Smart Meters Bill

Stephen Kerr Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Tuesday 24th October 2017 Commons Chamber

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

As my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) pointed out earlier, the SNP welcomes the progress on smart meters. The Scottish Government have set out developments for the roll-out in their Scottish energy strategy, which will obviously encourage uptake.

As we have heard from many Members, the benefits of smart metering technology are more accurate bills, more convenience and better energy. The technology can enable customers to better manage their energy, so consumers will be able to get a better deal, and could help consumers with more competitive tariffs. There are, though, serious concerns that must be dealt with before we can welcome everything in the Bill or, indeed, the whole roll-out of smart meters.

The first concern is on data and privacy. As we heard from my hon. Friend the Member for North Ayrshire and Arran, GCHQ did some work on the vulnerability of smart meters and found “glaring loopholes” that would allow access to meters. There is not only the potential for the abuse of customer information, but a security concern. If smart meters can be accessed in that way, it is potentially dangerous for national security. It is incumbent on the Government to ensure that proper controls are in place to make sure that that cannot happen.

It is important that consumers know that their data will be safe. I urge the Government to look into measures that allow the consumer to have more control over and ownership of their own data. They should have the right to look after their own information. There are clearly issues of connectivity and reliability, particularly with respect to customers’ concerns about whether units will work when they switch energy suppliers.

[Stephen Kerr (Stirling) (Con)]

Does the hon. Gentleman agree that the issues with the first generation of smart meters could easily give rise to frustration among consumers? They are encouraged to monitor their energy usage and costs and to shop around, but when they do shop around, they discover that their smart meter is no more and has deceased.

[Drew Hendry]

The hon. Gentleman makes a pertinent point. The Government need to put the consumer confidence issue front and centre and deal with it.

We must consider the costs and the potential increase in bills to pay for those costs. The right hon. Member for Don Valley (Caroline Flint) mentioned the fact that the consumer is not necessarily put first in the process. Surely, it would be appropriate for the outcome of a cheaper bill—a better deal for the consumer—to be put right at the heart of the delivery of the smart meter programme. I am not convinced that it is currently, so I suggest the Minister come back with some reassurances on how it will be.

With respect to the serious problems with consumers’ bills, the smart meter roll-out does not deliver on some of the big elephants in the room. My hon. Friend the Member for North Ayrshire and Arran mentioned Hinkley Point, one of the biggest white elephants around. The cost-benefits will be negated by the costs of Hinkley and the strike price that has been agreed, which nearly doubles the cost to consumers.

Smart metering does not tackle other issues for consumers in the different parts of the nations of the UK. For example, in my constituency and others in the highlands, we still have the inequity of consumers paying up to 6p more per unit than consumers in other parts of the UK. That cannot be right. When the Minister looks into measures to reduce costs for people in their homes, I urge him to consider some of the more pressing issues that are adding to fuel poverty.

There is, perhaps, one issue that the Minister could consider in taking forward smart meters, particularly when we get to the next generation of smart meters. We have talked a lot about the ability to switch tariffs and to monitor how much is being spent, but how easy would it be to allow consumers the ability to switch suppliers at the touch of a button in the next generation of smart meters? That is within the gift of the technology. Why is it not within the scope of the measures that we are taking forward?

I will not take up the full time that is available to me. I will just finish with a few questions. Will the Minister come back and state clearly, today and in future meetings as the roll-out goes forward, what will be done in practical terms to ensure that vulnerable people will not miss out in the roll-out of the smart meters programme? When will we see details on the next generation of meters, and will the Government consider those payment and switching options that I mentioned? When will we see the detailed roll-out of the strategy to understand how everyone will be included in this by 2020?

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I start with a slight confession: I sometimes wonder whether I am easily confused. I ask that because I have been looking at the information that the Government have put out in the briefings associated with this Bill. I have to ask myself, “Are the Government easily confused, or are the Government trying to confuse us?” I want to highlight some of the issues that I have picked up.

First, it is claimed that the extension of the Secretary of State’s powers to intervene until 2023 does not extend the actual period of the smart meter roll-out beyond the 2020 target date. The Government claim that they are on target to hit their deadline, but analysis shows that 53 million smart meters need to be installed but that only 7.7 million meters have been installed since 2011. That leaves 45 million smart meters to be installed in just a three-year period.

[Stephen Kerr]

Is there not an upside to this? The meters that have been installed so far have fairly limited functionality and interoperability. The upside is that the second generation of meters, which will be fully functional, will allow the Government to put their foot to the floor and move ahead with these meters.

[Alan Brown]

I understand the hon. Gentleman’s point, and I thank him for it. It is a bit like saying that the long-drawn-out introduction of universal credit is good, when the roll-out was a shambles. It is not enough to say, well, this roll-out is a shambles but that is good because better technology is coming further down the line.

--- Later in debate ---

[Stephen Kerr]

The other issue is connectivity. There is not the broadband or mobile telephony coverage that these rural areas need to sustain the functionality of the meters.

[Alan Brown]

I agree. There is an issue with connectivity, and a problem with gas meters on external walls. Flats and tenements quite often have banks of meters installed in communal areas, and there is not yet a solution for the installation of smart meters in those cases. Frankly, the 2020 deadline is dead in the water.

As I said, the consumer pays for any increase in labour costs and recruitment to try to hit a deadline, so that is an additional cost that eats into savings and is probably not yet projected. I am a wee bit unsure about the Government’s estimate of the financial benefits of the smart meter roll-out. I am not saying that the roll-out is not a good thing, but I do question some of the figures attributed to it. The only guarantee that consumers have is that they will have to pay for the £11 billion installation costs. As we have already heard, those costs are increasing.

There is an estimated direct consumption saving of £5.3 billion, which is only half the installation cost. There is also an assumption about long-term behaviour—that customers will continue to operate a reduced energy usage. I have a concern about human behaviour. It may be the natural instinct of many customers to modify their behaviour and turn down their electricity usage when they get smart meters, but bad habits may creep in over a long period and the savings might not be realised at the same level.

There are other estimated savings in the Government’s cost-benefit analysis that are, frankly, quite spurious. The Government estimate £8 billion of supplier benefits, but there is absolutely no guarantee that the £8 billion that suppliers are predicted to save will be passed on to consumers. The Secretary of State intervened earlier to suggest that the market will dictate that these savings will rightly be passed on to consumers, but I draw the Minister’s attention to the fact that market failure is the whole reason that we agree on energy price caps. There is no way that we can guarantee that future savings for suppliers will be passed on to consumers.

Other spurious savings estimates include carbon-related benefits of £1.3 billion and £98 million in air quality savings. Now, reducing carbon emissions is a good thing, but I question how we can quantify those reductions as savings that will go direct to the consumer. The Government estimate savings for each household of £11 per annum by 2020 and £47 per annum by 2030, and £16 billion of savings were estimated overall. However, as my colleagues have touched on, the bottom line is that these estimated savings of £16 million are completely dwarfed by the £30 billion project that is called Hinkley Point C. That wipes out any projected savings from this programme.

Other hon. Members have mentioned that all consumers are paying for this programme, so surely the fuel poor and prepayment customers should be targeted first and given assistance. We should ensure that these vulnerable customers get the smart meters they deserve. Smart meters are supposed to end estimated billing, but it is acknowledged in the Government’s own factsheet that accompanied some briefings that if somebody with a first generation meter changes supplier, it is quite possible that they will lose the functionality of the smart meter. Even if they retain some functionality, they will end up back with estimated meter readings. That is counter- productive and the opposite of what the smart meter roll-out is supposed to achieve.

It was said that the second generation roll-out will start in July 2018. Well, we need the Minister to confirm how certain that is. Will the energy suppliers be forced to move on to the second generation meters, or will they be able to use up the backlog of 2 million first generation meters or whatever the number is? What if the initial companies are doing cheap deals on the first generation meters to get them out the door? Are we still going to be stuck with them?