In this feature innovation energy sector consumer control Smart meters are set to revamp how we control, pay for and interact with energy in our homes, according to expert Steve Playle T he average household spends around 1,300 each year on domestic energy. Its a hot topic, constantly in the news and of interest to us all. The rising cost of domestic gas and electricity has been a major issue for years, but recent price reductions have kept the personal finance editors of our national newspapers at bay. Attention has shifted to issues around pricing transparency of the big suppliers, customer service performance and efforts to reduce energy consumption through various initiatives, including the now shelved Green Deal. Crucially, discussion of the production and consumption of energy fuels climate-change talks around the world, ensuring that the energy sector craves innovation. The next big thing for energy in England, Scotland and Wales will be smart meters. You may have heard of them as they are due to be rolled out into every home over the next four years. Smart meters are the next generation of gas and electricity meters, and they offer a range of intelligent functions. They show how much energy you are using through a portable, real-time monitoring device, called an in-home display (IHD). Most of the smart meters being installed today use mobile phone signals to send readings to your supplier, and other wireless technologies to send information to the IHD. The devices also communicate directly with your energy supplier, so a knock at your door from someone wanting to read the meter will be a thing of the past. However, there are some concerns for trading standards officers to beware of. One of the biggest risks will be the temptation for energy companies to use aggressive selling tactics in the home. Its possible that some unscrupulous companies will use the installation of a new meter as an opportunity to sell additional products to people. Considering the precarious position of the UKs power generation, with many old gas, oil and coal-fired stations forced to close because of EU anti-pollution rules, energy firms could decide to introduce variable tariffs that price energy more highly at peak times, with the aid of smart meter data. This would make it far harder for customers to compare tariffs and shop around for the best deal. A further issue is the conflict of interests that may arise. The government has established quotas for the installation of smart meters, S MART METER BENEFITS According to government guidance, smart meters bring a wide range of benefits: G Real-time information on energy use, expressed in pounds and pence G An end to estimated billing you will only be billed for the energy you actually use G Easier switching smoother and faster to switch suppliers to get the best deal G Ability to manage your energy use, Smart meters are the next generation of gas and electricity meters, and they can offer a range of intelligent functions better save money and reduce emissions yet there is no compulsion on the customer to have one fitted. The risk is that energy companies will imply installation is necessary, and not provide clear information about consumer choice. Despite the potential consumer protection issues, smart meters have arrived and they are set to change how we interact with domestic energy in the UK. In-house impact In-home displays will show a households energy use in pounds and pence Potentially, every household in England, Scotland and Wales will be fitted with, or offered, smart meters and, with my interest in the energy sector from a consumer protection point of view, I feel it is important for CTSI to be fully engaged with this mass initiative. To research the area, Iwas invited to the British Gas Smart Energy Academy, in Leeds, where I met senior managers to learn more. Smart meters offer a range of benefits to users. They provide real-time information on specific energy use and more accurate billing, which allows consumers to make more effective switching decisions when shopping around for the best deals. Many householders dont know kilowatt hours from cubic feet, so smart meters will undoubtedly help everyone to understand their energy consumption better. I have heard stories of how some families get more enjoyment from switching on different electrical appliances and watching the reaction of the IHD than from watching television. The theory is that, when you see the portable monitoring device on your mantelpiece clocking up the pounds when you switch on the tumble dryer, youll be motivated to turn the dryer off although youll still need to get your washing dry, which might be challenging in winter. The cost of installation of roughly 50 million smart meters across the UK is estimated to be around 11bn. Households will not be charged to install the new meter, but the cost will be indirectly wrapped up in existing energy bills. For a typical home getting both a gas and electricity smart meter installed, alongside an IHD, the cost will be in the region of 440. Government direction The requirement for energy firms to offer smart meters with IHDs to every home in Britain comes from a directive issued by Ed Miliband during his time as Secretary of State for Energy and Climate Change in the last Labour government. The subsequent coalition and the current Conservative government have continued with the strategy. It is planned that smart meters will be rolled out as standard across England, Wales and Scotland by 2020, but there is no legal obligation onhouseholders to have them so they can refuse to have one installed. There is significant pressure on the energy companies to get them fitted, however, and E.ON was fined 7m by Ofgem at the end of 2015 for failing to meet targets for the installation of smart meters for business customers. It is anticipated that energy companies will be pulling out all the stops to meet their targets but, as installation is not compulsory for It will be entirely possible to micromanage tariffs so that energy becomes more expensive at peak times customers, a rise in aggressive selling tactics may occur. Down the line, this may require the intervention of trading standards. In an effort to educate consumers, the government has created Smart Energy GB as part of its smart-metering implementation programme. Its task is to help the public understand smart meters and how they can be used to get gas and electricity consumption under control, and to communicate how the national rollout will work. The programme will be led by cartoon characters called Gaz and Leccy, and Im sure everyone will become very familiar with them as they start to appear in adverts across all forms of media. Cartoon characters Gaz and Leccy will promote the use of smart meters Consumer protection To ensure the new smart meters installed by energy companies are in the interests of consumers, the government is setting out a series of regulations. Rules concerning data access and privacy, security and technical standards for the metering equipment will be included, alongside guidance on meeting the needs of vulnerable consumers. As part of the consumer protection provisions, there will also be a smart meter installation code of practice (SMICoP). This will cover a number of issues and includes a clear stipulation that there can be no selling of products or services during the installation visit. A governance board is overseeing the code and I will represent the CTSI at its meetings to monitor progress, and to feed in any intelligence, apprehensions and areas for improvement as the meter-installation programme progresses. It is important, therefore, for colleagues to let me know about any early concerns, so I can inform theboard and ensure consumers are adequately protected. Interestingly, a survey by price-comparison website comparethemarket found that many early adopters of smart meters have not seen any benefit from using the new technology. Its figures show that nearly half of those with smart meters said their energy bills have remained roughly the same. Nearly a fifth of users believe their bills have actually risen, while one in four reports that their bill has fallen. The less bright side There are plenty of opponents to smart meters, and websites dedicated to disrupting their rollout are already appearing. Some of the concerns relate to potentially harmful health effects of the radio waves communicating between the smart meter and the IHD. Others raise the spectre of computer hackers being able to cause chaos by terminating household gas and electricity supplies at the click of a button. The smart-meter industry rebuts these claims, insisting the systems are safe and giving assurances that they are properly protected. Inevitably, there has also been criticism of the cost of installing smart meters, and concerns that some of the technology is already out of date. With any major initiative, there will be obstacles and difficulties to overcome. One current issue concerns the ability of smart SWITCHING LIMBO meters to communicate usage data to the FOR EARLY CONVERTERS? relevant energy provider. This currently The first smart meters began to be installed relieson existing mobile phone networks and in 2012, with nationwide rollout expected to we all know that coverage across the whole take place this year. However, early adopters of the UK is far from perfect. A new national may now find themselves in switching limbo, communications network is being constructed according to comparethemarkets head of to fix this problem, but it has not yet been energy, James Padmore, as their meters struggle completed. to connect to the new smart-energy network. Most new smart-meter installations will The 1.3m smart meters currently in UK homes be straightforward and involve a simple are known as SMETS1, says Padmore. [As] the swap, but some existing meters are sited in smart meter rollout gathers pace with a range tricky, inaccessible positions, and will require of SMETS2 smart meters being installed across potential disruption in the home. UK homes these new meters will be configured differently, and will be hooked into the new One interesting issue I predict in the sector smart-energy network, due to go live at some is the potential future inability to generate stage in 2016. sufficient energy to meet growing demand. Unfortunately, for the SMETS1 early adopters, Once smart meters have been installed, it this may present some issues because their will be entirely possible for companies to meters are not currently connected to the smartmicromanage tariffs so that energy becomes energy network. If they want to change energy more expensive at peak times. providers, they may not be able to keep the At present, the vast majority of households benefits of their smart meter without upgrading have one tariff, which is charged regardless of to SMETS2 and, if they dont switch, they are the time of day of use. Once energy companies likely to miss out on the best deals. Work is perhaps under the direction of government under way to enrol the SMETS1 meters onto the new network; however, at present, there are no have the ability to smooth out energy-demand timelines for this potentially leaving at least peaks and troughs through the use of flexible 1.3 million households in switching limbo. tariffs, it will become more challenging than ever to compare prices andsuppliers. Sources: Energy is never a dull subject, and it will be Smart meter statistics data: Q2 2013 fascinating to see how the rollout of smart comparethemarket.com meters progresses over the next few years. Credits Steve Playle is trading standards manager at the City of London Corporation. Images: Valentin Agapov / microvector / Shutterstock To share this page, in the toolbar click on