Ofgem: Energy Suppliers pay a total of £10.8m for not meeting smart meter installation targets for 2022

Energy suppliers British Gas, OVO, Bulb, E.ON, Scottish Power and SSE will pay out a total of £10.8m after missing smart meter installation targets for 2022.

The firms fell short of the installation targets set for 2022, culminating in a shortfall to install a total of 1,026,628 smart meters by the required deadline.

Following action by Ofgem, the companies have agreed to pay a total of £10.8m into Ofgem’s Energy Industry Voluntary Redress Fund (EIVRF) in respect of them not meeting smart meter installation targets for 2022. The fund is used primarily to help consumers in vulnerable situations most at risk from cold homes and high energy bills.

Smart meters are an important part of the transition to a greener, more flexible energy system. They also help households by making it easier for them to track their energy usage, as well as access innovative smart tariffs that can save money by encouraging energy use outside of peak times or when there is excess clean electricity available. Some customers have even been paid to use electricity during very windy days.

A full breakdown of the payments made into the EIVRF is outlined in the table below:

As a result of suppliers agreeing to make these voluntary payments by way of Alternative Action, Ofgem has decided not to conduct a full investigation into the reasons for the shortfall against the targets in respect of this matter for 2022.

A number of suppliers provided information on the mitigating factors that impacted their ability to meet their annual targets. Ofgem considered the impact of some of these which is reflected in the levels of Alternative Action payments agreed with suppliers, but a detailed review which would only be possible in the context of enforcement action was not undertaken.

In addition to the above action and following further engagement with Ofgem, Scottish Power has agreed to pay £440,000 into the EIVRF in relation to its 2019 Annual Milestones smart metering obligations.

Cathryn Scott, Director of Enforcement and Emerging Issues for Ofgem, said:

“The installation of smart meters is a vital step in the modernisation of our energy system and the path to net zero by 2050. Smart meters give customers better information about their energy usage helping them budget and control their costs.”

The Government introduced this four-year Smart Meter Targets Framework on 1 January 2022. This Framework is designed to ensure timely delivery of the smart meter rollout by setting energy suppliers’ minimum annual smart meter installation targets.

Under the Framework, suppliers are set annual targets for smart meter installations and Ofgem monitors performance against these targets on an ongoing basis. The first year of the current Framework ended on 31 December 2022. As of June 2023, over 33 million smart and advanced meters have been installed in homes and small businesses across Great Britain, which represents 58% of all meters in the UK.

ENDS

Notes to editors

• Bulb entered administration on 24 November 2021. The Bulb electricity and gas supply licences were transferred to Octopus on 20 December 2022.
• The Alternative Action amount has been set consistently across the six suppliers listed above, as it is based on the number of missed smart meter installations during 2022, with an allowance made for the Supplier of Last Resort consumers taken on in late 2021.
• Between 2016 and 2019, large energy suppliers (those with more than 250k customers) had to set annual targets, known as milestones, for the proportion of their customers that would have a smart meter by the end of each year. These targets were commercially sensitive. Under SLC 44 of the Electricity Supply Licence and SLC 38 of the Gas Supply Licence, large suppliers were required to achieve these targets within a set tolerance. 
• Figures according to government smart meter statistics.
• The Energy Industry Voluntary Redress Fund is administered by the Energy Savings Trust on behalf of Ofgem, which supports consumers in vulnerable situations, decarbonisation and the development of innovative products or services not currently available to energy consumers.