Smart Meters Bill (Second sitting)

Mark Pawsey Excerpts

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

[The Chair]

For the convenience of the Committee, I have four indications of questions that have to be asked before 2.45 pm, so moving on now to Mr Pawsey.

[Mark Pawsey (Rugby) (Con)]

Q May I move on to a bit of the Bill that we have yet to cover in our deliberations—the special administration regime? The Government say that the risk of the DCC failing is very low, but none the less want to put in this special administration regime. In what circumstances could you envisage the DCC failing, and do you agree that the likelihood of that happening is, as the Government say, very low?

Derek Lickorish: This is not my expertise, but I am under the impression that Ofgem has a responsibility to make sure that DCC can carry out its operations. If, heaven forbid, it does not work, that is probably the worst case scenario, and what happens then?

[Mark Pawsey]

Q How would you define it not working? What constitutes not working?

Derek Lickorish: We have just been talking about over the air firmware upgrades. Remember, this is a world first: we are world first with so many elements of this that have not been tested. If we are unable to do over the air firmware upgrades at scale, that must be a failure.

[Mark Pawsey]

Q Would that cause the DCC to fail and this special administration regime to kick in, in your view?

Derek Lickorish: It could do. I am afraid I feel out of my depth in being able to construct a scenario. Let us face it, we have said that DCC went live a year ago. Today, everyone is astonished to find that only 250 meters are connected to it, but it is working.

[Mark Pawsey]

Q Are the Government just being prudent by including this clause in the document?

Derek Lickorish: I think it is a very prudent situation. There must be an anxiety, otherwise why have they done it?

Richard Wiles: Likewise, I am not able to answer as to the exact reasons, but bringing previous Acts together under one is a sound idea. With regards to how DCC would reach that situation, again, I have no absolute definition as to how that could happen now.

[Matt Western (Warwick and Leamington) (Lab)]

Q This is not my specialist subject, but I am interested in the asset provider side. I am trying to get my head around this. Could you give me an idea of how many manufacturers are supplying to the industry?

Richard Wiles: There are different manufacturers for SMETS 1 and SMETS 2.

--- Later in debate ---

[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.

[Mark Pawsey]

Q May I ask once again about the special administration regime? The previous witnesses were not able to help us tremendously on that. Ms Vyas, you have come out in great support of the special administration regime. You have described the DCC as key national infrastructure. Can you explain why this is such an important part of the Bill?

Dhara Vyas: A big part of it is to do with data privacy. The creation of the DCC means that your supplier has access to your information, but via the DCC. Consumers retain control of their information and allow their supplier to access their information on a daily, half-hourly or monthly—as a minimum—basis.

[Mark Pawsey]

Q This is the provision in respect of the very unlikely possibility of the DCC becoming insolvent.

Dhara Vyas: I am so sorry; I thought you meant a comment on the DCC in general, not the actual provision in the Bill.

[Mark Pawsey]

Q No, I am particularly interested in why you think that the special administration regime is such an important part of the Bill.

Dhara Vyas: As a backstop, because the DCC should not be in a position where it could fail.

[Mark Pawsey]

Q Under what circumstances could it possibly fail?

Dhara Vyas: My understanding of the provision in the Bill is that it is to ensure that financially it is kept afloat.

[Mark Pawsey]

Q Why should it not remain afloat? That is the question I am asking. What is the likelihood of that ever happening? How could the need for it ever arise?

Dhara Vyas: If suppliers are not able to keep on—I think the DCC is funded by suppliers?

Sacha Deshmukh: I am not an expert in special administration regimes either, but my understanding is that however unlikely this is, this form of regime structure is relatively common in large infrastructure suppliers in the country, whether in the water sector, the rail sector or, in this case, the energy sector with this new infrastructure provider. But I am afraid that beyond that, I am not an expert in special administration regimes.

[Mark Pawsey]

All right, we will save it for the next witness.

Dhara Vyas: The rationale behind our response is very much that it is crucial that it should not fail.

[The Chair]

We aim to finish this session at 3.15 pm, and I have two colleagues who want to speak, Mr McCabe and Mr Kerr. I call Mr McCabe.