Smart Meters Bill (Second sitting) Debate
Full Debate: Read Full DebateMatt Western
Main Page: Matt Western (Labour - Warwick and Leamington)Department Debates - View all Matt Western's debates with the Department for Business, Energy and Industrial Strategy
(6 years, 9 months ago)
Public Bill CommitteesQ
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.
Q
Richard Wiles: There are different manufacturers for SMETS 1 and SMETS 2.
Q
Richard Wiles: There are probably about half a dozen different manufacturers that are providing SMETS 1 solutions, and it depends on the scale that they are deploying at. We are the two companies sitting at the top of the table; collectively we have the largest market share of the SMETS 1 devices going out there. We have supplied multi-millions of devices, smart meters, communication hubs and connected devices that hang off that through our communications hub and mini DCC head-end systems. There are other companies out there that have provided a smaller amount, but I cannot give you a definite figure on the volume of that.
Q
Derek Lickorish: The old Ferraris disc meter had a lifespan on circuit starting at about 18 years. It came in, you put an airline on it, took the dust off it, and then put it out for another 18. We are now talking about a very sophisticated electronic device, and I do not think we know the long-term answer to that, but it ought to start with 15 years.
Q
Derek Lickorish: No, there are two issues. There is the technical issue, and we are saying that you can deal with the technical issue.
That is what I thought.
Derek Lickorish: Then it comes down to commercial contracts.
That is the point I want to get to.
Derek Lickorish: This was an issue raised some time ago—in fact, probably two, but maybe three, years ago—over deemed rentals. You were getting enormous deemed rentals being charged by some meter asset providers to somebody who was going to use their meter, because they had inherited it on change of supplier. Some of those are not regulated businesses and people smell an opportunity on this sort of thing, in particular when it is in the state that it is—it is all relatively new—but then there are forces that will create anxiety about an asset’s longevity in that space, so the deemed rental will be high. It is rational to be high. That is because the framework that sits all around this is uncertain and, as we all know, markets like certainty. These people—they are financiers—want certainty, and if all the time we keep saying, “Well, SMETS 2 are just around the corner, no more SMETS 1 meters” it all creates a fog and a fuzz that will drive what I believe to be irrational behaviour on some of the deemed rentals. Ofgem is aware of it, BEIS is aware of it and this is another issue that the industry needs to galvanise around, because if we are not careful, if we do not get proper interoperability tested, which is in trouble at the moment, a risk premium will be attached to those contracts.
So the costs go up.
Derek Lickorish: So the costs go up. Bear in mind, and forgive me for saying, that this is a £12 billion programme. DCC alone has seen its costs go from £1.3 billion to £2.1 billion. Forgive me, but every £1 billion will give you 10 210-bed hospitals. These are huge sums of money and we need to make sure that the framework that sits around them is accurate and fit for purpose.
Q
Derek Lickorish: Yes, there is.
Q
Richard Wiles: We manufacture SMETS 1 and SMETS 2 devices. We are prepared to ramp up our production line to make sure that SMETS 1 can run in parallel to ensure that any potential shortfalls in capacity can be overcome by our increased production. We can continue to keep the momentum and supply chain running in that respect. Regarding installers, by the end of SMETS 1, we are probably looking at around 12 million devices. If the current installation rate continues through to July next year, that equates to around 1.3 million smart meters per month that need to be installed.
Whether we need additional installers is something that Trilliant has not supplied services on, other than installation processes, but organisations are geared up to supply the installation requirement for SMETS 1 and SMETS 2 to meet that deadline.
Q
Dr Sarah Darby: The specification is already there to allow for prosumption, for people who are generating—
Order. I am afraid I have no choice. That brings us to the end of the time allotted for the Committee to ask questions. I am sorry to cut you off in your prime. Perhaps, as the question has been brought in, you will see each other after the Committee. I thank you both for being our witnesses this afternoon and, on behalf of the Committee, for giving us the benefit of your wisdom. Line-by-line consideration of the Bill will begin at 11.30 am on Thursday in Committee Room 12.