Evidence Check: Smart metering of electricity and gas Contents

Conclusions and recommendations

The Evidence Check process

1.The delays in receiving some of the Government statements in response to our evidence check request were regrettable. It is concerning that the Government was not able to identify a lead department in two cases. (Paragraph 4)

2.The Government’s difficulty in engaging with the evidence check framework suggests that in some departments there is a lack of experience of articulating the evidence base for its policies. More worryingly it may also indicate that some areas lack the necessary evidence base. (Paragraph 7)

3.The Government’s evidence check statement on smart metering was disappointing in some respects. There was a lack of a clear description in the statement of the ‘problem’ that smart metering aims to address, and as a result the measures by which the project will be evaluated were opaque. The transparency of the statement was strengthened, however, by including references to DECC’s impact assessment. Overall, we were unable to rate the statement highly against the Institute for Government’s evidence transparency framework. (Paragraph 18)

4.In its response to this report, the Government should reflect on its experience of collecting evidence check statements from a range of departments using the IfG’s Evidence Transparency Framework and consider how its processes could be improved, including by building the IfG structure into its guidance and policy-development methodologies. We hope that the Government will be more consistent in its engagement with the Institute for Government’s Evidence Transparency Framework when preparing future evidence check statements for us and other committees. (Paragraph 20)

Consumer behavioural science

5.Smart Energy GB is making good use of behavioural science to consider how best to support the smart meter rollout. This could usefully be bolstered by evidence from sociologists and social psychologists, given that energy usage is an integral part of modern life. (Paragraph 24)

6.The inclusion of an in-home display in the smart meter rollout provides a necessary feedback mechanism on energy consumption, although other forms of feedback are possible and are being trialled. The Government’s evidence check statement did not include material on whether alternative energy use feedback mechanisms (such as clip-on energy monitors) had been considered. (Paragraph 30)

7.In order to reflect the available evidence the Government should ensure that in its bid to complete the smart meter rollout by 2020 it does not compromise on consumer engagement before, during and after installation, including for small businesses. The impact of smart meters will be limited without this support from installers and Smart Energy GB. (Paragraph 36)

8.‘Implementation’ is one of the IfG’s ‘chain of reasoning’ steps—implementing a policy based on evidence of ‘what works’. The Government’s evidence check statement highlighted available evidence on whether smart meters could lead to a reduction in energy consumption through engagement with in-home displays. That evidence does suggest such an outcome, although the scale and durability of such savings is contested and it would appear that the rollout could alter consumption levels by 2–3%. (Paragraph 40)

9.The Government should update its research on the impact of smart meters as the rollout progresses, adjusting the Impact Assessment as necessary. It should take the opportunity now available to examine five years of data for some customers in the Early Learning Programme. It should explore with British Gas the opportunity to make its large datasets, from 2.7 million fitted smart meters, available to researchers. (Paragraph 41)

Changing when energy is used

10.There is an extensive range of studies providing evidence on the likelihood and scale of consumers changing their usage patterns in response to Time of Use tariffs. Some evidence suggests that driving genuinely significant change could require a level of differential pricing which might be commercially, and potentially politically, difficult. (Paragraph 52)

The balance between consumer and national benefits

11.It is unclear whether the Government’s primary aim of the smart meter rollout is the establishment of a smart energy system (and the realisation of the corresponding benefits of this for efficient energy generation, both now and in the future), or to save individuals money on their energy bills. The Government needs to do more to communicate the national benefits of smart metering alongside the potential cost savings and efficiencies for individual consumers. This was a weakness of the Government’s evidence check statement, and relates to a lack of clarity over the ‘problem’ that smart meters aim to address. In its response to this report, the Government should provide further information on how it expects smart metering to affect the required energy generation capacity of the network and the mix of energy generation sources. (Paragraph 67)

Technical, security and privacy issues

12.The problem of interoperability of some early smart meters has still not been resolved, despite having been raised previously. This undermines efforts to encourage consumers to switch suppliers to get the best tariff deals and requires timely action. (Paragraph 70)

13.The public is already familiar with IT-based systems having been hacked. It would be unfortunate if unwarranted concerns in media reports about smart meter security diminished public trust in the programme. GCHQ’s recent blog post describing the security features of the system is a good example of communication with a technically-literate specialist security audience, but further efforts may be necessary to convince the wider public that smart meters are secure. We recommend that the Government consider further how to communicate the level of thought that has gone into designing a secure system for smart metering. (Paragraph 80)

14.As with many examples of big data, there are opportunities to explore as well as risks to manage. We look forward to seeing how the data that smart meters produce can be put to use beyond the obvious applications for energy network management, including how data can be used to support vulnerable customers. We were assured that consumers will own their data and be able to decide who can access it. Wider questions about processes for anonymisation and the ethics of data usage and consent will need to be considered carefully by the Data Services Ethics Council being set up by the Government following our Big data dilemma report. (Paragraph 84)

Conclusion

15.The Government’s evidence check statement on smart metering did not fully reflect the amount of work undertaken as part of the impact assessment for the project. The gap between the quality of the statement and the impact assessment is concerning, as it suggests there could be a disconnect between those responsible for the policy and those tasked with completing the impact assessment. (Paragraph 88)

16.The Government has invested in trialling smart meters and in studies of their impact. Smart Energy GB is also making use of evidence in understanding consumer behaviour. Despite the growing evidence base underpinning the project, there are a number of areas where the Government clearly believes there are misconceptions and misunderstandings about the utility, impact, and security of smart metering. The Government should reflect on these in the context of the mass rollout and consider how best to communicate with consumers on some of these topics. (Paragraph 89)

17.The smart meter rollout has too many objectives, and this may hinder implementation and evaluation. The Government should be clearer about the primary purpose of smart metering and use this to drive evaluation of the project. Taking this approach will help make future evidence check statements clearer. Smart meters need to be clearly understood by the consumer and provide information in a format that the customer finds helpful. In order for consumers to benefit directly from smart metering there will need to be appropriate investment in customer engagement, given that this is being introduced in an era of low public trust in utility providers. (Paragraph 92)





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16 September 2016