Conclusions and recommendations
Multiple occupancy and tall buildings
1. We
first identified the technical challenge of multiple occupancy
and tall buildings for smart meters in 2013. The Government has
established working groups with industry to address this issue
but suppliers remain dissatisfied with the level of progress to
date. We recommend that the Government take a firmer, co-ordinating
role to steer those involved towards an effective cross-industry
solution. DECC should use its smart meter working groups, identify
the preferred solution and establish a clear timeline to address
the issue of multiple occupancy and tall buildings. (Paragraph
13)
Interoperability
2. As
interoperability is at the heart of the Government's framework
on smart meters, the Government and the DCC should relax requirements
for early smart meters that fall just short of SMETS 1 compliancy
to be replaced by 2020. This could reduce cost and inconvenience
for consumers. (Paragraph 16)
In-Home Displays
3. Technology
has moved on since it was made obligatory for suppliers to offer
In-Home Displays (IHDs). It is essential that all meters are compatible
with smart phones and tablets as smart technology is now commonplace
and apps would provide more flexibility for both suppliers and
consumers and would improve interoperability during the mass roll-out
phase. However we are conscious that there are many UK households
who still lack access to smartphones and other smart devices.
On balance we recommend that DECC and Ofgem maintain the mandate
for all suppliers to offer IHDs. We also recommend that the Government
and suppliers work together to keep costs down and identify an
affordable smart app which can be used with all smart meters.
In this way all customers can be offered a choice which meets
individual customer preferences. (Paragraph 19)
The DCC Delay
4. We
are very concerned about the impact the DCC delay will have on
customers during the mass roll-out phase for the smart meter programme.
The target of 100% smart meter installation by 2020, which is
already in danger of being missed, will be made even harder to
achieve by this delay. It is also likely to increase the number
of SMETS 1 meters installed by suppliers, creating future interoperability
problems for customers who then have to install SMETS 2 meters.
The DCC must urgently find ways of incorporating these early meters
into its communication infrastructure and of simplifying the extremely
long smart energy code. Following the end of the DCC consultation
period, the DCC should report jointly with the Government on the
impact that this delay will have on the roll-out and in particular
on consumers, identify what measures will be taken to get the
roll-out back on track, and explain how any additional resources
will be provided. (Paragraph 24)
Shortage of installation engineers
5. Despite
the Minister's confidence, we are concerned that the current shortage
of installation engineers makes it unlikely that the 100% roll-out
target will be met by 2020, and may affect the installation costs
passed on by suppliers to customers. We recommend that the Government
publishes a detailed plan and timetable to address this skills
shortfall, and consults suppliers to identify which regions and
customers will be most affected by it ahead of the 2020 roll-out
deadline. (Paragraph 28)
The role of Distribution Network Operators
6. The
existing roll-out arrangements may now be too advanced for a transfer
of responsibility for installation. However, given the potential
benefits of DNOs playing a greater role in the roll-out, we recommend
that the Government urgently conducts and publishes an assessment
of the feasibility of requiring a more active participation of
the network operators in the roll-out programme. (Paragraph 30)
Public engagement with smart meters
7. It
is clear that helping 28 million households, including vulnerable
customers, to understand the benefits of smart meters and to continue
using them once installed will be challenging. We want the Government
to report periodically on the impact of smart meters on low-income
households. While Smart Energy GB's appointment has been supported
we also want evidence from this communications agency, and from
Government, of a clear engagement plan to persuade the public
of the advantages of installing and using smart meters. We are
concerned at the reported high drop-off rates after one year of
installation. Smart Energy GB's plan to use third parties, such
as community groups and public broadcasters, to engage the public
is wise and we encourage this approach. (Paragraph 35)
Mandatory Time of Use tariffs
8. We
believe that the potential benefits of Time of Use tariffs working
in conjunction with smart meters are very substantial. Energy
suppliers should continue to pilot the use of these tariffs and
feedback to Ofgem the extent to which they help change consumption
patterns and lower bills. We agree with the Government and suppliers
that the public need to have a better understanding of Time of
Use tariffs before the universal adoption of compulsory Time of
Use tariffs can be considered. (Paragraph 39)
Conclusion
9. While
progress has been made since we first looked at the Government's
smart meter programme in 2013, we do not believe that near universal
smart meter roll-out will be achieved by 2020. Long-known technical
challenges of multiple occupancy and tall buildings should have
been resolved by now. Other technical issues around interoperability
such as the migration from SMETS 1 to SMETS 2 lack a clear plan
for resolution and the DCC delay has damaged confidence in the
programme. The slow start to full engagement with the public means
Smart Energy GB must now step up delivery of their communications
programme. We want the Government to remain ambitious about securing
the maximum benefits from smart meters as soon as possible, particularly
in relation to energy efficiency and consumer bills. The Government
must monitor the impact of the programme to ensure that low income
households, in particular, are benefitting. However, the benefits
of smart meters will only be fully realised if the Government
sets and keeps within a budget limit on the cost of the overall
programme. We also consider that the Government should publish
the Major Project Authority's assessments of the smart-meter programme.
(Paragraph 40)
10. Without significant
and immediate change to the present policy, the programme runs
the risk of falling far short of expectations. At worst it could
prove to be a costly failure. The Government is at a crossroads
in relation to smart meter roll-out. All the problems which we
have identified are symptomatic of a national programme whose
management the Government has left largely to suppliers. The Government
must give serious consideration to whether or not it is possible
to reduce costs to consumers by streamlining the roll-out of smart-meters,
perhaps through more active participation of DNOs. The Government
must also take a more active role in driving forward the industry-led
roll-out, seeking and facilitating industry-wide solutions to
the technical challenges that remain. Getting it right will eventually
cut energy usage and bills for 30 million homes and businesses
in the UK. Getting it wrong risks embarrassment for the Government
through public disengagement with a flagship energy policy and
a costly missed opportunity. (Paragraph 41)
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