supply customers who have smart meters, there is nothing to prevent them charging these customers to reflect the increased cost of supporting their meters.

The proposal that any new supplier must continue to provide remote meter readings, is in principle also welcome, but does not go far enough. Other smart functionality such as accurate information on the in-home display may still not be available and requiring suppliers to take a remote reading does not guarantee that customers will get accurate bills. Suppliers will need to make additional changes to their back office systems and processes for this to be achieved. Government or Ofgem need to introduce a new Guaranteed Standard to require suppliers to provide accurate bills to customers once a smart meter is installed. They should also introduce a new Licence Condition to end back billing once a smart meter is installed for both domestic and micro-business customers when it is not the customer’s fault. Failure to get an accurate bill causes particular detriment when the customer receives a back-bill for usage they thought they had paid for. Shock bills can push customers into debt or overdraft with resultant additional charges and knock-on effects.

The proposals do not address problems faced by prepayment meter customers. While we welcome trialling at scale for smart prepay, there is a risk that customers getting smart prepay during Foundation stage could effectively be locked in to their supplier. If suppliers are rolling out smart prepay pre DCC, they should a) guarantee more competitively priced or lowest cost tariffs and b) offer tangible improvements in customer service eg choice of top-up options, friendly credit for gas. Ofgem and DECC should consider new Guaranteed Standards in this area.

Government has still not taken steps to address the barriers to switching faced by micro-business customers.

We understand that proposals do not cover the estimated 1 million customers who have had non-compliant smart meters installed.

7. While Consumer Futures supports trialling smart metering technologies at scale, we are uneasy that Government is incentivising early rollout of potentially a couple of million of smart meters before SMETS2 (the preferred specification) is available or the DCC is up and running. We suspect that these proposals will have unintended cost implications and an impact long-term on the products and service available to customers with these early meters. A cost/benefit analysis should be carried out.

May 2013