Smart metering: DECC consultations of August

In August, the Department of Energy and Climate Change (DECC) published further consultations on how it will approach roll-out of the smart metering programme. These consultations cover the following areas:

3 November 2011

In August, the Department of Energy and Climate Change (DECC) published further consultations on how it will approach roll-out of the smart metering programme. These consultations cover the following areas:

  • data access and privacy
  • the proposed draft licence conditions and technical specification of smart metering equipment
  • the proposed licence conditions for a Code of Practice on installation

The consultations highlight that there is a substantial body of work ahead for those involved with the implementation of smart metering. Here we summarise some of the key proposals in this latest round of consultations. 
Completion of the roll out by 2019

Suppliers must complete the roll out of smart meters by the specified date, which will fall in 2019. The Government does not propose to introduce interim targets, although this decision is to be kept under review.

The duty on suppliers to provide smart meters extends to domestic and small non-domestic premises. Small non-domestic premises are those falling within profile classes three and four of the Balancing and Settlement Code.

Ofgem will be responsible for the enforcement of this deadline. Whilst the Government does not intend to introduce any further penalty or enforcement regime, Ofgem can impose substantial penalties under its existing powers, including fines of up to 10% of a supplier's turnover. Suppliers must develop solutions to deal with scenarios where installation is technically challenging, and will only satisfy with their obligations if they have taken "all reasonable steps" to complete the roll out. Additionally, suppliers will be under a continuing duty to ensure that smart metering equipment installed continues to comply with the technical requirements in place from time to time, and to provide new or updated meters if required.
Mandatory installation of smart metering equipment from 2014

From the second quarter of 2014, all meters installed must be smart.

The consultations recognise that in new developments, installation of metering equipment is often carried out prior to the appointment of an energy supplier. The Government proposes to extend the provisions on the installation of smart meters to all relevant parties in relation to new developments, to ensure that suppliers are not required to meet the costs of replacing non-compliant equipment already installed.

Advanced meters have been installed at business premises for a number of years, and the Government proposes an exception to the installation deadline in respect of these meters. Advanced meters may be installed by a supplier where the contract has been entered into before April 2014, and the obligation to install the advanced meter is satisfied before 2019. Whilst advanced meters are not as sophisticated as smart meters, they still allow for the collection of data on a frequent basis, and so the Government is not unduly concerned about the continuing use of advanced meters beyond the 2019 deadline. 
Code of practice on the installation of smart meters

The Government wish to introduce a code of practice relating to the installation of smart meters, which will ensure a minimum standard of customer care during the roll out of the new equipment. Suppliers must develop a suitable code and submit this to Ofgem for approval at least one month before the code is due to come into force. A draft code has been published by the Energy Retail Association in parallel with the Government consultations. Suppliers must put in place arrangements to monitor their performance against the code. The Government do not propose to introduce a generic monitoring and auditing regime, to prevent a disproportionate burden being placed on smaller suppliers.

The Government has produced specific requirements for a domestic installation code of practice:

  • suppliers should recover the costs of the installation through customers' energy bills over a period of time. There should be no up front or one-off charge, although suppliers can charge customers for a meter that exceeds the minimum technical requirements.
  • suppliers must provide customers with information and advice relating to the installation of their smart meter.
  • no restrictions will be placed on the provision of written marketing material to customers, but suppliers must obtain written consent from customers before engaging in face-to-face marketing and sales. Any such activity must be carried out in a fair, transparent, appropriate and professional manner.
  • there is a high level requirement to ensure that customers are not unduly inconvenienced by the installation process.

Under the proposed non-domestic installation code of practice, suppliers should take into account the type of non-domestic premises. For example, a small branch of a large business chain will have different requirements to a free standing micro-business. Consequently, the Government propose that the code of practice for non-domestic premises should only apply to businesses with no more than 10 employees, an annual turnover below €2 million and an annual consumption of less than 50MWh of electricity or 200MWh gas. As with the domestic installation code of practice, suppliers must supply information and advice to the customer. Additionally, installations must take into account customers' business processes and avoid undue interference with them. 
Technical specifications

The August consultations provide details of the technical specifications required for the smart metering equipment. A key requirement of these specifications is interoperability, which will allow consumers to switch easily between suppliers, and avoid the costs of replacing equipment before the end of its economic life. The Government plans to introduce a dispute resolution procedure to ensure that a supplier breaching their interoperability obligation will be accountable for the costs of replacing the equipment.

A key aspect of smart metering equipment is the IHD (In-Home Display), which allows the consumer to view details of their energy consumption. Suppliers must offer domestic customers an IHD at the time of installation. If the customer initially declines and then changes their mind within 12 months of the installation the supplier must provide them with an IHD. If a customer notifies their supplier of a fault with an IHD, the supplier must take all reasonable steps to repair or replace it.

Smart metering equipment must be able to store 13 months of half-hourly consumption data, which the customer can use to monitor their energy usage, and select the most appropriate tariff. 
Data protection

Given that smart meters can store large volumes of information regarding a customer's consumption habits the Government is keen to address issues of privacy and data access. The August consultation on data protection is the least detailed of the three published, and requests further research and evidence from suppliers and network operators in order to formulate policy in this area.

The consultation distinguished between data which suppliers are entitled to receive, and additional information which consumers may wish to provide to suppliers in return for certain benefits and advice. In particular, the Government wish to receive more evidence on whether granular data (i.e. weekly, daily, half hourly) should be provided to suppliers as default. The current position is that categories of data required to be provided to suppliers should be construed narrowly, and that procedures such as aggregation and anonymisation should be used to protect privacy. Unlicensed third parties would need to obtain individual customers' consent in order to access smart metering data.