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Welcome to the second edition of Smart Comment, a newsletter produced by the Energy Retail Association (ERA) providing update information on the campaign for the roll out of smart meters to every home in Britain. This edition looks at the continuing campaign to gain a mandate for the roll-out of smart meters to every home in Britain as the Energy Bill passes through the House of Lords. It also looks at smart metering outside of Westminster, showing that around the world smart metering is already being used successfully, and at home there is a real appetite for a roll-out. |
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| In this issue: |
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| Energy Bill update |
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| The
Energy Bill will not now have its Report Stage and Third Reading in the
House of Lords until after the summer recess. Peers of all parties have
been calling on the government to set a timeline for the completion of
the remaining work being undertaken by BERR surrounding the smart meter
Impact Assessment (IA). The Government has said that, later this year, it expects to make an announcement on domestic smart metering, following publication of preliminary findings from Ofgem's smart meter trials. We strongly hope that the Government will give the industry the mandate it seeks to begin a universal roll-out of domestic smart meters as soon as possible. It is vital that the Government gives the industry a clear indication of its plans for domestic smart meters, as continued uncertainty over timing will push back the smart meter roll-out further. Without a clear timetable industry cannot commit to building the necessary investment into their business plans going forward, which will lead to delays in implementation. A project team led by the ERA has developed an operational framework for smart meters, and we firmly believe that this should be adopted as the standard functional specification. However, it is important to remember that energy suppliers are bound by the Enterprise Act and, we are therefore unable to make the decision on the technical specifications for smart meters without contravening competition law. Once the mandate is issued, a decision on this matter can be taken by the regulator, and the industry can progress the roll-out. As the Bill approaches Report stage, we are keen that it should be amended to deal with two important issues: stranded assets and flexibility over the roll-out model, as we remain very concerned that the Bill as it is currently drafted is not sufficiently robust to deal with these issues. Under an accelerated roll-out, smart meters will replace all 45 million existing gas and electricity meters, many of which will not have reached the end of their life. These unused, stranded assets will be a cost to suppliers because the investment will not be fully recouped. It is vital that that the enabling clauses in the Bill give the Secretary of State the power to issue a mandate which is able to compensate for the potential stranding costs. The industry (in particular network operators) would face significant stranding costs if the decision is taken to mandate an accelerated roll-out of domestic smart meters. Although it was thought originally that existing provisions of gas and electricity legislation would deal adequately with stranding, a project of this scale is unprecedented, and closer examination has revealed an anomaly in the gas legislation. We firmly believe that when the Energy Bill enters Report stage in the autumn that it must be amended to deal with this very important issue. The industry remains of the view that a regional franchise model (RFM) will deliver the cost-effective and efficient roll-out. This would mean that smart meters could be rolled out street by street through one contractor within each area. If we do not take this approach, each company will have to install meters for just their own customers, which could lead to far greater disruption and a more expensive roll-out. It is apparent that the industry must do more work on the case for RFM, but in the meantime, it is concerned that the smart meter clauses, as drafted, contain a bias against RFM. We firmly believe that the Bill must be amended so that no roll-out model is precluded before the Government makes its decision on domestic smart metering, and that the full range of delivery models can be considered. Again, we will press for the clauses to be amended in the Autumn. |
Lord Teverson, Liberal Democrat Spokesperson for Environment, Food and Rural Affairs, and Dr Alan Whitehead MP, Chair of the Parliamentary Renewable and Sustainable Energy Group, at a smart meter exhibition in March 2008 |
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| Smart metering in the devolved nations |
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| The View From Scotland | 
Mick Bates AM, Welsh Liberal Democrat spokesperson on Sustainability and Chair of Assembly Sustainability Committee |
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| Common
ground has been hard to find between the SNP Government and the Labour
opposition, and few issues have been able to unite the parties. The
need for smart metering has been one issue that has really gained cross
party support in Scotland. This has been part of the ERA's campaign
urging the Westminster Parliament to grant them a mandate allowing the
roll-out of smart meters throughout Britain. Built on a cross party contact programme involving face-to-face meetings with Ministers, Opposition Spokespersons, Committee Convenors and members, Cross Party Groups, individual MSPs and Government officials, the smart meter message has received overwhelming support. This support has manifested itself in many forms; press releases, Parliamentary questions and motions, debates (one of which praised the ERA for its work in promoting smart meters) and letters to Westminster Ministers and Government departments in support of the granting of a mandate have been plentiful. |
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| The View from Wales | ||
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| When
the National Assembly for Wales was established in 1999 the founding
legislation included a statutory requirement to ensure sustainability
across all its policy areas. The original Sustainable Development
Scheme is now being revised and updated alongside a Microgeneration
Strategy for Wales and soon a new Energy Efficiency and Savings Plan.
Within this context, smart meters should have had a welcome in the
devolved body - and that has proved to be the case. All four Welsh
political parties have met with the Chief Executive and others from the
ERA and voiced their support for the ERA campaign for smart meters. The Welsh Liberal Democrats have led a full debate in the Assembly Plenary session and have also operated their Assembly office on smart meters for a day. During the winter of 2007/08 the increase in fuel prices has added extra impetus to addressing the modernisation of metering technology. Plaid Cymru's Leanne Wood has taken this up stating "smart meters overcome some of the pricing inequalities that currently exist between customers in Wales." As well as cross party support, smart meters have been demanded by many of the leading consumer groups in Wales. Mick Bates AM, Chair of the Assembly Sustainability Committee chaired a seminar on smart meters with presentations by ERA and attendance from a wide range of organisations and parties including supporters in Citizens Advice Bureaux in Wales, Energywatch Wales, the Wales Consumer Council and the World Wildlife Trust. As the Assembly rises for the recess of summer 2008 there is widespread support for smart meters across the political community as the UK government decisions in autumn 2008 are awaited, so that Wales can start the process of introducing smart meters into the one million Welsh homes. |
Nick Bourne AM Leader Welsh Conservative Party Assembly Group |
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| A smarter world |
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| While
the debate in the UK for a smart meter mandate continues, many other
countries are already enjoying many of the benefits of smarter
metering. There are 35 million smart meters in continental Europe, with
that number set to rise to 60 million by 2012 as the Scandinavian
countries join nations like Italy and Holland in revolutionising their
metering systems. The devices that have been used in countries ranging from Sweden to the US have shown that householders who use smart meters can reduce their energy bills by between five and 10 per cent. Based on savings of five per cent the Energy Saving Trust estimates that if everyone in the UK switched to smart meters British householders could save £1.2bn a year and the equivalent of 7.4 million tonnes of CO2 emissions. Smart meter roll-outs that have taken place all over the world have one major issue in common, they all had in place political support in the form of a mandate. All but one of the major implementations of smart metering has seen a decision made by politicians, government departments or regulatory authorities. In all these cases, as in the UK, a mandate was necessary because the market structure required it. Without a mandate in the UK, market structure and competition law would almost certainly delay the project indefinitely and increase its cost to the point that the extra expense would be passed on to the consumer. Although the UK is behind many other countries in the race to achieve smart metering, the opportunity presented by the Energy Bill would catapult the UK into the position of a technological world leader. The smart meters currently in use, or being implemented the world over, are overwhelmingly only able to monitor electricity use. The energy industry in the UK is proposing to go one step further and include gas smart metering in their ambitious ten year roll-out programme. By including gas as part of smart metering project, all UK customers will be able to have full control of their energy use. This roll-out has the potential to make Britain a world leader in the way it empowers its energy consumers to use less energy. |
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| Poll shows the public are ready for smart meters |
Some key statistics: | |
| Research
conducted by YouGov shows that the vast majority of people in Britain
want to put paid to estimated energy billing. The YouGov survey
commissioned by the ERA shows that young people are the least happy
with outdated billing and metering technology and are the most
interested in switching to the accurate bills that new smart metering
technology will make possible. The antiquated metering technology currently installed in our homes means that energy suppliers have to rely on estimated billing, which is widely unpopular. In order to get an accurate bill, suppliers have to send a meter reader round to every house or rely on the customer to phone in their latest meter reading. Of more than 1,950 people surveyed in Great Britain, 44 per cent are unsatisfied with this system of billing. It is among the next generation of young adults that dissatisfaction is the strongest with almost half (48 per cent) of 25 to 34 year olds being unsatisfied with the current system of billing. The vast majority of people recognise the appeal of smart meters with over four fifths (82 per cent) of those people questioned being in favour of the new billing technology. Yet it is young adults who appreciate this benefit the most with 84 per cent of 25 to 34 year olds wanting to see an end of estimated bills. Smart meters will rid consumers of the uncertainty of estimated bills and reward them for conserving energy by displaying information in real time on the gas and electricity used, the cost of this energy and their carbon impact on the environment. |
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| Smart meters in the media | ||
| In
England, Scotland and Wales the media are developing a close interest
in how smart meters can transform the lives of the people in this
country. Stories, like this one from BBC TV Scotland show how smart meters will be able to help people control their bills, by giving them real-time and accurate information on their energy use. Duncan Sedgwick, Chief Executive of the Energy Retail Association appeared on BBC Radio Wales to discuss how smart meters can help Welsh consumers take greater control over their energy supply. |
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| Smart meter supporters |
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| "I
am very keen on smart metering, which is referred to in this [Energy]
Bill and which will be delivered, though on a slightly slower timetable
than I think is possible and necessary." - Lord Whitty (Lab) - Former Minister for Sustainable Energy "Smart meters are a vital tool in helping people understand how much energy they are using. Individuals can then improve their fuel efficiency, reduce their carbon emissions and even consider meeting some of their own energy needs through micro-generation" - Nicol Stephen MSP (Lib Dem) - Former Leader of the Scottish Liberal Democrats "Smart meters present a range of opportunities for energy efficiency and customer benefit. They will enable people to reduce their energy bills, will promote microgeneration and will be the key to encouraging people to change their pattern of energy use and reduce their carbon footprint." - Jane Davidson AM (Lab) - Welsh Assembly Goverment Sustainability Minister "The Committee therefore recommends that the Welsh Assembly Government urges the UK government to review its recent amendments on the UK Energy Bill to ensure that a universal roll-out of smart meters is delivered without delay. " - Welsh Assembly Sustainability Committee Report |
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| What is the Energy Retail Association? The Energy Retail Association (ERA), formed in 2003, represents electricity and gas suppliers in the domestic market in Britain. The ERA works closely with Government, charities and other organisations in England, Scotland and Wales to ensure a coordinated approach to dealing with the key issues affecting our industry and British consumers. All the main energy suppliers operating in the residential market in Britain are members of the association - British Gas, EDF Energy, npower, E.on, Scottish Power, and Scottish and Southern Energy. Contact For more details on smart meters, or to arrange a briefing meeting, please contact: Madeleine Hallward, Public Affairs Manager at the Energy Retail Association. T: 020 7747 5435; E: madeleine.hallward@energy-retail.org.uk |
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| What are smart meters? http://www.energy-retail.org.uk/smartmeters.html What are electricity display devices? http://www.energy-retail.org.uk/ElectricityDisplayDevices.html Smart meter animation http://www.energy-retail.org.uk/SmartMetersAnimation.html |
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