Smart Meters Bill

Baroness Maddock Excerpts

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

[Baroness Maddock (LD)]

My Lords, the Minister said in his opening comments that this is a small technical Bill and, as is his wont, painted a very rosy picture. As we have heard, some of it is rosy but some of it is not quite so rosy.

It is difficult not to be too repetitive because noble Lords around the House agree that the Bill contains some positive measures and some negative measures. I think that very few people would disagree that smart meters will make a large contribution to our national energy infrastructure. We have heard, and we know, that they can assist consumers and energy suppliers to use energy more efficiently and to reduce costs on both sides. However, as others have said, we somehow fail to carry to fruition many energy and energy efficiency programmes in an efficient, timely and cost-effective way. The smart meters rollout is no exception and that is why we have this Bill before us today.

As others, including the Minister, have said, the Bill extends the Secretary of State’s powers to develop, amend and oversee regulations concerning the licensing of smart meters for gas and electricity usage. Presumably, we are discussing this issue because not everything has gone well in this area. The Bill sets up a new special administrative regime for the national smart meter communications and data service provider—in short, the DCC.

In the event of insolvency, the noble Lord, Lord Whitty, highlighted many moons ago that there was a problem. Was this considered? We now know it was considered in the original discussions in 2008 but, nevertheless, we went along with it. We now have problems, and we have seen recently that dealing with it has been very slow.

The Bill also introduces new powers to modify industry codes and instruments directly to deliver a market-wide, half-hourly settlement that uses the smart meter data. There is agreement around the House that this would be a good thing but only, as my noble friend Lord Teverson said, if the meters work. The clause dealing with this came rather late in the day in another place. Will the Minister explain why? The original plan was that every household and small business in the UK would be offered a smart meter. We have already heard from others that the plan was for 2020; the Government now need proposals in this Bill giving them until 2023, and doubts have been raised this afternoon about whether they can do it by then. We have heard all sorts of statistics about how many meters will have to be put in every week to make this happen. Other concerns raised this afternoon concern data protection and privacy. The noble Lord, Lord Whitty, gave us more detail on that.

We have also heard concerns about the installation and selling of this equipment to consumers. I have a particular gripe—I get rung up about smart meters and I realise that I am also being told we need to switch suppliers. I am not very good at doing this, but my husband has done it. I am concerned that, if I have a smart meter, I might not be able to have SMETS 1 and I may not be able to switch my supplier again; therefore, I am not prepared to say yes to the installation. When you have a conversation about this with someone representing the supplier, trying to persuade you, they do not seem to understand what you are talking about. There is a big issue about how people talk to consumers when they are trying to persuade them to have a smart meter.

We have also heard about costs. We know that around £11 billion will be spent and there have been projections of a net benefit of £5.8 billion. But, as others have highlighted, rollout is happening more slowly, so it is not clear that the cost benefit will work out as projected. The National Audit Office is reviewing the programme and plans to report this summer, looking specifically at whether the programme is on track and whether the economic case is still the same. I will not repeat how many meters have been put into houses; the big issue is that, while SMETS 1 installation has gone ahead, albeit not as fast as we would like, SMETS 2 is very slow. I have not done as much detailed digging as my noble friend Lord Teverson; the figures he put forward this afternoon are pretty frightening.

Good smart meters can play a part in helping those who find it difficult to pay for their energy—as the noble Lord, Lord Whitty, mentioned. I am vice-president of National Energy Action, a charity that campaigns on fuel poverty, and I am grateful for its briefing. It is supportive of the programme, realising that it has good potential for helping people in fuel poverty. One thing it is particularly concerned about is the role of Ofgem in monitoring and enforcing minimum standards under the installation code of practice, because this is fundamental to the successful rollout. At the moment, there is little information about how or when individual suppliers are rolling out this technology or about their approach to engaging with customers, particularly vulnerable customers—I have talked about people like me—to ensure that they capture the benefits of more accurate billing, which the noble Baroness, Lady Manzoor, referred to. Nor is there much information about how they are helping people to get more of a handle on how they use their energy.

NEA would like to see Ofgem publish the annual rollout plans of individual suppliers and details of how many meters are installed annually. This could be broken down between SMETS 1 and SMETS 2 and the number of smart meters operating in pre-payment mode for those who find it really difficult to pay their energy bills. This could be done each quarter in line with other Ofgem E-Serve quarterly reporting. This information is not commercially sensitive and it would enable bodies such as NEA to offer bespoke advice to customers about when they can expect to benefit from their smart meters.

NEA also stresses that data protection should not be a key reason why more geographic-specific information cannot be put in the public domain. There are concerns and questions about data and data protection, which the noble Lord, Lord Whitty, talked about, but we ought to be able to use the information without people’s data being used in the wrong way. If we developed a GIS-based map of where smart meters have been installed, that would be a great help to organisations all around the country—for example, to charities such as NEA. They could follow up the installations, amplifying the benefits and helping people by providing more extensive behaviour-change advice and support. It is clear that not all installers are providing this help—some are but some are not.

There is one acute concern about installations. We need to know that when an engineer leaves after putting in a smart meter, the heating still works. They might have said that a gas appliance was unsafe and turned it off. Obviously we want things to be safe but at the moment no government policy is in place to help people—particularly vulnerable households—to change a boiler, as used to be the case under the ECO. I had an exchange with the Minister about this back in the autumn because people were not able to replace their boilers—a situation that has got even worse during this cold winter. When I asked him about it, the Minister’s answer was, “Well, of course, we really believe in energy conservation now, and that’s where all the money is going”, but that does not help the person whose boiler needs to be replaced in the winter. We need to do both. From a sedentary position my noble friend says that it is more efficient.

NEA spends a lot of time talking to consumers and that is why it is so concerned about some of the issues that are not going as smoothly as they should. There is also an issue around price caps and pre-payment meters. The meter price cap is very closely linked to the smart meter rollout and to SMETS 2, and I hope that the Minister will be able to tell us a little more about that.

We have heard that Clauses 11 to 13 create powers to oversee the smart meter programme, but I have already highlighted that Ofgem is finding this quite difficult. However, it has now been asked to deal also with the half-hourly settlement. As others have said, this is a good thing because not only does it enable suppliers to offer different prices at different times of day—we have heard about other things that can help people to use their electric products more efficiently in the home—but it can assist in developing, nationwide, a more demand-led energy supply system. The noble Lord, Lord Whitty, my noble friend Lord Teverson and I have raised this issue in successive energy Bills in this House. At one time it seemed that the Government did not understand that at all but they have cottoned on to it now and it is a welcome addition to the Bill.

Many people still do not have meters but research has shown that people who have them have changed their behaviour and are quite satisfied. In one survey, 75% of people said that they would recommend the meter to someone else; and 80% claimed that they were saving energy through their behavioural change.

If this is to continue we need to make sure that SMETS 2, the cleverer meter—so called—rolls out properly. People need to be able to change their supplier because we have two government policies working against each other—persuading people to have a meter, persuading them to change—and the two do not go together.

I welcome the Bill, as do many other noble Lords, but I am disappointed because it has highlighted many problems that perhaps could have been avoided. We keep falling into the same trap on several issues: we are bad at cost-benefit analysis and adjusting as time goes along; and we are bad at understanding human behaviour, which I appreciate is difficult. We assume all kinds of things about human behaviour which turn out not to be quite right. We need to be better at handling different scenarios.

I hope the Minister can assure the House that the programme will go forward in a more rosy way—I am sure he will; he usually does—and that he can reassure the House on some of the issues that have been raised today. There is common ground across the House and I look forward to his reply.