Industry News

• DECC issues consultation on smart metering

  26 Jun 2009

  The Department of Energy and Climate Change (DECC) has announced a further consultation on the proposed rollout of smart metering to UK domestic customers and SMEs.

  
  The consultation is seeking opinions on the preferred market model, and whether SMEs should be treated differently to domestic customers.

  
  Three market models have been considered:

  a) The competitive model – extends the existing competitive market arrangements. This model provides maximum opportunities for new, independent market entrants (such as UPL) which have made the financial investment to take an active role in the development of this market and its services. It encourages innovation and provides freedom of choice for customers.
  b) The regional franchise model – each geographic area would have a metering and data agent appointed under a competitive tender, which all energy suppliers would have to use for both meter swaps and automatic readings.
  c) The central communications model – meter swaps would remain competitive under the current market arrangements, while communications for automatic reading would be made monopolistic through the appointment of a central communications provider.

  
  DECC suggests that the final option offers the greatest overall net benefit. It could, however, reverse the introduction of competition in data services and meter reading, which has existed in the market for many years and has helped to keep costs down.

  
  Considering that a communications link to every home will be needed in order to download the meter data, it seems strange that neither this consultation nor the recent ‘Digital Britain’ report issued by the government make reference to each other. Linking the two would present a significant opportunity to deliver solutions which achieve both objectives.

  
  DECC’s advisors admit there is a risk that the currently preferred central communications option will stifle innovation. By pursuing a monopoly provision model, options to enhance the use of this communications link to homes – to provide broadband, public information or security services, for example – could be lost as the monopoly provider seeks only to meet the minimum specification of downloading meter readings.

  
  For the domestic market, DECC advocates that the provision of an in-home display unit (which takes information from the new electricity and gas meters and displays usage rates in cost terms) will help to make energy users more aware of their consumption, and change their behaviour in the way they use energy. In today’s society, a ‘one size fits all’ solution is too restrictive and options such as provision of energy information via the Internet, digital TV or even text messaging should also be considered.

  
  Looking forward, smart metering could also form the backbone of a future ‘smart grid’ system, which would allow more control over demands on the gas and electricity networks, resulting in capital investment savings by avoiding unnecessary reinforcement.

  
  For the SME business market, it is vital that customers retain full choice over the provision of their energy information with the ability to select a service which matches their requirements. To that end, UPL will be responding to the consultation to appeal for open customer choice in metering and data services for UK businesses and for as minimal a layer of monopoly in communications as possible.

  
  For businesses with small or medium sites currently considering smart metering, the consultation makes provision for pursuing such a strategy now – as may be required to support schemes such as the Carbon Reduction Commitment. The new market arrangements will not start until 2013, with a seven-year programme following on.