Energy and Climate Change Committee Enquiry Progress on Smart Meter Roll Out

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1 Energy and Climate Change Committee Enquiry Progress on Smart Meter Roll Out 1. The roll out of smart meters is vitally important to our energy future; therefore we welcome the opportunity to submit evidence to your inquiry. 2. As you are aware Energy Networks Association (ENA) is the industry body representing the UK s Electricity and Gas transmission and distribution networks operators. The following comments are provided by ENA on behalf of its member companies in response to the invitation published on 22 September A number of ENA member companies may have responded individually to your request. The comments in this document are submitted in support of the individual submissions that may have been provided by our member companies. Written Evidence Submitted by Energy Networks Association 4. Networks are preparing to support smart metering roll out to ensure that customers receive a positive experience of installation and over subsequent years if problems arise with individual meters. We will do this by continuing to work closely with DECC, Ofgem, DCC, suppliers, other stakeholders and with each other over throughout the rollout programme. 5. Although Gas and Electricity Network Operators don t have overall responsibility for delivering the smart meter roll out they have an important role to play both during and after the roll out. To put the Network Operator involvement into context we provide some background information in a) and b) below: a. During the roll out - Smart meter installers will need to interact with Network Operator equipment in order to undertake the safe installation of each Gas or Electricity meter. It is likely that in some instances this interaction with Network Operator s equipment will identify issues that need to be attended to by the Network Operator before the meter installation can continue. Network Operators are planning to be ready to respond to an increasing number of these interventions as the roll out progresses in order to ensure that any asset related issues do not unavoidably hold up the progress of the roll out. During the roll out Electricity Network Operators will also start to use the smart metering system to deliver customer benefits. Electricity Network Operators are already planning to develop their IT systems to enable them to use smart metering derived information to enhance their existing processes. These plans will be developed and finalised as information from DCC becomes available in accordance with the Industry Plan. b. After the roll out - Network Operators will be users of the smart metering system and will have access to information derived from smart meters. Although the information available from Gas networks is limited it is expected that this information may assist with network planning and help our Gas Network Operator

2 members make better informed reinforcement decisions in specific location. For Electricity Network Operators the information provided by smart meters will play an important part in the transition to a low carbon future. Our Electricity Network Operator members are proposing to use the information from the smart metering system to help them prepare to manage changes to power flows on electricity networks arising from changes in customer energy usage associated with an increased use of low carbon technologies (e.g. heat pumps, electric vehicles and PV s) and to design their networks more effectively and efficiently. Smart meters also have the potential to enable Network Operators to improve the service they provide to customers during certain types of network faults. 6. We provide the following responses to your questions from a Network Operator perspective. What progress has been made on smart meter roll-out since our last report on this subject? 7. Network Operators are not responsible for the roll out but they are required to support the roll out of smart meters by ensuring that they attend site to resolve any service termination issues which are identified during the meter installation activity. Since July 2013 whilst there has been a marginal increase in the volume of such activity, this has been adequately managed with existing resources. Our Electricity Network Operator members have supported the development of service levels associated with this activity, however visibility of future Supplier roll out plans will be critical to ensure both our Gas and Electricity Distribution Network Operator members are able to continue to deliver the present high level of service. 8. Our members are now developing their IT systems to provide the DCC with the metering registration data it requires to operate and they have also started to procure the systems that interface directly with the DCC smart metering system. To what extent has the Government addressed the concerns we raised about smart-meter roll-out, and the concerns raised by other interested parties since we published our last report? 9. From a Network Operators perspective we were pleased with the Committee s recommendation in the last report for DECC to draw up a co-operation protocol to require Suppliers to work together for a more efficient roll out. To date we have not seen any activity from DECC to achieve closer working by Suppliers. We are aware that the Association of Managing Agents is very keen for Suppliers to co-ordinate their smart meter installations where their customers are located in multi-occupancy buildings. They are seeking a co-ordinated approach to smart meter installations so that all Suppliers install their equipment during the same period and not in an ad hoc fashion over the duration of the programme, each time causing disruption. Network Operators are supportive of Suppliers being encouraged to work together in multi-occupancy buildings as this would help network operators resolve any network related issues that are

3 identified during the course of the smart meter installation in a co-ordinated manner minimising any disruption to customers. What problems have emerged during the foundation stage and how are they been addressed? 10. The meter replacement activity during the foundation stage has given rise to some additional intervention work for Network Operators. We are reliant on smart meter installers reporting network related issues to us promptly and correctly. Incorrect reporting ties up Network Operator resources, increasing costs which are ultimately bourn by customers. In order to minimise incorrect reporting ENA has been working with the Association of Meter Operators to improve the guidance offered to their members. Network Operators are also looking to put in place arrangements for regular collaboration with Suppliers and Meter Operators during the course of the smart meter roll-out so that parties can share their experiences and improve the accuracy of network issue reporting. 11. Network Operators are concerned that should the foundation period be extended there will be a higher proportion of SMETS1 meters installed than originally anticipated. A number of potential customer benefits delivered though Electricity Networks will not be available where SMETS1 meters are installed. Electricity Network Operators are keen to maximise the benefits that can be delivered to customers from the use of the smart metering system and they are actively being encouraged by Ofgem to do so. Electricity Network Operators would therefore prefer to see the number of SMETS1 meters installed kept to a minimum (e.g. no more than 5%). a. Currently, gas distribution networks have responded to no gas calls from customers with smart meters, where upon attendance, the root cause has been due to the meter valve closure. We believe full testing of the interoperability of the meter systems is critical to avoid such instances of no gas to customers, together with appropriate education materials to explain to existing credit customers the potential difference in experience from smart meters with valves to a traditional dumb meter with no meter valve. This educational material should also detail who to contact for what type of issue to ensure the most timely, effective and cost efficient response for customers. What are the remaining challenges (technical, communication or other) associated with launching the mass roll-out of smart meters in 2015, and completing it by 2020? 12. The smart meter programme is very complex programme involving multiple parties which has a relatively short implementation time. From an ENA perspective the technical challenges that still need to be overcome include finalising the detailed specification for the smart meters (GBCS) and the DCC services available to Users (DUGIS) as well as developing the necessary Network Operators systems and procedures to access the DCC services and deliver the benefits to customers. Appreciation of full smart meter benefits for customers is essential, including reduced long term network reinforcement

4 costs and an improved service during outages. Extensive early deployment creating two tiers of smart meter users risks frustrating and complicating this communication challenge with customers. ENA and its members are fully supportive of the programme s objectives and have been playing their part in the relevant SMIP transitional governance groups. Delivery of Customer Benefits from Network Operator Use of the Smart Metering System 13. Electricity Network Operators have an obligation and a desire to deliver customer benefits from the use of the smart metering system. ENA and its members are doing all we can to engage with the relevant SMIP stakeholders in order to ensure that the planned Network Operator functionality of the smart metering system is delivered as expected. The customer benefits that can be realised from Electricity Network Operator use of the smart metering system can only be fully realised if the functionality works as expected and is not eroded by technical difficulties, changes in scope, increases in cost, programme delays, poor WAN connectivity etc. 14. Our Gas Distribution Network Operators have been considering the use of the smart metering system to improve both the customer experience and how information could support their network operations. Our Gas Distribution Network members are working with the industry to determining the potential costs and benefits from being able to access this information. Network Operator Capability to Support the Rollout 15. In order for Network Operators to support the Suppliers in their installation activity Network Operators need to have adequate forward visibility of Supplier roll out plans so that they can plan their resources to manage the expected increase in interventions work accordingly. There are some significant factors that are preventing Suppliers from producing reliable and sufficiently detailed rollout plans. These factors include the completion of the SMETS2 specification and greater certainty of when SMETS2 meters will be available in sufficient volumes. How can these challenges be overcome? 16. ENA and its members suggest that: a. DECC continue their efforts to finalise and drive through the completion of the SMETS2 & GBCS specification and that DCC continue to finalise the DUGIS. Completion of these specification in conjunction with all stakeholders should minimise the technical risk that smart meter functionality is not delivered as expected; b. although SMETS2 and DUGIS are not completed suppliers should engage manufacturers in the early preparations for mass production as this will reduce the lead-in time once the specification is completed and minimise the number of SMETS1 meters installed;

5 c. DECC continue to encourage suppliers to share their roll out plans as soon as possible; so that network operators can plan their resources to carry out remedial work efficiently; and d. DECC and Ofgem oversee the programme with much closer oversight of DCC operations to ensure cost efficiencies and minimisation of increases to DCC charges in the future. What are the best approaches to monitoring the mass roll-out of smart meters? 17. We are aware that Ofgem are developing Supplier reporting obligations and have completed their consultation on this. We are also aware that DECC are looking to monitor the roll out with further separate reporting obligations for Suppliers. ENA suggests that government departments co-ordinate their requests for information so that Suppliers only have to provide one set of reporting items that can be used by DECC and Ofgem. Furthermore, ENA consider that Supplier forecast information should be shared with those stakeholders that rely on knowing Supplier plans in order to build their strategy to support the programme; e.g. Network Operators, the DCC and Smart Energy GB. What contribution can smart meters make to expanding the use of Demand Side Response as a means of addressing possible capacity shortages? 18. Smart meters themselves have the functionality to facilitate expanding the use of Demand Side Response (DSR), however there is a need to give careful consideration to the governance and commercial arrangements that will need to be developed in conjunction with all stakeholders including customers. At the moment access to the smart meter functionality that would facilitate DSR is limited to suppliers and they are likely to take the initial lead in developing commercial arrangements with their customers. There is a need to recognise that some DSR actions may have an adverse impact on gas and electricity networks and there is a need to ensure that can the technical and commercial arrangements co-ordinate so that they can co-exist without conflict. It is worth noting that generally the DSR actions that may have an impact on gas and electricity networks are those that would encourage consumers to increase their energy demand at particular time. In the scenario of a generation capacity shortage, it would be likely that DSR actions would encourage the reduction in energy consumption. However the same DSR action may encourage consumers to consume more energy later when the generation capacity shortage has ended, but this may give rise to a network capacity shortage. By way of an example DSR could be used to encourage EV charging to take place after the evening peak to avoid creating a generation capacity issue, but if all EVs where configured to charge in early in the morning this could create network capacity issues particularly in those areas that already have a high penetration of electric space and water heating. It is important that all the implication of DSR for all stakeholders are considered as such arrangement are developed.

6 To realise the full potential benefits of smart meters, is it necessary to introduce time of use pricing for Electricity? 19. Time of use pricing for energy can be used to change customer behaviour and therefore has potential to help manage generation capacity shortages or network capacity shortages. It also has potential to help customers manage their energy bills. Smart metering simply facilitates the delivery of such benefits.