Speech

Smart Metering: maximising the technology

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Speech by Baroness Verma to the Smart Metering: maximising the technology, Intellect lunch.

Introduction

I would like to start by thanking Intellect UK for organising this event and bringing us all together to discuss this important agenda.

This autumn we have seen energy bills climb up the political agenda.

The main drivers of rising energy prices in recent years have been the increasing wholesale energy costs and the need of course to upgrade our network infrastructure.

Average household dual fuel bills are estimated to have increased by around 13% in real terms between 2010 and 2012, rises that have risen increasingly since the last decade.

But the best way to keep everyone’s bills down is to help people to save energy, ensure fair tariffs and have active competition amongst the suppliers.

And that is what the Government is doing.

In the short term, we have already put in place policies to help consumers, particularly the most vulnerable, in managing their energy bills this winter and beyond.

For example, 230,000 homes will be warmer this year by getting energy efficiency measures installed under the element of the Energy Company Obligation that is designed to support vulnerable households and households in deprived areas.

2 million households will get help under the Warm Home Discount, included amongst this group are well over a million of the poorest pensioners who will receive £135 off their electricity bill.

We are reforming the retail energy market, making it simpler, clearer and fairer. We are limiting the number of tariffs available so that consumers aren’t faced with a myriad of confusing tariffs, and can make switching easier.

In terms of competition, we are working to make it easier for new companies to enter the market, including extending the exemptions from participation in environmental and social schemes.

And of course we are all working hard to see a successful rollout of smart meters to all homes and small businesses by 2020.

Smart meters are a key part of the energy efficiency agenda. Key to putting control in the hands of the consumers, putting an end to passive observation, and instead, active engagement. In home displays will give near real time information in pounds and pence.

This will help enable consumers to better manage energy consumption, save money and secure sustainable energy supply.

In bringing an end to estimated billing, consumers with smart meters will receive accurate bills, one of the biggest causes for complaints energy suppliers are inaccurate bills.

A centralised programme of consumer engagement activities will build confidence and understanding of how to use smart meters to manage energy consumption and costs.

Consumers will be better informed and able to switch suppliers in order to see reductions on their bills. Switching will be faster and easier as a result of smart meters.

Smart metering will also make the whole experience of being an energy consumer and interacting with energy suppliers more accessible, increased engagement will drive a more vibrant and competitive market, consumers will have more control.

Smart metering will also open up opportunities for innovation in new products and services.

We are starting to see innovation in the development of smart appliances, they turn on when energy is cheapest. We look forward to even greater development in the sector.

We are committed to putting consumers at the heart of the Programme.

We have achieved a lot in the past year, working closely with all stakeholders, I feel very proud of the achievements during my first ministerial year at DECC. In December last year there were 260 smart meters installed in domestic properties, now there are over 100,000.

We are making good progress to enable every customer and small business to be offered a smart meter before the end of 2020.

Over the past year we have hit a number of important milestones.

  • We have published the Consumer Engagement Strategy, which sets out the steps to take to ensure we get consumer engagement right to help ensure an efficient roll out and to ensure consumers reap the full benefits from their smart meter;
  • Published the second set of key decisions on the Smart Metering Technical Specifications Version two; and
  • Most recently announced the conclusion of a successful procurement on behalf of industry to establish the Data and Communications Company, Data Services Provider and Communications Service Providers. The DCC will enable communications between smart meters and; energy suppliers, network operators and other authorised service users.

And industry has also taken a number of steps which will be integral to a successful roll out. They have:

  • Established the Central Delivery Body, which will be responsible for engaging consumers with smart meters;
  • Agreed the Smart Meters Installation Code of Practice which sets out standards for the installation visit and ensures consumers’ interests are protected;
  • Made significant investment in preparation for mass roll-out. This investment is leading to the creation of jobs and training opportunities; and
  • In many cases, already started installing smart meters

These are important achievements.

I would like to express my thanks for the efforts and commitment of industry, which has been so significant in the work completed thus far. I look forward to us continuing to work together to ensure a successful roll-out.

We recognise that consumers will only fully realise the benefits of smart meters if they are effectively engaged. Individual suppliers have a key role to play here from the start.

We must build the confidence and trust of all consumers. It is important to reach out to vulnerable or hard to reach groups.

We know from research that third parties, such as:

  • voluntary organisations
  • local authorities,
  • housing associations,
  • as well as friends and family - can provide an effective and credible sources of information.

That is in addition to information given by suppliers or central Government.

The central delivery body will organise a centralised programme of consumer engagement activity which will support what the engagement suppliers will be doing themselves.

More specifically the Central Delivery Body has key objectives to:

  • build consumer confidence in the installation of smart meters; and
  • to build consumer willingness, awareness and understanding of how to use smart meters to manage energy consumption

In December, The Central Delivery Body will publish its Consumer Engagement Plan. This will be a key milestone in the delivery of smart meters, and will set out a range of activities which will be undertaken in 2014 to further engage consumers.

Customer protection and a good experience for consumers at installation visits are crucial.

As you are all aware, we will see 30 million homes and small businesses receive new smart meters by 2020. An important part of consumers’ experience of smart metering will be the installation visit.

In June, the Smart Metering Installation Code of Practice came into force. This ensures that consumers:

  • experience a good service;
  • are given the information they need to understand how to use their new meter and in-home display; and
  • understand how this can help them to use their energy more efficiently.

Importantly, vulnerable customers are supported by the Code of Practice and suppliers recognise that they need to identify them and respond to their specific needs.

Privacy, security, and data access are high in the minds of some domestic and small business users, and it was crucial that we took steps to protect the privacy of individuals and made sure that they have control over the data recorded by their smart meter. We have legislated for this important area through the data access and privacy framework.

Consumers will have a choice over who has access to their smart meter data, except where the data is needed to fulfil regulated duties.

Consumers should have a choice about how their data is used, and by whom:

  • Suppliers will be required to explain clearly to their customers which data is being used, for which purposes, and what choices the consumer has about this. Suppliers will have to get explicit customer consent to access half-hourly data, or to use data for marketing purposes.
  • Network operators will be allowed to access half-hourly data for regulated purposes provided they aggregate (or otherwise treat) the data so that individuals cannot be identified from it.
  • Third parties (such as energy services companies and switching sites) will be required in the Smart Energy Code to obtain consumer consent before requesting data via the DCC, verify the identity of the consumer, and provide reminders to consumers about data that is being collected.

Security has been at the heart of our design work throughout the programme. This design work is based on rigorous risk assessment and close consultation with experts in industry and the relevant Government agencies.

Economic benefits

Over the next 20 years, the rollout of smart meters is expected to deliver sizable economic benefits

Some of these benefits are already beginning to be realised. And smart metering is already driving investment and creating jobs and will increasingly do so up and down the country.

For example, Arqiva have announced 150 jobs protected and 160 jobs created as a result of contracts with the DCC. British Gas recently announced that they had signed a contract with Landis & Gyr that would result in Landis & Gyr doubling their 600-strong UK smart meter manufacturing workforce. British Gas also announced that they would be recruiting an extra 500 smart energy experts.

As the roll-out progresses we expect more jobs to be created, many of these will be UK based:

  • The latest industry estimate is that between 6,000 and 7,000 meter installers may be required
  • Providing the communications infrastructure for smart metering is also expected to provide new jobs
  • The roll-out of smart meters will enable the expansion of the energy services market with companies developing innovative services and providing high value jobs.

Forward look

The successful award of the Data and Communications Company Licence and the Communication Service Provider and Data Service Provider contracts was a major milestone. Now we are firmly moving in to the implementation phase - a crucial stage in the delivery of the smart metering programme.

The implementation phase will see responsibility for delivery lie with many parties, including many different industry partners who will be vital in ensuring we are ready to start mass roll out in Autumn 2015. Meter manufacturers will be developing meters to test and suppliers will be developing their internal systems. This will enable them to integrate with the Data and Communications Company.

The Data and Communications Company will now move to the design, build and test phases of their programmes. All of this activity is integral for ensuring that the roll out gets off to the best possible start and the full benefits of the Programme are delivered.

Conclusion

The success of this work, and the programme itself, hinges on those outside Government; the suppliers, service providers and consumer groups that advise and work on behalf consumers - those of you who are actually delivering the rollout.

The Government will of course continue to have a key role to play in monitoring and evaluating the roll-out of smart meters to ensure that the benefits are delivered and in supporting industry to deliver this programme together.

The programme is progressing forward at a good pace. In working closely together, Government, industry, consumer groups and other stakeholders have ensured that we are able to deliver an ambitious programme that will realise huge benefits to consumers, and also ensure future platforms for smarter services. I very much look forward to working with you and building on what has already been achieved.