Smart Meters Bill (Second sitting)

Dan Carden Excerpts

Committee Debate: 2nd Sitting: House of Commons
Tuesday 21st November 2017 Public Bill Committees

[The Chair]

Thank you. If we can keep the answers brief, we will be able to get in Mr Carden and Mr Morris.

[Dan Carden (Liverpool, Walton) (Lab)]

Q Mr Lickorish, you have been very clear about the technical versus the commercial issue in terms of whether this can benefit customers if they can move from one supplier to another. Are there any answers from Government, or the structure of how this is set up that can deal with those commercial issues?

Derek Lickorish: I think that Ofgem ought to be able to bring the people round the table who can solve these issues. I do not think they are particularly visible at the moment. In the grand scheme of things, there will be those who say “yes”, but we have said that we think that 20% are in dumb mode; it might be less than that at other times. In terms of the 80: 20, it does not get the attention it deserves. If we are not careful, this becomes a bit of a cancer and it will grow bigger—20% of 45 million will be a huge number of meters, for whatever reason. It can be solved.

Richard Wiles: Absolutely, I agree with that. We need to ensure that there is some form of incentive. The incentives need to be financial in some form—because some energy supply companies will be losing clients, as well as those gaining—to make sure they have the interoperability requirements to allow them to stay smart.

[The Chair]

Thank you. The last question goes to Mr Morris.

--- Later in debate ---

[The Chair]

Ms Vyas, did you want to add anything to that line of questioning?

Dhara Vyas: No.

[Dan Carden]

Q We have heard positive stories about prepaid customers and the benefits that they enjoy. I believe that most of the roll-out so far has been to prepaid customers. There is a satisfaction rating of around 80%. Are you less able to be positive about the benefits to other customers? What are those benefits?

Dhara Vyas: Our research echoes Smart Energy GB’s work, and shows that consumers are really positive about their meters on the whole. That applies to both prepay and credit consumers. Prepay customers stand to gain so much from this. I think it will change the prepay market, the dynamic of the prepay market and assumptions about people who do or do not prepay for their electricity and gas. I agree with you that, yes, prepay customers stand to gain a lot. A lot of customers might choose to have prepay as well because of the flexibility of it.

Early experiences research that we have conducted has shown that all customers like the visibility of their energy use. In the long term, they are quite excited about the ability to have new tariffs linking smart products and services in their homes. It generally does tell a positive story.

Obviously, you will not be surprised to hear that we and Citizens Advice also gain quite a few not-so-positive stories. Early experiences research has found that people do complain about things such as loss of services when they switch. Billing issues are quite a big problem, and that is for credit customers with shock bills or back-billing. There is a lot of anger about “Why am I still getting back-bills?”, or “Why is my bill inaccurate when I was sold this by being told that it was the end of estimates—that I would not get an estimated bill but an accurate, up-to-date bill?”.

There are issues that need to be ironed out as the technology hopefully embeds. I think suppliers have been working quite hard on agreeing back-billing principles and how to work with customers. A big part of that is communication: make sure you send a meter reading before your smart meter is installed, so you do not get a big shock bill when your new meter goes in. So, there are other areas where credit customers have both positive and negative experiences.

[Dan Carden]

Q We have also heard quite a bit of evidence about the difficulty consumers are having transferring. One company puts a smart meter in, then there is an issue moving to another company. As far as I can remember, for years and years, we have been told that the ability to move from one supplier to another is the answer to reducing bills. This seems to fly in the face of that.

Dhara Vyas: It is the SMETS 1 issue: a SMETS 1 meter is not always interoperable with another supplier’s system. That is where SMETS 2 provides a solution. That echoes back to my earlier point that we should focus on moving more SMETS 2 out there.

One last thing I will say is that all consumers, whether on prepay or credit, stand to gain a lot from the energy savings and energy-efficiency advice that will be provided on installation of the smart meter. I think that is quite key. Regardless of meter mode, the experience of having a supplier in your home fitting a smart meter, talking you through the in-home display, talking you through energy-efficiency advice, which is tailored to you and your home, is a once-in-a-lifetime experience. It is really important that suppliers get that right.

[The Chair]

Q Mr Deshmukh, anything to add?

Sacha Deshmukh: I would just add that I think the research Mr Carden refers to is the most recent research by Populus. You are absolutely right that prepayment customers reported 89% recommendation—so, very high. The pattern of the very high recommendation continues to all low-income customers, or customers with a vulnerability in the household, so low-income credit customers are also strongly recommending the product.

Even among households that are not low-income, the levels of recommendation are significantly higher than in other areas of technology. It would be fair if you were then to say that the experience of buying energy through an analogue technology has been particularly poor—and it has. Clearly, those levels of satisfaction are also linked to the fact that this was the last area of pretty much any of our daily lives where people had been reliant on such old-fashioned technology, even in the credit mode.

Smart Meters Bill (Third sitting)

Dan Carden Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 23rd November 2017 Public Bill Committees

[Steve McCabe]

I am extremely grateful to my hon. Friend for that observation. Unfortunately, I have relied on the wording of the Department for Business, Energy and Industrial Strategy and its myth-busting document. However, it is very helpful to hear what my hon. Friend has just said and it would be extremely helpful if the Minister took that point on board when he seeks to enlighten the Committee on how we will proceed.

What will happen to energy suppliers if they fail to meet the roll-out targets by the end of 2020? So far, the Government have indicated that the reasons for the extension are

“to remove delivery barriers, protect consumers, and help households and small businesses continue to get the most from their smart meters once installed.”

We heard on Tuesday that some customers cannot possibly be getting

“the most from their smart meters”,

because once they are installed and the customer switches provider, they cease to be a functioning smart meter. So I can see why the Minister is keen to address that problem.

Perhaps the Minister would be kind enough to explain to the Committee exactly how an extension to 2023 helps achieve each of those stated aims. If the target for installation is going to be met by 2020, as BEIS asserts, there will be no “delivery barriers” to remove. Also, it is unclear what protection the Government think customers would need in relation to the roll-out, unless it is specifically about this question of the problem that arises when people try to switch providers.

[Dan Carden (Liverpool, Walton) (Lab)]

Surely this delay in the roll-out, potentially to 2023, would also have a significant effect on the Government’s cost analysis. We have heard about the astronomical sums of money that are involved in the roll-out. Has my hon. Friend had any indication of what a delay would mean for the cost of this scheme in the future?

[Steve McCabe]

I hope that before the Committee concludes its business, all of us here will have a much better understanding of exactly what this programme currently costs and what it is likely to cost by the time of completion. I was quite taken aback at the evidence session on Tuesday when one of the witnesses told us that the cost to the customer had already gone up in 12 months from £5 to £13. If we multiply that increase over the period of the extension that is now under discussion, we can see that, far from being a measure designed to cut the energy costs for consumers, the Bill could well load cost after cost on poor people who are already struggling to pay their energy bills.

That is one of the reasons why, in discussing the Bill and deciding whether to give the Minister this extension and these approvals, we need to be absolutely clear what we are committing to. It is on us in this Committee to determine whether we are genuinely standing up for customers, or whether we are considering the implementation of a programme that is primarily designed to provide benefits to suppliers, in the sense that the suppliers are meant to make the savings and then pass them on to the customers. If we were to end up in a situation whereby the benefits to the customer are not realised and the costs to the customer rise exponentially, that would be a disaster and a total dereliction of our responsibilities.

[Dan Carden]

Yesterday, we sat through the Budget and heard very specific sums of money being put here, there and everywhere. Is it my hon. Friend’s understanding that the budget for the roll-out of smart meters is unlimited?

[Steve McCabe]

Again, I defer to the Minister; I genuinely look forward to hearing his explanation of this situation. It is my fear that, although the budget may not be unlimited, the costs are loaded on the consumer and the costs to the consumer could be unlimited. We could find that, instead of protecting people, we are loading them with costs into the foreseeable future.

--- Later in debate ---

I know it is not customary to try to answer questions put by Opposition Members, but I will do my best—[Laughter.] On the point, among many good points, made by the hon. Member for Birmingham, Selly Oak about the costs to consumers increasing, the Bill does not change the existing roll-out deadline. Consumers start saving as soon as their smart meter is installed. By 2020 the next benefit means that consumers will save £11 a year annually, rising to £47 a year by 2030. We are monitoring the costs, as is the regulator.

[Dan Carden]

I hope that the Minister will respond to one of the points that Derek Lickorish made the other day when he said,

“It is no good having a target that nobody believes in...we need a recognition now that says, ‘We will look at all the issues and have a unity of purpose about what the targets should be’.”––[Official Report, Smart Meters Bill Public Bill Committee, 21 November 2017; c. 37, Q69.]

What proactive undertakings is the Minister proceeding with to bring the suppliers together to make 2020 a realistic date in this context?

[Richard Harrington]

I can reassure the hon. Gentleman that we speak regularly to the suppliers. In fact, yesterday morning I met a group of them. I think Mr Lickorish was there, but certainly others who gave evidence, Mr Bullen and Mr Salter-Church from Ofgem, were there. BEIS has regular meetings. I would not put my name or that of the Department to this target if I thought it was unrealistic. Hon. Members have referred to Mr Lickorish’s evidence showing some cynicism about it. The cliché on these occasions is, “He would say that, wouldn’t he?” I am sure it is a genuinely held belief, but it is the Government’s intent to make sure this happens. I would be hauled, as they say in the press, before whatever Committee if the target is not met in 2020, or whatever the date might be—not 2023, because that would be on a different issue; that is not the target. But I might end up being accused of misleading the House, albeit not on purpose, and being told I was completely wrong and should pay the price. However, I am personally satisfied that the date is not as unrealistic as Mr Lickorish said.

The extension of powers has been mentioned, and I think I have stressed enough that is not because of failing to meet the target. The hon. Member for Liverpool, Walton said earlier that he was concerned that the cost to consumers from the smart meter roll-out could be unlimited. He was probably referring to poorer people in our constituencies, who currently do prepayment and might suddenly be hit with an unlimited charge by suppliers, justified or not. I want to make it clear to him and to everyone else that we are monitoring the costs all the time. The DCC, which is a natural monopoly, simply because it is the only company connecting smart meters, is subject to price control regulated by Ofgem, which has provisions for monopolies. The DCC is slap bang in the middle of that.