Smart Meters Bill

Lord Teverson Excerpts

2nd reading (Hansard): House of Lords
Tuesday 13th March 2018 Lords Chamber

[Lord Teverson (LD)]

My Lords, last Sunday evening my family were watching “Call the Midwife”. It was raining outside, as it often is in Cornwall. We have a number of outside sockets. The television suddenly stopped, much to my relief, as I am not a great fan of that programme—I am sorry to offend the Minister. Unfortunately, the further downside for me was that I had somehow to fix the electricity. This became my task, so I went out and I had to search for a torch. Then I had to find my way under the stairs, where there is a cupboard. I had to put the torch on. The meter, a dumb meter, is some two or three feet further away. I had to look at all the switches, and finally I managed to get the electricity back on.

How I wish that I had had a smart meter so that I could have got on to my iPhone and knocked a switch so that light was restored to Thornparks House down near Tregony in Cornwall. Alas, this was not the case. However, this underlined to me how important this programme should be. It is supposed to be an £11 billion programme. That is £11 billion of what I see as upgrading of domestic and commercial infrastructure and communications channels in the United Kingdom. That is why it is important.

How is it that in these days, when we use iPads and smartphones and with all the technical ability that we have, we still have so many people with these dumb electricity meters? My meter has, I think, never been read by anybody apart from me in the past 10 years because no one can get access to it from the outside. How is it that we still have this dumb technology when everything else has changed so much? The Minister will gather that I am a fan of this programme, but from now on the supportiveness of my speech goes downhill.

When I first joined this House 12 years ago in 2006, it happened to be the year that the smart meter operational framework was produced. I have always been interested in energy and one of my first visits—on the way up from Cornwall—was to a smart meter manufacturer in Winchester. They were the people who told me how great this technology was, what a fantastic future it should lead to and how obvious it was that it should be adopted, not just in terms of ease but of information and future distributed energy systems. It was quite clear. I became not just a fan, but a strong advocate. However, where are we now?

The noble Lord, Lord Grantchester, has gone through a little bit of the current position. My numbers may not be exactly the same, because they vary by source, but there are some 47 million meters in this country. There are 27 million properties, so a number, particularly commercial properties, have several meters. We have approximately 9 million SMETS 1 meters, which means that we have 39 million still to do. At 1 million a quarter, which roughly ties up with the Minister’s figure, that takes us to 2028. By that time, I suspect that I shall no longer be a Member of this House, but I sincerely hope that we are able to meet that timetable. We also have about 100 SMETS 2 meters, most of which I understand have been installed on close friends and family of the producers as guinea pigs to see how these meters work. Last time I heard, they do not work particularly well. In fact, in the main they are fairly non-functional.

We should, however, give the Government their due. They have put back the final date for SMETS 1 installation from July this year to October and we have a 2020 target. The noble Lord, Lord Grantchester, maybe with his tongue in his cheek, asked the Minister whether it was possible to meet this target. Clearly it is not, so for goodness’ sake let us admit it, get back from la-la land into the real world and allow the industry, consumers and everybody else, including the Government, to plan this sensibly.

As I said, it is an £11 billion programme. That is massive in terms of future charges to electricity consumers. At the centre of this we have DCC, a Capita organisation. I understand that it has recently changed its management quite substantially. I certainly hope so. I looked through a list of just how late it had been, and I think there had been six postponements since 2014. We finally had it go live in November 2016, some years after it originally happened.

One thing I learned when I was very young was that, as a relative said to me, people who put lots of initials after their names are probably the ones you want to avoid, because they are trying to impress you and probably do not have the substance—I am sure noble Lords keep their peerage title in front of their name but have nothing behind. I stretch that example to reports and projects that are full of acronyms. When I went through all the background work to this, I was concerned: SMETS 1, SMETS 2, DCC, PPMID, CAD, IHD, CGI, SMSO, SMDA, SMOF, GCME, ESME, GBCS, SAR and of course MAPs, which are meter asset providers, which I will come back to later on. It seems to me that this process—this structure—is so difficult to understand and has been put together in such a difficult form, with a mixture of public and private, that it is designed to fail.

So far, I regret to say, it has been unable to deliver, despite in many ways the context being so simple, in that all you need is a bit of technology in your house—not necessarily under the stairs—which tells a monitor what you are doing in terms of electricity and maybe later allows you to participate in smart energy through a distributive grid as well. All that it then has to do is communicate usage in some way to a data hub, and all that data hub has to do is communicate with the electricity or gas supplier. That is all that is required, and yet 12 years later, where are we? We are a small way through a programme that we desperately need.

The Minister mentioned costs to some degree. I think the whole DCC budget to deliver this between 2013 and 2021, which goes on to consumers’ bills, has gone up from £1.3 billion to £2 billion. Its project management costs have gone up from £107 million to £374 million, and its set-up costs for subcontractors from £131 million to £948 million. DCC may be out of control, but government management of the process has clearly also been quite ineffective. In terms of timing, DCC has been late in going live by some two years, while SMETS 1 has been put back from July to October. At the moment, SMETS 2 meters are not working and have no supply chain, so if we stick to the October 2018 date for stopping the installation of SMETS 1 smart meters, can the Minister explain to me what happens to all the installers between October and when we actually get SMETS 2 meters going? We have thousands of skilled people out there fitting 400,000 of these meters a month, but I cannot see how they are not all going to be out of a job in October. We then lose the skills, so how do we get the rest of the programme in, not just by 2020 but by whenever we manage to do it?

One of the things that has to be core to this whole programme is interoperability. I understand SMETS 1 meters are reasonably interoperable, but as I think the noble Lord, Lord Grantchester, said, if you change supplier—which government, we in Parliament and people interested in energy want people to do—there will be instances when you get stuck with a meter which is either dumb or has to be replaced by the new supplier, at an additional overall cost to the consumer, if not individually. That is not right. What will happen to all the SMETS 1 meters? Are they going to be stranded assets? I do not see how that will work.

Turning to meter asset providers, I am not greatly into the argument about whether they should be licenced or not. Again, the noble Lord, Lord Grantchester, brought this up; I am sure that it is an important issue. To me, the real issues relate to energy prices and meter finance. I may have been fairly naive, but I thought that the energy supply companies would probably finance them themselves. How naive can you get? Of course not: they do not do that; they get them off balance sheet and lease them, yet the lease costs of these machines have been extremely high and are still high. That will reflect, once again, on consumer prices. It is something that needs to be considered and possibly changed.

I have many questions to ask the Minister, but first I congratulate the Government on having the half-hour metering to make sure that we can actually push forward much greater use of smart meters for smart grids, and particularly for demand-side management—all of that area. However, they are going to have to be a lot cleverer in terms of explaining to the public that demand-side management is not compulsory but voluntary, so that we do not have the Daily Mail headlines about people being forced to turn their heating off, or whatever.

I have not yet been told that the Government have solved the problems in relation to multi-occupational buildings. Are they anywhere nearer to solving them? On the compatibility and interoperability issues, the north is on a different communications system from the rest of the country and, as I understand it, it is incompatible with the remainder. Are all the 9 million SMETS 1 meters going to end up being stranded assets, and what do we do with them? Is this system now future-proof? I get the impression that it is not; that to really have an intelligent system, we are going to have to upgrade again. When are we going to have to do that? What policy action can we do centrally to bring down that rental cost of meters that is going to affect energy companies and that will inevitably be passed on to consumers? How will that be changed? For goodness’ sake, how are we going to manage DCC better in the future? This seems to be an organisation that started late, has been complacent with public money, has had hugely overshot budgets and just requires much better management for the future. Lastly, the 2020 target date is just not possible. What is the real target date for that, and do we have a chance of actually meeting it?

--- Later in debate ---

[Lord Henley]

My Lords, on the last or second to last point made by the noble Lord, Lord Lennie, he looked forward to a world with a SMETS 3 or 4 that might be able to assist a customer in finding a new supplier and direct him in that way. I think we are already there. I imagine that the noble Lord reads the Guardian more often than I do, but the Guardian of 11 March was talking about one company that is developing some sort of dongle that can be plugged into one’s meter and will automatically switch one to the best supplier according to the programme one puts in. One can put in, “I want the greenest supplier” or “I want the cheapest supplier” and one could find oneself having a different supplier from month to month, possibly two or three times a year. The future is good. I refer the noble Lord to that article to see just what is happening out there and what smart meters, as they are at the moment, could possibly lead to.

I have to say that, listening to the debate, I felt that it was a fairly Eeyoreish performance, even by the standards of this House. The noble Baroness, Lady Featherstone, was politer—she referred to it as a masterclass in faint praise. The noble Baroness, Lady Maddock, was, as always, very kind to me: after making her Eeyoreish speech, along with her colleagues and all other noble Lords, she said that she expected something more optimistic from me, “Because the noble Lord always is very optimistic”. I think there is nothing wrong with being optimistic when one has technical developments that are going to bring great benefits to everyone. They are going to bring benefits to the consumer, as I made clear in my opening speech, but they will also bring benefits in terms of reducing our overall consumption and in many other ways.

Like the noble Baroness, Lady Featherstone, I was very amused by the picture of her noble friend Lord Teverson under the floorboards or somewhere—I am not quite sure where he was; it was rather a confusing picture, but he was in the rain with a torch. All I can do is refer the noble Lord to Hilaire Belloc’s “Lord Finchley”. The noble Lord will remember that Lord Finchley came to an untimely end because he tried to do these things himself. In future, the noble Lord can get someone else to look at these things, but smart meters will solve the problem for him.

Others, such as the noble Lord, Lord Whitty, and me, took us back to 2008. I was very grateful to him for doing that and for saying that back in 2008 he was giving warnings, in his Cassandra-like way, and now he could say, “I told you so”. The great thing is that he can say “I told you so” to everyone here, in that the 2008 Act, as the noble Lord and others on the Benches opposite will remember, was passed under a Labour Government. The 2011 Act that I referred to was passed under the coalition Government. I think that we had a Liberal Democrat in both the business department and the energy department during that time, so their fingers must have touched this at some point. Now, in 2018 we have a Conservative Government, so perhaps, like Peter Simple’s Dr Heinz Kiosk, I can just say, “We are all guilty!”, if something has gone wrong. I think, from the degrees of optimism I have listened to in the course of the debate, that there is a general acceptance that smart meters are going to be able to do something that has not been available before and that, as I said, that will bring great advantages to us.

A very large number of questions of a fairly detailed sort have been raised and I will try to address a number of them. However, I think that what a debate of this sort also shows is that even a Bill such as this—a Bill that is broadly welcomed on all sides, that has been through pre-legislative scrutiny, that has had a very useful trip through another place since that pre-legislative scrutiny and that is now here—will benefit from what your Lordships can do in Committee. I look forward to that Committee and hope that we can tease out just where the problems are so that I can give appropriate assurances on matters that are relevant to noble Lords and, if necessary, make amendments, but I do not think that that will be necessary. As the noble Lord, Lord Grantchester, put it, this is a largely technical Bill dealing with three small matters, but its title allows us to discuss the generality of smart meters, smart metering and how we get the rollout completed. I hope that in the course of this debate, Committee and further stages we can continue that process and provide the proper assurances.

This afternoon, I propose to answer a few of the questions to the best of my ability. I think it would be useful if I write another letter to all noble Lords who have taken part in this debate and place a copy in the Library, setting out a more detailed answer of the sort that one cannot properly give to some of the more detailed questions and very sensible suggestions made by my noble friend Lady Manzoor. I give that assurance that I will send that detailed response to all noble Lords.

In the meantime, I shall answer a few of the questions that have been asked. The first, and most important, is to give some sort of assurance that we believe that it is still possible, despite the numbers which the noble Lord, Lord Grantchester, quoted from Which?. The numbers probably appeared in the Daily Mail as well, for all I know—that was another publication that was mentioned. We believe that we will be able to get there in due course. The rollout to date has been growing. Around 400,000 smart meters are being installed every month. That has to get up to a bigger figure if we are going to get to the end in the three years that are available. I do not think that is representative of the next phase of the programme when most suppliers will be installing smart meters with greater numbers of installers and more types of customers across Britain. We will certainly continue to collect data—this was something that the noble Baroness, Lady Maddock, asked about—on the rollout, getting independent, official, quarterly statistics on progress by the large suppliers, and we will make sure that they are published quarterly, as I think they have been since September 2013. In addition, a summary of the annual rollout progress for the calendar year is published every March, so we should have that in due course. I do not know whether it will be before Committee, as no one has yet given me a suggested date for the next stage of the Bill.

[Lord Teverson]

As I said, I think it is impossible to get to that. Can I just be clear about the commitment? It is to offer everybody a smart meter. Are the Government clear with the suppliers about what “offer” means and that it is not just an email saying, “Do you want a smart meter”? Are we clear about the target? Not everybody wants one. Is that a potential get-out clause in this target?

[Lord Henley]

The noble Lord knows that we are not going down the route of saying that everyone will have one, but we hope everyone will see the benefits of them and that everyone will be offered one, and I hope that offer will be more than just the email that the noble Lord suggests. It is difficult to persuade people to change. Some months ago we discussed the ease with which one can change one’s electricity supplier. However, because of inertia, few people do. The easier that it becomes and the more benefits that there are, the more people will switch supplier. The same applies to smart meters: people will adopt them as they see the benefit. We shall continue to push suppliers to do what they can, because of the benefits. That is not only those benefits to consumers that we all recognise, but those to the country through reducing our overall electricity consumption by evening it out and those other benefits identified.