Smart Meters Bill

Baroness Manzoor Excerpts

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

[Baroness Manzoor (Con)]

My Lords, I strongly support the Bill and I thank the Minister for so elegantly laying out its three aspects. He will be pleased to hear that I will not restate them, but it is worth restating that the purpose of the Bill is that every household and small business in the UK will be offered a smart meter by 2020—although of course there is no obligation for anyone to accept that offer.

I am viewing the Bill through the prism of a consumer. To that end, I was interested to note that, according to research undertaken by comparethemarket.com, one in five people did not want a smart meter. The Government will therefore have to undertake some more effective ways of communicating to the public what smart meters can and cannot do, particularly if they want to hit their target by 2020. As has already been stated, 53 million meters will need to be rolled out and then rolled on to the new national communications network. As the noble Lord, Lord Grantchester, said, that equates to 24 meters a minute. It is also of concern that some of the largest suppliers of energy say that the rising cost of the smart meter programme is one of the main reasons for the rise in customers’ energy bills.

To ensure transparency in bill costs, energy companies should have a duty to further break down their billing costs to the consumer. Billing costs could show what cost is due to energy generation; what proportion of the bill is due to distribution; what proportion is due to overhead costs such as billing, smart meters and customer services; what proportion is for installation and management costs for smart meters; and what proportion is for any data requests from users. I would like the Bill to incorporate such a duty of transparency, thus enabling customers to make more informed choices, aiding competition and helping to bring energy costs further down. If such a duty is not put in the Bill, will the Minister give consideration to including one in regulations?

Consumers’ perceptions have not been aided by the functional issues experienced with the first generation of smart meters—the SMETS 1s, as has been said—which have left some consumers concerned about having a smart meter installed. Users of SMETS 1s have had problems keeping the benefits of their smart meter when they switch energy suppliers. This is because the SMETS 1 meter became defunct, or dumb, as it could not connect to the new national communications network. This meant that SMETS 1s could not talk to the consumer’s new energy supplier.

I understand that the second generation of smart meters, the SMETS 2s, have overcome this problem, but the issue of operability of SMETS 1 meters still needs to be addressed. Will they be replaced, or can they be upgraded to enable compatibility with the new communications network? What action are the Government taking to inform customers that operability problems have now been resolved—if they have—and that the SMETS 1 meters will not be installed by energy suppliers unless they are fully functional on the new communications network? And who will pay for the upgrade?

The Government estimate that smart metering will deliver net benefits to GB of £5.7 billion, equating to £300 million off domestic energy bills in 2020 and £1.2 billion a year by 2030, and the Minister has restated that. Breaking that down, it is expected that individual households will save on average approximately £11 a year on their energy bills by 2020, rising to £47 in 2030.

Smart meters should also address the imbalance in information between suppliers and their customers, because customers will be able to see the level and cost of the energy that they are using in real time and use that knowledge to change to a different tariff or supplier or better plan when they use their energy, thus enabling budgeting. This is particularly important for low-income households and those who use prepayment meters. The smart meter does not need topping up and these customers will no longer have to leave home to buy top-ups for their meter.

As well as allowing consumers to make informed choices, smart meters should put an end to estimated bills because consumers and the energy suppliers know the uptake of usage down to half-hour intervals. To ensure that this benefit is fully realised, it is important that energy suppliers then do not encourage customers to pay via annual payment plans—otherwise, customers receive estimated bills with potentially large credit balances left at the end of the year.

There have also been stories in the press about a few smart meters malfunctioning by sending out the wrong usage readings to their energy supplier. Can my noble friend the Minister say how likely it is for a smart meter to be dysfunctional, and what happens when the usage reading is inaccurate? What redress does the consumer have? There have also been reports that because the smart meter technology works via the internet—we have already heard this from the noble Lord, Lord Teverson—there are connection problems in places such as high-rise flats or in some rural communities where coverage is poor. Despite this, I understand that the Government expect more than 99.25% of premises and homes to be covered by the national communication network. Can my noble friend confirm that this figure is accurate, and are there any plans to ensure that the communications network gives 100% coverage?

Despite some teething problems, the principle behind smart meters is important. Not only does it allow the companies to assess in real time the energy uptake by the nation and plan accordingly for it but it is likely to aid the future development of innovative smart products, as we heard from the Minister, such as dishwashers, smart kettles, fridges, washing machines and indeed other new services. But with such smart technology comes dangers to security. Can my noble friend say a few words on what safeguards have been implemented to ensure that the new communications network is safe from unintended interference and sabotage? How will DCC keep customers’ data safe, and how long will customers’ records be kept?

To conclude, the benefits and flexibility of smart meter usage can be fully realised only if there is effective training of those who install them, and if customers are trained in how to use these meters and the new technology effectively. Smart meters and such technology are our future and we should fully embrace their benefits. The Government need to ensure that customers can access the cheapest tariffs and ensure that smart meters work for everyone: customers, the energy companies and our environment.