BEIS oral evidence session on the rolling out of smart meters

• Daron Walker, Senior Responsible Owner for Smart Metering Implementation Programme, Department for Business, Energy and Industrial Strategy
• Lord Duncan of Springbank, Minister for Climate Change, Department for Business, Energy and Industrial Strategy
• Mary Starks, Executive Director of Consumers and Markets, Ofgem
• Richard McCarthy CBE, Chairman, Data Communications Company

Ian Liddell-Grainger asked why the use of smart meters was declining. Lord Duncan said take-up fluctuated for a variety of reasons, including the move from old to new meters. A target of 2024 had been set to get 85% coverage. The challenge was to convince people who were unwilling to change. This included landlords of multiple-occupation properties.

Mary Starks said Ofgem would take ‘tough action’ against energy companies that failed in their obligations. Three had already been fined, including SSE and EDF. Six roll-out plans had been rejected resulting in new plans being submitted.

Mark Pawsey asked about slow progress in the roll-out, saying that ‘all reasonable steps’ to ensure greater use of smart meters was not sufficient. Lord Duncan said the next step was to place legal obligations on suppliers. Daron Walker said all reasonable steps was an appropriate strategy because there were uncertainties over the smart metering programme, including new technologies being developed. The proposals being consulted on now for post-2020 would do away with that strategy and to move towards a ‘fixed-tolerance.’

Mary Starks said the half-hourly settlement programme did not rely on the smart metering programme to be completed. Half-hourly settlement was already in place on an elective basis, so there were already time-of-use tariffs in place. She agreed with Mr Pawsey that acquisition of an electric vehicle could be made dependent on having a smart meter to ensure that charging was done at the most cost-efficient time of day.

Lord Duncan said there was still widespread ignorance about the advantages of smart meters.

Stephen Kerr was nonplussed about why SMETS1 meters were still being installed, with all their shortcomings. Mary Starks said they were suitable in certain properties, but the expectation was that SMETS2 should be the norm when technical problems were ironed out. Richard McCarthy said that from November onwards, up to 50,000-70,000 meters a day would be migrated. The aim was to have all dormant meters transferred on to the DCC network by the end of next year.

Lord Duncan made a commitment that the BEIS website would be updated with new data in real-time.

10.35 am

Replying to Mr Kerr, Richard McCarthy said 22% of all instals of SMETS2 meters were now in the North of the country, at 70,000 a month and rising. Technical problems had been solved. At the peak, smart meter installations were 110,000 a week. They were now at 85,000 SMETS2 installations a week and rising. Pre-pay meters were rising at a particularly fast rate, but it was correct that in the North there were still low numbers due to the slow development of the required firmware. That had been fixed and numbers would rise significantly into the New Year. Final testing of dual-band communication hubs was taking place to ensure all homes with SMETS2 meters had in-home display units.

10.45 am

Peter Kyle focussed his questions on costs and asked Daron Walker why the cost/benefit analysis for 2019 was different from last year, making it difficult to compare like-for-like costs. Mr Walker said the change was because the roll-out was taking longer than envisaged. So the appraisal period had been extended to 2034. The costs of meters had come down since 2016, but installation costs had gone up.

Mary Starks told Mr Kyle that Ofgem had all the powers it needed. The way the programme was overseen was likely to evolve and price control would become more conventional.

On the issue of what BEIS was doing in terms of decarbonising homes, Lord Duncan said this was an issue that the BEIS committee might want to look at next year. The department would be publishing on this subject early next year.

On the issue of the cost/benefit analysis, Rachel Reeves asked for evidence to prove there would be time-benefit savings to consumers of £1.4 billion. Daron Walker said research had been done in the past for what the savings were, but they had not until recently been able to monetise it. He confirmed that nothing materially had changed, but different values had been adopted.