I am very pleased to have been asked to speak this morning.
The range of expertise assembled in the room today is a testament to the importance of the smart meter programme. By working together to deliver the technologies we require and through engagement with consumers, we will ensure that the roll-out is successful and delivers important benefits to households and businesses across Britain.
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.
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 options, which will also make switching easier.
In terms of competition, we are working to make it easier for new companies to enter the market.
And of course we are working hard to see a successful rollout of smart meters to all homes and small businesses by 2020.
It means installing over 50 million smart meters in over 30 million properties.
Our smart meter programme is not just about replacing a meter at the end of the electricity wire or gas pipe.
The smart meter programme aims to give every household technology that will not only transform the way they control their gas and electricity consumption; but also enhance the power and understanding that they have as energy customers.
Smart meter technology - a key to putting control in the hands of the consumers
Smart meter technology is key to putting control in the hands of consumers.
Smart meters will give consumers near real time information, in pounds and pence, through in-home displays.
This will help consumers to better manage their gas and electricity consumption, understand what they are paying for, empowering them to help save money.
As we have seen in recent weeks, the estimated billing and direct debit arrangements used by energy suppliers can lead to consumers being hundreds of pounds in credit on their energy bills. Smart meters bring an end to estimated billing. Estimated billing is also a driver of one of the biggest causes for complaints to energy suppliers - inaccurate bills. Smart meters will give consumers the confidence that the bill they are paying reflects their actual energy use, rather than a company’s estimate.
As we set out in the Annual Energy Statement last month, energy companies must make switching suppliers faster for consumers – with an ambition to move to switching in 24 hours, rather than the current five weeks - without increasing consumer bills. Smart meters will be a key enabler of faster switching. Smart meters will make consumers better informed and more easily able to switch suppliers in order to see reductions on their bills.
And the experience of being a prepayment customer will be transformed, with topping up as easy as topping up a mobile phone.
This is just the beginning of smarter living. The smart meter rollout is central to opening up opportunities for innovation in new products and services. We are starting to see innovation in the development of smart appliances that 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 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 the Government.
The Central Delivery Body, set up by industry, will organise a centralised programme of consumer engagement activity – in support of the engagement suppliers will be doing themselves. You will be hearing from its Chief Executive, Sacha, later this morning.
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, which will set out exactly how it plans to engage consumers in 2014 and beyond.
Consumer protection and a good experience for consumers during 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. 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 put in place regulations and license conditions 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 fulfill regulated duties.
Together we have achieved a lot
We have been working with partners from industry and with consumer groups and togetherwe have made a lot of progress. 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 consumers and small business to have a smart meter before the end of 2020.
Over the past year we have hit a number of important milestones – the most significant of which was the signature of the Data and Communications Company Contracts. The Data and Communications Company will be responsible for linking 53 million smart electricity and gas meters in homes and small businesses with energy suppliers, network operators and energy service companies.
We have also made significant strides in advancing the regulatory, policy and technical platform necessary for smart metering, including the Smart Metering Installation Code of Practice and the Consumer Engagement Strategy.
And industry has also taken a number of steps which will be integral to a successful roll out. They have set up the Central Delivery Body, which will be responsible for centralised engagement of consumers and made significant investment in preparation for most households getting a smart meter between Autumn 2015 and 2020.
In many cases, suppliers have already started installing significant numbers of smart meters.
These are important achievements.
I would like to express my thanks for the efforts and commitment of industry. Commitment that 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.
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, following signature of the DCC contract, Arqiva announced that 150 UK jobs would be protected and 160 jobs created. In September, British Gas announced that they had signed a contract 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. These are real jobs, being created directly as a result of smart metering.
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 providing 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.
The successful award of the Data and Communications Company Licence 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 industry partners - for example, meter manufacturers, energy suppliers and network operators. By autumn 2015 we expect all major energy suppliers to offer smart metering services to both credit and pre-payment consumers and use the shared infrastructure provided by the smart Data and Communications Company, to support the completion of the roll-out by 2020.
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.
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 of consumers - those of you who are actually delivering the rollout.
We are committed to the success of the Programme. We will work in partnership with all those that have a delivery role to ensure we achieve the goals we have collectively set ourselves. The Government will 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.
The programme is progressing forward at a good pace. In working closely together, Government, consumer groups, industry and other stakeholders will ensure that we are able to deliver an ambitious programme that will result in huge benefits to consumers - and also ensure future platforms for smart services. I very much look forward to working with you and building on what has already been achieved.