Smart Metering: Electricity and Gas

Graham Stringer Excerpts

Thursday 9th February 2017 Westminster Hall

[Derek Thomas (St Ives) (Con)]

I am glad to have the opportunity to talk about smart meters. I remember when we did the inquiry; it was something that I thoroughly enjoyed and learned a great deal from. I thank my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe), who is the Chair of the Science and Technology Committee, for introducing the debate today.

There is no doubt that we should welcome the roll-out of smart meters, and we do welcome it. There is a genuine opportunity to bring an end to physical meter reading. I live down a very long lane and twice a year some very delightful gentleman finds his way down to where I live, to read the meter. I will talk a little about how successful that has been later on.

I am not looking to put people out of jobs, but where technology helps us to get accurate information and manage our energy use, as well as to provide data that can help to manage the nation’s energy supply and planning, it needs to be welcomed, and I think the smart meter roll-out is welcome.

As we have heard, smart meters have clear benefits. Their introduction has the potential to help consumers to reduce their energy consumption, shift their energy demand away from peak periods, which the Chairman of our Committee referred to earlier, and improve customer choice. Choice is a particularly interesting angle; if smart meters allow people to switch suppliers quickly and to access better tariffs, they must be welcome.

All of these measures will help constituents in west Cornwall and on the Isles of Scilly. We already know that 80% of smart meter owners are taking steps to reduce their energy consumption. According to Smart Energy GB, individuals are turning off lights, switching off the heating at certain times and changing the way in which certain household appliances are used, all in a proactive effort to engage with their energy usage.

I was pleased to hear the hon. Member for North Ayrshire and Arran (Patricia Gibson) mention fuel poverty. My concern is that once people on limited budgets realise how much energy different appliances use, they will start to behave in a way that is harmful to them—particularly older people during winter months. So we need to be very careful about how we communicate with people and empower them to get the best out of their homes.

The smart meter roll-out on its own is not really good enough. I know that this is a slightly separate issue, but the Government must consider how we can improve the efficiency of people’s homes, particularly those of vulnerable people. Otherwise, the smart meter roll-out might actually be detrimental for those households.

Dr Sarah Darby of the Environmental Change Institute has said that smart meters are effective, smart systems that bring together every-day human intelligence and technical ingenuity. We are beginning to hear about some problems with the roll-out, and I am glad that we conducted the inquiry last year. We are well into the programme for 2020. As an elected representative in my first Parliament, I recognise that 2020 is coming around very quickly; it keeps me on my toes every weekend. Far more important, however, is the roll-out of the smart meter programme.

Technological advances should always benefit the consumer; it is really important that that is clear, otherwise we will never get proper engagement. However, the delay in the data communications company’s go-live date has put these benefits at risk. Originally, the company was meant to go live in autumn 2015; in reality, it was late in November 2016—more than a year later—and it was even later for the north of England.

That delayed start has meant that the 2020 deadline for the roll-out of smart meters across the country is rushing up on us. It has created an impractical timetable for suppliers. I am particularly concerned about the smaller energy suppliers. We are trying to encourage them into the market, yet we have created quite a challenge for them to supply their customers with smart meters. The delay to stage 1 of the roll-out has placed the availability of SMETS 1 meters under strain, as purchasing was done on the knowledge that their installation would have been completed a year earlier. I have been speaking to the smaller suppliers, and they are talking about the massive difficulty they have in sourcing the meters and the qualified competent engineers to fit them. There is now a need to extend the roll-out period for SMETS 1 meters to meet the delay in the go-live date and to address the functionality concerns about the SMETS 2 meters, which are being used for the mass roll-out of the scheme.

The lack of planning for the launch and the deadline for the roll-out of smart meters has increased costs and uncertainty for suppliers, who still have to meet the legally binding deadline of 2020. We know full well that if costs increase for suppliers, those costs will only ever go to the consumer. I am always referring to people struggling on limited budgets to meet their energy bills. The strict timetable has also meant that there is less time to test and learn the system, which could lead to greater problems down the line and has meant that many promised benefits for consumers cannot be delivered.

Additionally, part of the changes to the DCC functionality has removed the ability of consumers to switch between credit and prepay modes. In the inquiry, I remember talking about those with prepay meters and the kind of revolution that smart meters would bring for them. Prepay customers pay more for their energy, and they pay up front. Some of the people I meet have no choice; they are in properties that belong to other people. When I talk to social landlords, they see the roll-out of smart meters as an opportunity to help their tenants to reduce their bills and manage their finances more easily. What we are finding is that they are not able to switch between credit and prepay modes. The meters cannot deliver in the way we expected. That is a disadvantage for millions of prepay meter customers across the country as they cannot gain access to the market.

Dr Sarah Darby’s definition of smart meters also pointed to the importance of shaping human behaviours. We have already heard about that today. Improving energy use practices and consumer’s energy know-how are essential to ensuring that the full benefits of smart meters are realised. Data from the “Smart energy outlook” show that awareness of smart metering and its benefits rose by only 7% in the past year. That needs to be improved, and that is despite Gaz and Leccy. Gaz and Leccy are enormous role models for my children. We watch their adverts regularly. If you do not know Gaz and Leccy, Mr Turner, you must go home and do the research. It will add value to your life. I share an office with three other MPs, and they have spent considerable time in research, watching Gaz and Leccy. They are fantastic adverts. They are absolutely worth watching, and they help to get across the point that we are not in control of the energy we use. However, if we are seeing only a 7% increase in awareness, despite that brilliant media campaign, we are not getting the information out in the way we should. Unless consumers understand the benefit of smart metering, we are not going to win the battle.

I was a builder before I came here. I used to do barn conversions. For many years, in every barn conversion I completed, a smart meter was installed, but often concerns about how the data would be used meant that it was never used. Instead, it was just left on the side. Because it was not integral to the structure of the building, it would just be unplugged. Customers would tell me, “I don’t want my energy supplier knowing when I am making a cup of tea or when I’m getting out of bed or when I’m doing this or something else.” There is a real need to make customers aware of what data are collected, why they are collected, for whose benefit and how they are used. That is a battle we have not yet fully dealt with or addressed.

Smart metering will improve the temporal resolution of energy data, but it will still not differentiate between heating and other energy demand, nor will it show where in the building energy is used so the need to address energy efficiency in the home remains.

There are some connectivity issues with smart meters, and I want to talk about my experience. We did the inquiry last year. I explained that the gentleman walks or drives down my lane a couple of times a year. On an unusual occasion I met him, and he said, “Do you know, your meter is still showing ‘blank’”—I had an old-fashioned meter—“so I have not been able to take a reading for four years?” I said, “Okay. What can I do about it?” He said, “I don’t want to tell you this, because it will put me out of a job, but you ought to put a smart meter in.” I applied for a smart meter and had one fitted. The energy company had estimated how much energy I had used in the past four years. I disputed it and, with the help of my children, managed to reduce the estimate. The energy company gave me a new bill that was considerably less, although that is a matter for another debate altogether.

The smart meter was fitted. Once a month, I have to go outside and take a photo of my smart meter and send that photo over broadband to the supplier, because I do not have connectivity. My smart meter is not connected to anything, because I do not have mobile phone signal. That will be a challenge if we are going to provide 20 million smart meters—or however many we are supplying; it is quite a lot—by 2020.

I am the local MP and, interestingly, the local BBC presenter recently emailed me to say that he had a smart meter fitted, and he has to do exactly the same thing. It is a bit worrying if we are to win public support for smart meters if the local MP and the local BBC presenter have meters that do not work. Clearly, this is a private meeting, so I am not telling the world that my smart meter does not work, but I do enjoy telling the story.

[Graham Stringer (Blackley and Broughton) (Lab)]

I have no idea where the hon. Gentleman lives in Cornwall—he is clearly not getting a signal—but it is a much more general problem. At the present time, the smart meters are not functional in tall buildings. Does he consider that to be as big a problem as the one facing those living in the remoter parts of Cornwall?

[Derek Thomas]

The hon. Gentleman is absolutely right, and I thank him for that intervention. I raised the issue because I am wedded to the idea of getting smart meters. If we get them right, they are a fantastic thing, and we should be ambitious, but the roll-out will be flawed and difficult to recover if we cannot deal with the connectivity issues. The issue is not just for the Minister; it is for the whole of Government to recognise the challenge of giving each of us the best available modern-day technology. I will move on, because I am probably taking too long.

The roll-out of smart meters will undoubtedly help my constituents in west Cornwall and the Isles of Scilly, but there is work to do to convince them of the benefits and how smart meters can help them manage their energy better and in a different way, so that we do not place such a demand on, dare I say it, fossil and nuclear power. In Cornwall, we generate more energy than we use, such that wind turbines are turned off. If we get it right, and we learn to store energy, we will get people moving to electricity and away from oil for heating. We will be able to be much smarter about the generation and use of energy.

Smart meters have an important part to play, but the Government need to look at the challenge of delivering the programme by 2020. There is a real need for an independent review of the safety, cost and deliverability of the roll-out of smart meters. We must consider the pressure that suppliers are under to find and retain qualified engineers, to source the meters that will do the job and to ensure that they are fitted in a way that helps rather than hinders the consumer. The 2020 deadline is too ambitious. The cost and expertise required for installing smart meters has been underestimated, and if we stick to the current deadline, the impact on consumer experience will undoubtedly be negative. That is a shame, because this is a once-in-a-lifetime opportunity to get it right.

To conclude, it is clear that the intentions behind the roll-out of smart meters are good. I am absolutely a fan of the ambition, but we have to accept that the timetable is over-ambitious and potentially harmful to consumers. We therefore must use caution, re-evaluate the timetable and draw on the words of Benjamin Franklin—we must prepare properly, or prepare for smart meters to fail. I did not write that last bit, and I am not sure that it is the best bit of my speech. Thank you very much, Mr Turner.

[Graham Stringer (Blackley and Broughton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Turner.

I think there is something in the pathology of Government in this country—civil servants and Ministers —that means that we do not seem to learn from every new IT or technology project that goes wrong; we just wait for the next one to come along and that goes wrong. I think it was as long ago as 2000 that the then Minister of State in the Cabinet Office, Sir Ian McCartney, produced a special report, which, from memory, covered 12 IT projects that had gone wrong at horrific cost. Everybody said what a good report it was—which it was—but have Government learned from that? No. One could go through NHS recordkeeping, the Home Office, national insurance record systems, Libra—there are a whole series of IT projects that have put huge costs on the public accounts.

There are some real difficulties with smart meters, and I agree with the hon. Member for North Ayrshire and Arran (Patricia Gibson). We have good reason to be alarmed, however sensible it is to be in support of people having more real-time information about the energy they are consuming. Who could disagree with that as a reasonable objective? But let us look first at the Government’s cost-benefit figures, which the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), the Chair of the Select Committee on Science and Technology, referred to.

Written evidence to the Committee said that the process the Government had used to get a cost of £12.1 billion and a net benefit of £4 billion was intellectual slosh, when compared to eight other international studies, and asked some fairly fundamental questions. Why, when Texas has 350 pages of regulations to cover its smart meter system, does our system have 7,000 pages? I have not only had the pleasure of taking part in the Science and Technology Committee’s report; I also sat on the Select Committee on Energy and Climate Change with the shadow Minister, my hon. Friend the Member for Southampton, Test (Dr Whitehead). We asked just how many pages there were on the SMETS 2 meters, and it was a huge number of pages. One has to ask why there is no comparison. Why is it that in Italy and Spain the individual cost of meters is about half the price that they are in this country? The hon. Member for North Ayrshire and Arran pointed to one of the reasons. There are 11 objectives and in anything with 11 objectives, things will get lost.

One of the major objectives, however it is stated, is to stabilise the energy network. It can be destabilised because we are using intermittent sources of energy, such as photovoltaics and wind farms. When there is a big change in the wind or sunshine, that can destabilise the network. Smart meters can help to stabilise that. That is one objective. It is a national objective, the costs of which have been put on the individual energy consumer. I do not think that is fair. The German assessment—one of the eight other studies referred to—found that there was really only a benefit of moving to smart meters when individual consumption was more than 6,500 kwh per annum. That means there would only be a benefit for 10% of consumers.

There is a great deal to be worried about, including the background, the assessments and the principles. The incompatibility between the SMETS 1 and SMETS 2 systems, which has also already been referred to, is a real problem that is yet to be solved. An even bigger problem is that when Ministers were asked by the Energy and Climate Change Committee—my hon. Friend the Member for Southampton, Test may well have asked the question—what will keep the costs of the project down, because the Government have no control over that, the answer was “competition”. When British Gas are the near-monopoly supplier of the meters, that is not good enough.

The costs are going up, there is no compatibility between SMETS 1 and SMETS 2 meters, and if someone changes energy supplier, the meter will not work, so all the benefits of knowing the level of consumption disappear. That points to a fundamental flaw in the design. The meters should have been supplied, owned and paid for by the network supply companies, not directly by the electricity suppliers. If competition is what is going to keep price down, but a customer cannot move easily and get the benefit of a smart meter, it simply will not work.

I would almost guarantee without asking that every person in this room has a smartphone—we meet some people without smartphones, but very few indeed. In a common-sense world, a sensible system of trying to get immediate information—I accept it would not work at the moment in the more remote parts of Cornwall and perhaps Scotland—would be for someone to get the information directly to their smartphone and to have the control on their smartphone as well. That would solve the problem of the system not working if they changed supplier and of having to go somewhere to look at the meter.

I was in the British Embassy in Finland nearly 17 years ago, when a representative of Nokia showed me how he could close the curtains in his house and change which electrical appliances were working. Yet we started 10 years later, putting in systems that are less good than that Nokia system was then. We have to answer the question of why the system we are putting in is essentially obsolete, and chunky. It does not seem sensible.

One point that has not yet been made is that of security. We had a private briefing from GCHQ, which was quite reassuring, but we also got contradictory evidence from the Royal Academy of Engineering, which told us:

“The smart meter network is being installed before its requirements as an Internet-connected energy system have been fully determined”,

and that

“the threat of cyber attacks—either to gain information, ‘steal’ electricity or disrupt supply—is real and pressing…Disruption to energy and gas supplies at a massive scale is possible, either from cyber attack or errors in software.”

It went on to say that those are not the only threats to the system, and that it could be threatened by rogue programmers.

I think the idea of having complete knowledge of the energy that one consumes is a desirable objective, but we are doing this in a way that will be not appreciated by the consumer and will probably cost them money. I have one final question for the Minister. There has been a large assessment of this scheme, and I understand that there were four years of freedom of information requests before the document was published. Will the Minister put it into the House of Commons Library? If he will not, will he explain why?