Smart Meters Bill

Report stage (Hansard): House of Lords
Tuesday 15th May 2018 Lords Chamber

Report

15:33

Amendment 1

Moved by

[Lord Grantchester]

1: After Clause 1, insert the following new Clause—
“National Plan for Smart Metering
(1) Within one month of the passing of this Act, the Secretary of State must publish a National Plan for Smart Metering.(2) The National Plan must show clearly how all the objectives of the smart metering implementation programme will be delivered, and must specify an appropriate termination date.(3) When preparing the National Plan, the Secretary of State must consult—(a) OFGEM;(b) District Network Operators (DNOs);(c) The Data Communications Company;(d) energy suppliers;(e) consumer interests bodies;(f) Smart Energy GB;(g) the National Audit Office; and(h) such other relevant bodies as may seem appropriate.(4) The National Plan must respond to key findings and recommendations made by annual NAO reports on the smart metering programme and outline how the Secretary of State plans to respond to recommendations made by the NAO including but not limited to— (a) measures to reduce costs of the smart metering implementation programme;(b) measures to maximise the likelihood that smart meters will achieve their intended long-term benefits;(c) measures for improving the take-up of smart meters.(5) The National Plan for Smart Metering must set out the progress made to carry out obligations undertaken by the licensed energy suppliers and their associated organisations to deliver all the objectives of the smart metering programme and must include, but is not limited to—(a) a detailed specification for the functionality and performance required in each meter, so as to ensure reliable service life, ease of installation and maintenance, appropriate inter-operability, future upgrading capacity, and removal and safe disposal of obsolescent equipment;(b) an assessment of the future developments thought feasible and desirable for the smart meter programme, including monitoring of customer activity so as to deliver least cost tariff benefits combined with the maximum ability to engage with future appliance applications, inter-operability, compatibility with smart phones and tablets, and the encouragement of self-generated capacity in the home;(c) an assessment of the potential of smart meters to be the gateway to additional domestic energy efficiency measures;(d) an analysis of technical developments to provide alternative solutions for Home Area Network (HAN) connections where premises are not able to access the HAN using existing connection arrangements;(e) an assessment of the most effective way of dealing with the inclusion in the programme of hard-to-reach premises and multiple-occupancy dwellings;(f) an assessment of alternative delivery arrangements as between energy suppliers and DNOs which might increase the effectiveness of roll out solutions over time.(6) The National Plan for Smart Metering must set out detailed targets for each quarter of each year for each energy supplier in pursuit of the objective of complete roll out of smart meters by an agreed termination date.(7) If by 31 December 2018 fewer than 500,000 SMETS 2 are in operation in homes and small businesses across the United Kingdom, the planned roll-out of smart meters must be halted until such time as the Secretary of State has considered the effectiveness and efficiency of the plan, its realistic completion date and the costs required to complete the plan, and has made a statement to Parliament together with a revised programme for the completion of the roll out.(8) The Secretary of State must publish the National Plan for Smart Metering by 31 December 2018.(9) After due consideration and consultation, the Secretary of State must in regulations made by statutory instrument specify the final version of the National Plan for Smart Metering.(10) A statutory instrument containing regulations under this section may not be made unless a draft of that instrument has been laid before, and approved by a resolution of, each House of Parliament.(11) The Secretary of State must report annually on the extent to which the National Plan for Smart Metering is being delivered, in line with the termination date.”

[Lord Grantchester (Lab)]

My Lords, the Bill is a largely technical Bill, introducing three elements, namely: extending the Government’s powers; introducing a special administration regime for the national smart meter communication and data service provider, the DCC; and providing powers for Ofgem to deliver half-hourly settlement using smart metering data. By and large, these elements have been critically examined in the other place, as well as in your Lordships’ House. We do not particularly take issue with these measures but we recognise that Ofgem’s monitoring and powers over pricing should enable adjustments to make the possibility of a special administration regime extremely unlikely. It is fair to say that we remain concerned that consumers could ultimately pay the price either way.

However, on the analysis of the present circumstances in the rollout of smart metering, the programme is to a large extent in disarray, with enormous confusion and uncertainty in the marketplace. This inevitably leads to reticence and a lack of confidence in the mind of the consumer. We continue to highlight this in our Amendment 1 today. The technical nature of the Bill belies its national importance; it deals with critical national infrastructure, whose modernisation is crucial. We agree with the Minister that the large-scale rollout of smart meters across the UK by 2020 is a substantial technical, logistical and organisational challenge. Everyone is clear that meeting that challenge depends on collective and co-ordinated delivery. In Committee and in subsequent discussions, the Minister has been emphatic that the programme should be led by government. We have therefore altered our amendment and recognised that Ofgem has a different role to play.

The amendment puts the challenge to the Government to provide the leadership. We still believe that a national plan is required. The Government may challenge our diagnosis and claim that they have a high-level plan. However, the perception in the marketplace is very different. The mixed message—on the one hand that the consumer needs only to be offered a smart meter while, on the other, that smart meters need to be installed to a rollout target programme—has not been helpful. We need technical difficulties to be resolved, solutions to be promoted and accountability to be put into the hands of government to make this infrastructure upgrade the success that it needs to be.

The main elements of the amendment remain from our Committee discussions. The Government must galvanise the situation and be seen to be guiding the process: taking ownership of the issues, building ambition into the programme to deliver benefits and putting the consumer in control of their energy use, so that they become more informed and efficient and save themselves money. We have also put a check into the process by the addition of a subsection in our proposed new clause such that should fewer than 500,000 SMETS 2 meters be installed by the end of the year, a review and reassessment must take place. The challenge of careful management is herein included.

Energy efficiency is a crucial element of enabling the UK to meet its energy demands. The achievement of this must be put into the hands of consumers, through the transformation that smart meters will bring to their lives. A smarter, sensor-enabled network would be able to assess live power demand and current usage, transferring power from place to place as needed, reallocating or postponing charging times automatically and potentially allowing the UK to identify the ultimate source of the power through a modern, decarbonised energy mix.

Electrification is still essential to meeting long-term emission targets. It is clear that upgrades to the power network through renewables, storage and additional investment in household-to-grid infrastructure are all crucial elements. This amendment will bring visibility to the process and place responsibility in the hands of the Government. I beg to move.

[Baroness Featherstone (LD)]

My Lords, I support this proposed new clause on the national plan for smart metering, to which I have added my name. As I said in Committee, I came to the smart meter table relatively late, far more recently than most of your Lordships, who seem to have been debating it in one form or another for some years. I was shocked at the seemingly piecemeal way it has evolved, as if it were not one of the major infrastructure projects of this century, which it is. As a consequence of this approach, I have seen a lack of vision, scale and form, which is why this project has been so poorly executed. I was astounded to find that the suppliers were to be the agents of change; I did not understand why it was not the distributors.

However, we are where we are, as they say, so this new clause is proposed to give the opportunity for the rest of the scheme to be conducted in a far more responsible and farsighted way. It would allow the Government and all the players to ensure the best way forward and to deliver certainty and security for consumers, who have been expected to change—we know how difficult change is—but then have heard conflicting and different advice at different times from different people.

The proposed new clause would make sure that all parties are involved; it puts in metrics, targets and incentives to maximise take-up. It makes tracking progress on those tasked with delivering the objectives of smart meters and details what that will require. It would make sure that everything is properly reported, measured and documented. At last, we might actually have a critical path and a critical path analysis from which to work.

The proposed new clause would put this massive civil infrastructure project on a certain basis; it provides certainty for the consumer and a more sure and stable critical path for providers and all those participating in the rollout and beyond. As the noble Lord, Lord Grantchester, said, that is central to all our commitments on energy and energy efficiency in the future.

I very much hope that the Government will take a deep breath and graciously accept that they need help, and that the national plan would be a sensible and professional way forward.

[Lord Teverson (LD)]

My Lords, I support Amendment 1 in the names of the noble Lord, Lord Grantchester, and my noble friend Lady Featherstone, and I should also like to speak to my Amendment 2.

It is important to remind the House that this is an £11 billion programme; it is one of our major national infrastructure programmes, started in concept when I joined the House in 2006. It is now 2018—12 years later—and all of 300 meters have been installed, but we are not sure whether they work. There are another 10,000 which do not comply with the final regulations that we are trying to achieve—that is another potential problem for the future.

The one person I have really missed in this debate is Lord Patrick Jenkin on the Government Benches. He was one of the great analysts who brought together the real facts of a case, and we miss his presence.

One concern I had in Committee was prompted by my noble friend Lady Featherstone, who spoke very cogently of how, when the congestion scheme in London was rolled out, huge testing was carried out to make sure that the system worked when it was launched and that it was effective from day one. Yet when I asked the Government about their tests for SMETS 2 meters and their systems to ensure that the machines were ready for the massive rollout of 50 million meters by 2020—it is almost amusing to say that date—I got no response. The Minister looked at me as if to say, “What are you talking about?” It seems that there is no bar that has to be crossed—there is no test before we roll out these additional 40 million meters, supposedly over the next couple of years.

15:45

That is why I tabled my amendment: to tease out from the Government how they will meet the amazing timescale that they are giving themselves. It is ironic that, in Committee, the noble Lord, Lord Grantchester, tried to push the programme back, and we agreed with him that it was better to make it realistic, rather than impossible. We were trying to give the Government a chance to meet targets rather than miss them, as they are clearly going to.

My amendment asks the Government: what is your testing regime? Tell us the criteria so that we can be certain that, as the remainder of this £11 billion programme rolls out, we will have something that works. At the moment, the evidence says that it does not, or that it operates very imperfectly.

One of the main messages that has come over to me during the passage of the Bill is the total confidence of the Government that this programme will roll out on a timescale decided many years ago by 2020, whereas everyone else—the industry and the rest of the House—are saying that it is impossible to meet the targets.

We must move forward. Most of the clauses of the Bill are good and I would not want to get in their way, but we say to the Government, “Okay, you’ve said it’ll work. Get on with it. Good luck, but the rest of the House thinks that you haven’t got a chance”. I rest my case.

[Lord Campbell-Savours (Lab)]

My Lords, subsection (5)(b) of the new clause proposed by my noble friend states:

“an assessment of the future developments thought feasible and desirable for the smart meter programme, including monitoring of customer activity so as to deliver least cost tariff benefits combined with the maximum ability to engage with future appliance applications, inter-operability, compatibility with smart phones and tablets, and the encouragement of self-generated capacity in the home”.

I shall concentrate on the word “interoperability”, which I raised in Committee.

I was with some friends last weekend and we had a discussion about smart meters. The general view was that the problem with them is that you cannot switch suppliers. Although we are assured by Ministers that we can switch suppliers, the public believe that that is impossible without losing some information. My friends said that some suppliers refuse to have anything to do with the meters provided by others.

We need today from the Dispatch Box an undertaking that under whatever arrangements are ultimately in place, there will be absolute interoperability whereby, whoever is the supplier, the meter will work and provide information on the number of units consumed, the price per unit and the total paid to that point for the power consumed. The public need the assurance that if they get a smart meter, they can switch between suppliers quite liberally without losing any of the facilities available from an existing meter. I would like that assurance from the Dispatch Box, because I am sure that it would resolve many of the existing concerns in the country on the failure of the equipment to be interoperable.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, I thank the noble Lord, Lord Grantchester, and other noble Lords for introducing their amendments. I think that it was the noble Baroness, Lady Featherstone, who said that she came late to this debate. That is true of a great many of us—but she is right to say that it has been going on a long time, through a Labour Government, the coalition Government and now under this Government. I believe we are making progress, and I want to correct the noble Lord, Lord Teverson, who implied that only about 300 smart meters had been installed. I hope that was just a slip of the tongue and he was just referring to SMETS 2. As he is aware, some 10 million smart and advanced meters are operating across Great Britain, which are being installed at a rate approaching 500,000 a month—and I hope that figure will go up, as all those first-generation meters are expected to be enrolled within the national infrastructure from later this year.

I also thank the noble Lords, Lord Grantchester and Lord Stevenson, the noble Baroness, Lady Featherstone, and the noble Lord, Lord Teverson, for the way they have co-operated on this Bill, and the constructive approach they have taken to its scrutiny. I hope that, as a result, we will fairly quickly be able to move on to other matters and then, once the legislation is finished with, get on with the programme and meet the aims shared by the noble Lord, Lord Teverson, and I. We have heard concerns about how well the smart metering programme will deliver benefits for consumers. I hope that in due course we will be able to address the point made by the noble Lord, Lord Campbell-Savours.

I am convinced, perhaps because I am one of those eternal optimists, that the programme will be a success. The noble Baroness, Lady Featherstone, smiles at me because she thinks I am too much of an optimist—or too much of a Tigger—in these matters, but it is better to be a Tigger on this occasion than an Eeyore. I shall continue to do so, and I hope the noble Baroness will accept that progress is on the way.

I recognise the spirit in which the amendments have been proposed. While I cannot accept them, I want to set out several commitments that the Government are making, which I hope will address noble Lords’ concerns.

I turn, first, to the amendment moved by the noble Lord, Lord Grantchester, which would require the Secretary of State to establish and put into regulations a national plan for smart meters with associated implementation requirements. We believe we have the right strategy in place for ensuring that the smart metering programme is delivered cost-effectively and that consumer benefits are optimised. The Bill, in seeking an extension to the duration of the Secretary of State’s regulatory powers, recognises that the Government are accountable for delivering the benefits of smart metering and that we need to maintain close oversight of implementation.

There are various aspects of what is proposed that duplicate work that the Government already have in place, which we do not believe would ultimately work in the best interests of consumers. However, we have reflected closely on the concerns that the noble Lord, Lord Grantchester, has expressed regarding the programme, and have concluded that there is more we can do to address his concerns to help the programme succeed. We have identified three actions we are prepared to commit to as a result.

I recognise that there is an appetite for the Government to do more to ensure that we are transparent with consumers and Parliament in monitoring and tracking delivery. The programme already publishes quarterly rollout statistics, and we have committed in the other place to publish more substantial reports on programme delivery. I can further commit to publishing, by the end of 2018, as part of our annual report on progress, a forward plan of activity. This will show that the Government have a clear plan for resolving the remaining technical and operational challenges to delivering the programme. The report will be placed in the Library of the House.

I sympathise with noble Lords’ desire for further assurance that the Government have a firm hand on the tiller on all aspects of the programme. I therefore commit to publishing, by spring 2019, a report that will provide a stocktake of progress towards delivering the consumer benefits of the programme. We will take evidence from consumer representative bodies and Ofgem in preparing the progress report. The planned National Audit Office inquiry on the smart metering programme, which we currently expect to report by the end of this year, will be another important strand of evidence. It is right that Parliament should have an opportunity to scrutinise the report. The Government will therefore bring forward a ministerial Statement on the final report, allowing some sort of debate in both Houses of Parliament.

We believe that smart meters will be game-changing for how consumers engage with their energy use and the market. The amendment seeks an assessment of how well the programme is future-proofed and we recognise that there are merits in undertaking an assessment of the smart meter platform in support of this. I therefore commit to publishing a paper by the end of this year that will draw out and promote the potential of the data offered by smart meters for future innovative consumer technologies and services.

The noble Lord, Lord Campbell-Savours, raised interoperability and claimed that it is difficult to switch between suppliers. It will be important for suppliers to communicate to consumers that they can switch supplier without risk of losing services. From later this year, the enrolment of SMETS 1 meters is expected to take about a year. All SMETS 2 meters will be fully interoperable from the outset. If the noble Lord requires anything further, I am more than happy to write to him.

[Lord Campbell-Savours]

My Lords, in the event that a second supplier takes over, will the information on the meter provided by the first supplier be equally made available by the second?

[Lord Henley]

I think the noble Lord is correct, but if not I will write to him on that matter.

Amendment 2, in the name of the noble Lord, Lord Teverson, relates to SMETS 2 testing. I recognise that at the heart of the amendment is a concern that the Government are pushing ahead with transition to SMETS 2 meters without adequate checks and balances. We want to transition to SMETS 2 meters as they are better for energy consumers. As I made clear, they offer full interoperability from the outset, cost advantages and support for energy network planning and investment decisions, from which efficiencies and consumer energy cost savings can flow. This is why we will put in place a SMETS 1 end date to drive the transition to SMETS 2 meters.

I reassure the noble Lord that we are not driving this transition blindly. We have thorough and mature industry-wide monitoring and governance that allows us actively to scrutinise this transition. We closely monitor energy supplier and DCC operational capability, meter availability and reliability and supply chain maturity. That is underpinned by a robust testing regime across the end-to-end system set out in the regulatory framework via the Smart Energy Code. It requires, and provides assurance, that the DCC’s systems and services meet requirements; that suppliers and other DCC users are capable of using the services that are provided by the DCC; and that the metering equipment which suppliers enrol with the DCC is interoperable with the DCC’s systems and compliant with the relevant technical specifications. This is backed by device certification via the National Cyber Security Centre’s commercial product assurance scheme.

After undertaking their own thorough testing, leading energy suppliers are now rolling out SMETS 2 meters to real customers at low volumes, demonstrating their confidence in the preceding testing. We think it is right to continue to press other energy suppliers to make the same transition, on the back of their own testing. We are in close dialogue with the DCC and suppliers, and if it was shown not to be in the interests of energy consumers, we would provide further time for the transition.

In light of those assurances, and given the substantive commitments to further government action and information that will be made available to both Houses, I hope the concerns of the noble Lord and all other noble Lords who took part in the debate have been dealt with, and I hope the noble Lord will feel able to withdraw his amendment.

16:00

[Lord Grantchester]

My Lords, the Minister’s reply is interesting. He is understandably reluctant to accept that his department needs the force of this amendment in the Bill. It is critical that the Government meet these three vital tests for the rollout of smart meters. First, there must be a visible plan. I can accept that the Government’s commitment to an annual report, with the current status and future milestones mapped out, meets this criteria, and I thank the Minister for repeating this commitment again today.

Secondly, there must be a role for Parliament to monitor progress and take evidence that all elements in the rollout are co-ordinated into an achievable programme. It should be possible to implement this part of the plan from the Minister’s commitment to the Government’s statement in a publication early next year with a report, with evidence and a stocktake on the latest technological position on the transition from SMETS 1 to SMETS 2 meters and their capabilities, the latest cost-benefit analysis provided by the NAO, and after consultations with consumer organisations and Ofgem. Parliament will be scrutinising this on behalf of consumers. The Minister has given a commitment that the Government will come forward with a statement in the first half of 2019.

Thirdly, the ambitions inherent in a national plan must be embraced and consumers put at the heart of the programme. The Minister must make sure that his commitment to a separate paper at the end of this year goes ahead, making the data usage for smart meters available for the optimisation of consumers’ use of energy. I am encouraged by the Minister’s reply that the Government accept the thrust of the amendment as part of his department’s responsibilities. The Government will accept that they are on notice to perform to their timetable.

I welcome the Minister’s commitment to the rollout programme and the way he has responded to our challenge. It is agreed that in essence his department will conduct the national plan in all but name and that he has promised to make this available. With that secured, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Amendment 2 not moved.