Energy Bill [HL]

Debate between Lord O'Neill of Clackmannan and Lord Grantchester

Monday 31st January 2011 Grand Committee

[Lord Grantchester]

My Lords, we agree in large measure with the amendments tabled by my noble friend Lord Whitty. We thank him for introducing the subject of smart meters so that we may discuss certain aspects of their operation. On his first amendment, on marketability, we understand that a balance must be struck between information provided to the consumer and possible salesmanship at the time of installation. He is quite right to draw the attention of the Committee to the fact that only 20 per cent of consumers view their energy supplier as “most trustworthy”, which is a huge gap to bridge in getting to a degree of confidence for the consumer.

On the question of smart meters and interoperability, as we know, at present consumers cannot change supplier without changing meters. We understand that there could already be something approaching 2 million smart meters in the marketplace, although the exact number is not known. It would be very interesting if the Minister could provide us with any figures. At Second Reading, my noble friend Lady Smith raised the question of interoperability. The Minister has since written to us to say that he has had discussions and will do his utmost to make sure that, as far as possible, interoperability will be maintained. What exchanges has the Minister had with the energy companies in this regard? I draw to his attention that this is a vital area for consumer confidence, and ask whether there are indeed ongoing conversations with the industry.

The noble Lord, Lord Jenkin, drew to our attention the fact that the Energy Retail Association has produced a draft code of conduct for consultation, building on suppliers’ current work on a draft voluntary code of practice on vulnerable consumers and accurate billing. Our understanding is that, when the code of practice comes into place, this interoperability should be a standard requirement. Perhaps the Minister can comment on whether, by the time the regulations are drawn up, smart meters will be not only entirely interchangeable between credit and pre-pay systems but completely interoperable between energy companies.

That leads me to ask the Minister a few general questions that are afforded by this opportunity. Does he have in mind perhaps undertaking a review of consumer protection in this field? It is a huge area and could benefit from such a constructive operation. Furthermore, does he have in mind a strategy to deliver consumer benefits? These smart meters are not simply a new device that will allow the “market to provide”, as he said. Perhaps we cannot simply install them and hope that they will work. There will have to be a strategy to ensure that the consumer benefits are realised and, indeed, a constant interactive review of the rollout strategy to ensure that all the opportunities are not missed. At the moment there does not seem to be any monitoring framework in mind. There are also no minimum standards to encourage not only general acceptance among consumers but some knowledge of what they are looking at when they see a smart meter. The whole consumer field could be greatly augmented by undertaking a constant interactive review. Lastly, has the Minister thought about an independent smart-metering delivery campaigns body to monitor these situations and perhaps to give him guidance on extra help to low-income and vulnerable consumers?

[Lord O'Neill of Clackmannan]

I welcome this amendment. It is important that we have a code that is as robust as possible, not least because this process will be carried out without a clearly identifiable body responsible for consumer protection. We have previously had gas and electricity consumers councils. After that, we had the combined one and Energywatch, which was folded into Consumer Focus, which, of course, will disappear. Many people have grave doubts about whether the citizens advice bureaux as presently constituted have the resources. They certainly have sufficient locations, but the question remains whether within these locations they will have people with the expertise to take on the protection of consumers when matters such as smart metering arise.

As has been pointed out, there is a great lack of public confidence in the energy suppliers in this country. That is quite a sizeable achievement, because for many years we were able to point to British Gas, the Post Office and one or two other companies as being the kind of companies that people could depend on and trust. Now, in large measure, either through commercial incompetence or greed—in the case of the Post Office it is not really greed, but I certainly would not acquit the others of a charge of greed—the public lack confidence in these companies.

The rolling-out of meters will go on for some time. We will have something like 18.5 million households with gas and another 24 million with gas and electricity, and then there are small businesses, shops and the like. So we could be talking about somewhere in the region of 45 million-plus meters being installed over a relatively short period.

One of the hallmarks of this process at present is that it is shrouded in secrecy. The lack of transparency about the discussions taking place between the Government and the companies is, in many respects, quite astounding. There is not that much that we need to concern ourselves with in terms of commercial secrecy, but we need to know a great deal more. If we are not going to have what many of us would regard as appropriate bodies for consumer protection, if we are likely to have a lengthy period in which this rollout will take place and if we have a conspicuous absence of transparency in the planning and the bringing down, even intermittently, of tablets from the mountain, it is important that we have as robust a code as possible.

While we may get the usual claptrap from the Minister about the words in the amendment not being the exact words, we want reassurance. The public deserve reassurance. We as consumers will be paying for the installation of these meters even though they will be owned by some electricity or gas supplier. It must be made clear that we will have these meters for a long time. I remember that one of the past arguments against smart metering, at a time when there was not quite the environmental edge to the debate that there is now, was that these meters were robust enough to last for 40 years. It was the “If it ain’t broke, don’t fix it” kind of argument. We are going to be saddled with these damn things for a long time, so we should ensure that they are the right ones, that they are sufficiently flexible, that we begin to get clear indications of the intentions of the companies and that there is to be a sufficiently strong and robust process of consumer protection throughout that period.

To each of those requests, I would expect some kind of lukewarm response from the Minister, such as, “We’ll do our best. We’re all trying very hard, chaps”. Until such time as we can get something more robust than that, the least that we can hope for is a decent code of practice. My noble friend Lord Whitty has made a reasonable stab at that. The words may not be exactly what are required but, if the message can be got through and if at Report we can get something to reassure and protect consumers, we will not have made too bad a fist of this part of the Bill.