Smart Meters Bill

Toby Perkins 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

[Rebecca Long Bailey]

My hon. Friend makes a fantastic point. Perhaps the Minister can confirm how the Government plan to expand public awareness about this. Beyond the availability and the benefits of smart meters, it is imperative to explain the benefits of the data they collect, as well as how consumers can access and use those data to bring their energy bills down.

We have already heard comments about data. I draw to the Minister’s attention the fact that Smart Consumer Alliance has highlighted to me that its research shows that

“several consumers in the UK have contacted their energy suppliers to securely interface to the data provided by the home area network functionality of their smart meter, but…in all cases this has been unsuccessful because energy suppliers often block connection to the meters, quoting technical difficulties and other issues”.

Those consumer requests were professionally assisted by academics and technology innovators in the UK with devices that are certified under the UK smart metering standard. As the Minister and the Secretary of State are aware, this data is very useful for research, enabling market competition through accurate tariff and supplier switching, intelligent heating systems, and consumer education and guidance in energy efficiency, as well as many future innovations in home energy management. However, despite the fact that consumers are struggling to access their own data, it is thought that these devices are being routinely used by the energy companies for their own data collection purposes.

On the design of the smart metering regulation and standards, as well as the justification for the cost of smart meters, the House is aware that consumer benefit was at the fore in discussions before implementing the roll-out. Indeed, at condition 49.4 of the energy supplier licence, there is the obligation to support, free of charge, requests for data. The amount of data collected by smart meters is enormous, and has a significant value for customers and those with whom they choose to share the data. It would therefore be encouraging to hear from the Minster what plans he has, in the light of the concerns I have raised, to ensure that consumers have unimpeded access to the data to which they are entitled.

I turn now to the second part of the Bill, on the special administration regime. Given the centrality of the DCC to the successful working of the smart meter system, it is clear that we need a plan in the event of its insolvency. I am therefore concerned by clause 7. As the explanatory notes summarise, the clause includes provision

“requiring the holder of the licence to raise the charges imposed on its customers or users so as to raise such amounts as may be determined by the Secretary of State and to pay the amounts raised to specified persons for the purpose of making good a shortfall in the property of a smart meter communication licensee available to meet the expenses of smart meter communication licensee administration.”

They go on to state:

“This will allow the costs of smart meter communication licensee administration to be recouped via the licence mechanism from the industry.”

The DCC is a wholly owned subsidiary of Capita plc, to which the task of providing all the communications and infrastructure for the operation of smart meters has been outsourced. However, it is not clear from the Bill or the explanatory notes why, in the event of this wholly owned subsidiary of Capita going into administration, customers and users, per se, should foot the bill, especially when they have already suffered the cost of the smart meter roll-out in their energy bills.

The Select Committee on Science and Technology estimated that the total consumer benefits of smart meters amount to more than £5 billion from energy saving and microgeneration. However, the benefits for suppliers, which include the big six energy companies and others, total £8 billion. Despite that, as my hon. Friend the Member for Southampton, Test (Dr Whitehead) has said to the Government, customers are estimated to pay somewhere between £130 and £200 on their bills to enable suppliers to recover the installation cost of a smart meter. In fact, when two of the big six energy companies announced price rises in February, they stated that a substantial element of the 10% increase resulted from the smart meter policy. The Government responded that they would monitor the extent to which costs were passed on to customers and intervene to make sure that customers saw the benefits.

When he sums up, will the Minister confirm what recent assessment he has made of the costs that consumers face for smart meter installation? Can he still provide evidence of a clear long-term average energy bill saving for smart meter consumers, despite the sum for installation cost recovery? What assessment has the Minister made of the possible costs involved in making good any shortfall in the property of a smart meter communication licensee that is available to meet the expenses of such a licencee’s administration? I appreciate that that is a hypothetical question and the answer is difficult to quantify, but if he has not assessed that or attempted to do so, will he confirm whether he has considered setting a limit on the cost that can be passed on to consumers? What safeguards will he put in place to protect consumers against an unfair increase in their energy bills as a result of administration expenses? Why do the costs seem to be borne by customers or users alone? Has he considered levying the recovery of such costs on any other entities that might benefit from smart meter data collection? If not, what is his rationale for not looking at those other entities?

The Minister will no doubt realise that there is invariably a risk that consumers who have smart meters installed could face an increase, rather than a reduction, in their energy bills. It would be helpful if he could provide clear assurances on that matter. Although an insolvency situation is extremely unlikely, if smart meter consumers have hanging over them the possibility that they will have to write a blank cheque for administration costs, many people will be deterred from participating in a smart roll-out.

[Toby Perkins (Chesterfield) (Lab)]

I congratulate my hon. Friend on her support for the Bill and the points that she has raised. A concern that has been raised with me is that a huge number of old-style meters are ending up in landfill. There is no need for that, because they still have value in many export markets. An enterprising company in my constituency, Meter Provida, has taken on the role of getting the old-style meters checked out and sold as exports. May I encourage my hon. Friend to put pressure on the Government during the passage of the Bill to consider enforcing compliance with the waste electrical and electronic equipment directives by companies that have old-style meters to ensure that more of them are reused?

[Rebecca Long Bailey]

My hon. Friend makes a valid point, and that is certainly something that the Opposition will take forward. It would be interesting if the Minister elaborated on the Secretary of State’s comments about the updating of SMETS 1. What will it entail, and when will it occur?

The Opposition have been clear about our concern that customers are paying for the roll-out. I fear that without adequate safeguards in the Bill, consumers may end up footing the bill for any mismanagement of the data collection regime resulting from insolvency. If that is the case, the Minister must understand the risk that this will be another example of consumer interests being shunted to one side in favour of others.

Only recently, the Government promised to knock £100 off the bills of 17 million households, but that promise is yet to be delivered on. Admittedly, following pressure, the Secretary of State came back with a legislative proposal a couple of weeks ago, but I am extremely concerned about media reports that surfaced at the weekend in which internal Government sources indicated that they might not implement the draft Bill at all. Indeed, we learned that the Government have allegedly already told energy investors that the Prime Minister’s draft Bill would be ditched if they felt that the big six power firms were doing enough to tackle high bills, and this approach has now also been confirmed by civil servants.

For the avoidance of doubt, will the Minister confirm in his summing up whether these assertions are true? If they are not, will he assure the House that no matter what pressure he, or indeed the Secretary of State, faces to shelve the energy price cap, the draft Domestic Gas and Electricity (Tariff Cap) Bill will be brought before this House and passed as urgently as possible?

--- Later in debate ---

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

We in the Scottish National party support the roll-out of smart meters, but it is essential that maximising consumer and environmental protections lies at the heart of any strategy to do so.

It is empowering for consumers to have near real-time information on their energy consumption to help them to control and manage their energy use, and in turn save money and reduce emissions. If roll-out is effective and well managed, there are obvious benefits to consumers. Nearly eight in 10 people with a smart meter would recommend one to others, and the same number with a smart meter say they have taken steps to reduce their energy consumption. Those with an in-home display model in particular feel they have a much better idea of what they are spending on energy and check it regularly. If having new technology in their homes helps consumers feel that they can exercise better control over energy consumption and be better informed about their energy use, with greater control over their bills, then of course that must be welcomed.

In previous speeches, we have heard about switching suppliers. I would like to say, right at the outset, that switching suppliers has a limited effect. Research shows that people who switch tend to be those who are better off. They switch and they save money. However, there is not a sufficient impact on the lowest income households, which are in most danger of fuel poverty. They find it much more difficult to switch suppliers.

We often hear that smart meters are free to consumers. They are not. They are paid for through energy bills. Every household will, ultimately, pay for the new meter roll-out via their bills. It is important that consumers understand that having a smart meter is a choice. Trading Standards has expressed concern that data from citizens advice bureaux suggest that consumers are not being told that they can refuse a smart meter, if they so choose.

[Toby Perkins]

There is a really important point here about consumers from the lowest income households. Given that companies have different tariffs, why do the Government or the companies themselves not say, “We’ll stop you having the responsibility of deciding the best tariff for you. We have all the data. At the end of every quarter, we’ll look at your bill, tell you what would have been the best tariff and put you on it, so you always save the money without having to do all the work yourself”? Companies should have the information to be able to do that.

[Patricia Gibson]

What the hon. Gentleman says sounds eminently sensible. The problem is that the better off and most well-informed people are switching and saving. That is being subsidised by the people who are unable to switch and save because they do not feel up to the task. The poorest households are actually subsidising the most affluent households, which have the ability and the expertise to switch and save. That is a real issue that has to be addressed. Similarly, as mentioned before, those on prepayment meters—the poorest households in our communities—must have access to smart meters if they want them.

It is important, as part of this process, that the Government’s regulatory framework clearly establishes the rights and obligations of all aspects of smart metering design, development, installation and operation, as well as monitoring and reporting. Customers must be reassured, and continue to be reassured, that their data and security are robustly protected in the course of the smart meter roll-out. There is concerning evidence, however, that smart meters are being installed before the programme’s requirements as an internet-connected energy system have been fully determined. The UK Government must do everything in their power to protect consumers during the roll-out. There were disturbing reports last March in the Financial Times of GCHQ intervening in smart meter security, claiming to have discovered glaring loopholes in meter design, and causing some alarm. Such concerns must be fully addressed.

The plan to install smart meters in every home by 2020 must not leave consumers out of pocket. It must be asked whether the cost of the roll-out will be borne by all energy consumers. The successful operation of smart meters can also be a postcode lottery. In areas with a poor mobile signal, there is a real chance that smart meters will not work. If we are applauding the merits of smart meters, this has to be borne in mind, because digital inclusion matters.

Almost 100,000 fewer households were in fuel poverty in 2015 than in the previous year in Scotland, but there is still much more to be done. The Scottish Government have commissioned a review, due to be completed next year, of the definition of fuel poverty in order to inform a new fuel poverty strategy that will be followed up by a warm homes Bill. There has to be a focus on those in most need of help to heat their homes.