Smart meter review for Which? calls for action on roll-out plan
Exposing the risks that the roll-out and operation of smart meters will fail consumers
Project duration: November 2011 to January 2012
Smart meters are on their way. The foundations of the roll-out are being laid and by 2019 every home and business in the UK should be equipped with this monitoring wizardry.
The meters will stimulate greater consumer engagement with their energy use, cut the costs of meter reading, and enable more efficient ‘smarter’ management of the electricity and gas systems.
But are the government’s smart metering plans ‘smart’ when viewed from a consumer perspective? Or will they benefit the energy companies at the expense of consumers and create a backlash of distrust and suspicion?
CSE was commissioned by consumer champions Which? in November 2011 to answer these question by reviewing the current smart meter roll-out plans through the lens of the interests of existing and future energy consumers. The resulting report was widely publicised and can be downloaded here.
As CSE’s Chief Executive Simon Roberts and the report’s lead author explained: “Without the support and involvement of consumers, the smart meter programme will not succeed. It is therefore imperative that the needs and interests of consumers are fully understood by those developing the programme and effectively embedded in its design and delivery."
The review examined the current plans for the roll-out and operation of smart meters to take account of how they measured up against a number of clear consumer-oriented objectives. These objectives include:
- keeping costs as low as possible
- providing a trustworthy and confidence-inspiring roll-out process
- offering a fair share of the benefits of smart meters
From the process, four key issues emerged:
- The reliance on “competitive pressures in the energy supply market” to control programme costs and to ensure the cost saving benefits accruing to energy suppliers are passed through to consumers appears naïve given official recognition of the currently limited nature of such pressures
- The approach being taken to data privacy may conflict with the system’s need for data to optimise performance, thus undermining the full realisation of the anticipated benefits
- The choice of energy suppliers as lead delivery agents for the programme builds in consumer distrust from the beginning and limits the potential for area-based programmes which are likely to be (a) more cost-effective and (b) more likely to enable social and community interventions which can involve consumers in the roll-out and establish positive social norms regarding reactions to smart meters
- DECC’s understanding of consumer concerns is developing but it still appears to have a limited perspective on: (a) how these concerns might play out within the media and society more widely during the roll-out process and thus create delivery risks, and (b) what types of interventions (and by whom) might be required to mitigate these risks
It was felt that without remedy, the programme may run into deployment problems as a result of increasing consumer resistance – as experienced in other countries.
As a result of this the programme may fail to deliver a full share of its benefits to consumers, instead enabling energy suppliers and others in the energy market to gain at the expense of consumers.
The report concluded that there is a meaningful risk that the UK smart metering programme will fail consumers unless the Government makes changes to its current plans.
“It’s clear from our review that the interests of consumers are neither well understood by Government nor well protected by the Government’s current plans,” explained Simon, who was lead author of the report.
“While the current plans aren’t right for consumers, there’s plenty the Government can do to improve them," Simon added. "Our report outlines fifteen remedies which put the consumer at the heart of the smart meter programme and make it much more likely to be a success.”
The fifteen proposed remedies listed in the report, which came out of the four key issues, were:
1. Controlling costs and the pass through of benefits
- Require that metering costs are separated on bills and quotes
- Use early, transparently and aggressively new powers to obtain info from energy suppliers
- Have explicit plans to intervene to protect consumers
- Stop assuming competition in energy supply will keep costs as low as possible
2. Managing data privacy and security concerns
- Make public that a smart meter cannot act as a ‘spy in the home’
- Put in place (and publicise) very harsh penalties for breach of data privacy
- Emphasise the benefits of smart meters
- Take the most generous perspective on what constitutes a regulatory duty
- Ensure all aspects of the energy market are using smart meter data
3. Delivering a cost-effective, community-engaging, competition-enhancing, street-by-street roll-out
- Mandate energy suppliers to work in co-operation...[on] a national street-by-street roll-out
- Develop a funded programme of interventions to maximise the value for consumers
4. Understanding consumer concerns and developing interventions to ensure they are assuaged
- Explore the potential value of ‘bottom-up’ social communication processes
- Focus on the simplest, most resonant consumer benefit – accurate bills
- Establish a clear understanding of how...best to communicate with and engage different segments
- Develop their own ‘anti-smart meter’ campaign strategies
Echoing CSE's concerns, the Public Accounts Committee has expressed concern that the smart-meter programme will fail to pass on savings to the consumer.
Speaking on 17 January, The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said: "Consumers will benefit from smart meters only if they understand the opportunity to reduce their energy bills and change their behaviour. So far the evidence on whether they will do so has been inconclusive. Otherwise, the only people who will benefit are the energy suppliers."