Ahead of his speech at the Liberal Democrat Party Conference, Which? has written to Energy Secretary, Ed Davey, calling on the Government to cut the cost of the smart meter roll-out.
Which? is calling on the Government to take action now to reduce the cost of installing smart meters in homes across the nation. With the official roll out starting at the end of 2015, a £10.9bn programme will see a smart meter installed in every UK home by 2020. Smart meters will help give people more control over their energy use but with consumers footing the bill it is imperative that costs are reduced wherever possible.
As part of our Fix the Big Six campaign, Which? is calling on the Government to act now to control costs in the long run by implementing three measures to reduce the cost of the smart meter roll-out. We want the Government to explore:
· Centralised procurement of meters – using economies of scale to drive down costs. One of the biggest smart meter programme costs is the meters themselves, but currently each supplier has its own purchasing plan.
· A co-ordinated and more efficient approach to the purchase and installation of communications infrastructure in multi-occupancy buildings such as flats or high-rise buildings to reduce disruption and cost;
· Early guidance on ‘all reasonable steps’ that suppliers need to take to install smart meters in all homes by 2020, avoiding disproportionate cost and improving the efficiency and costing of rollout plans.
Which? executive director, Richard Lloyd, said:
“Without immediate action the cost of the smart meter rollout is in danger of spiralling out of control, while consumers foot the bill. The energy market is undergoing a full scale investigation, so the Government cannot expect competition alone will keep costs low.
“Major reforms are needed to Fix the Big Six and restore trust in this broken market. At a time when energy bills continue to squeeze household budgets, the Government must urgently explore ways to ensure consumers get value for money from the smart meter rollout.”
Notes to Editors
1. As part of our Fix the Big Six campaign we are calling for control of costs on consumer bills arising from Government-mandated programmes.
2. Centralised procurement or centralised meter assurance – one of the biggest smart meter programme costs is purchasing the meters. Procurement is currently planned to be done by each supplier separately. We believe the Government should urgently assess the benefits of centralised procurement e.g. a central body to aggregate demand and enable suppliers to purchase smart meters on a more cost-effective, collective basis. An alternative approach is to ensure participation of all suppliers in a central assurance regime to guarantee meter interchangeability.
3. Co-ordination of installation in multi-occupancy buildings – flats and high-rises present problems because meters need to be installed in communal areas such as basements and range-extending Home Area Network (HAN) technology will be needed to enable meters to communicate with individual dwellings. Without central co-ordination, there could be installation visits from multiple suppliers or incompatible equipment installed meaning an unnecessary duplication of equipment, effort and cost. We want the Government urgently to commit to and set out a framework to centrally plan, procure and commission installation.
4. Early guidance on ‘all reasonable steps’ – at present suppliers are required to take ‘all reasonable steps’ to install smart meters in all homes by 2020. But there is no definition of, or guidance on, ‘all reasonable steps’: this is causing uncertainty among some suppliers and could lead to inconsistent approaches. We are calling on the Government to conduct cost-benefit analysis of installing in ‘difficult’ properties and work with Ofgem to define guidance for suppliers so they are not required to install in some homes at disproportionate cost. Guidance would enable suppliers to plan efficiently and help ensure certainty around future costs.
5. The letter sent to Energy Secretary, Ed Davey can be found here.