Smart Meters Bill

Written evidence submitted by SSE (SMB10)

Public Bill Committee: Smart Meters Bill

About SSE

1. SSE is a UK-listed company and the broadest based utility operating in Great Britain with separate retail, wholesale, networks and enterprise businesses. SSE’s core purpose is to provide the energy people need in a reliable and sustainable way and, as of 30 September 2017, SSE had 7.72 million energy customers across Great Britain and Ireland.

2. As a responsible company, SSE seeks to maximise at a national and local level the economic benefits that are created by its activities and in 2016/17, SSE made a contribution of £9.3 billion to UK GDP. SSE is proud to be one of the UK’s largest Living Wage employers and the first FTSE 100 Company to be awarded the Fair Tax Mark.

Progress in delivering the Smart Meter Programme

3. SSE welcomes the opportunity to submit evidence to the Public Bill Committee’s scrutiny of the Smart Meters Bill and considers itself well placed to do so. The Smart Meter Programme is a Government mandated scheme and, as an energy supplier operating in the GB market, SSE is required to take all reasonable steps to install smart meters to 100% of its customers by 2020. SSE has therefore invested significant resource into the rollout and as of 30 September 2017 had 650,207 domestic smart meters on supply.

4. SSE remains fully committed to the smart rollout, believing it represents a unique opportunity to transform the relationship between customers and suppliers. Smart meters can play an important role in helping consumers manage their energy usage, ensuring the energy networks are more responsive to demand and managing the transition to smart grids. Over time, smart meters could also help reduce household energy bills and carbon emissions from domestic properties, if accompanied by changing consumer behaviours.

Ensuring the rollout delivers net benefits for customers

5. SSE shares Government’s ambition for the programme to be successfully delivered and supports the aims of the smart rollout. SSE does, however, seek to encourage pragmatic and flexible decision-making on the approach to achieving these aims as the roll-out develops and new information becomes available. At a projected cost of more than £11 billion across the industry it is vital that the programme is delivered successfully and cost effectively for consumers.

6. As one of the most significant and complex infrastructure projects seen in the UK, the smart metering programme has a significant number of interdependencies; in particular, the central data and communications infrastructure being provided by the Data and Communications Company (DCC). Individual delays to this critical infrastructure may have been small, but the collective impact has been significant, constraining suppliers’ ability to plan and allocate resources cost-effectively.

7. Without the supporting infrastructure in place, suppliers have had to install significantly higher volumes of the less functional SMETS1 meters than was originally envisaged – this model of smart meter is less interoperable, creating a barrier to customers switching energy suppliers and maintaining smart functionality. In light of these ongoing delays, SSE continues to believe it will be challenging for many suppliers to meet the 2020 deadline in a way that yields maximum net benefits for customers.

8. Six years into the rollout, industry is about to transition from the Foundation Stage of the roll-out to full-scale deployment with SMETS2 delivery planned for mid-2018. This juncture presents an opportunity for BEIS and other stakeholders to reflect on the progress made and some of the ongoing challenges with a window of just three years remaining. SSE believes BEIS should initiate an evidence-based review into the rollout in 2018 to assess progress and identify any ways in which the benefits to customers could be enhanced and the costs reduced. This would ensure that lessons were learnt from the experiences of suppliers, customers and other stakeholders and would also ensure all parties remain confident that the customer opt-in approach being pursued remains appropriate.

9. Suppliers are required to take ‘all reasonable steps’ to meet their licence obligations on smart, but without further guidance around best practice or what this constitutes, it remains challenging for suppliers to know what will be regarded as sufficient. Suppliers would benefit from industry-wide benchmarks to work towards, particularly given the supplier-wide evidence of lower than expected demand that is being compounded by negative media sentiment – which is only likely to increase if a flexible and pragmatic approach is not taken.

The Smart Meters Bill

10. The Smart Meters Bill makes provisions to deal with the threatened or actual insolvency of the Data and Communications Company (DCC). SSE agrees that the DCC is a critical piece of infrastructure, sitting at the heart of the operation of smart meters; it therefore supports these safeguard measures to ensure it can continue to function in the event of financial difficulty so as not to impact consumers’ experience of smart.

11. The legislation also seeks to extend the Secretary of State’s existing powers to: amend licences and industry codes; veto any proposal by the Authority to consent to the transfer of the DCC licence; and to make activities relating to smart metering licensable from 1 November 2018 to 1 November 2023. In principle, SSE supports these measures but given suppliers are required to have met the Government’s delivery target of rolling out smart meters to 100% of homes and businesses by 2020, SSE believes further clarity is required to justify why the Secretary of State’s powers are being extended from 2020 to 2023.

November 2017

 

Prepared 27th November 2017