Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
Ofgem balances stronger enforcement action for missed smart meter targets with supplier stability.
Conclusion
Ofgem believes that the missed 2022 targets were nevertheless achievable, even for large suppliers with ‘lots of incumbent customers’.48 It considers the role it can play in suppliers meeting their installation targets is to provide a clear signal and an incentive to suppliers to invest appropriately and take meeting their targets seriously.49 It is now in discussions with the majority of those suppliers that did not meet their targets, and has previously used its enforcement powers for smart meters to require one energy supplier, OVO Energy, to contribute more than £1 million to a ‘redress fund’.50 It is considering more severe financial penalties, but does not want enforcement action to force or lead to supplier failures.51
Government Response Summary
The government acknowledges the committee's findings regarding Ofgem's approach to missed smart meter targets, reiterating Ofgem's existing enforcement guidelines and plans to continue its considered approach to non-compliance, and stating that the department already considers supplier engagement in target setting.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 For instances of possible non-compliance with targets, the Office of Gas and Electricity Markets (Ofgem) will gather information from a variety of sources, some of which is provided directly and some of which is requested via informal and formal processes in line with its Enforcement Guidelines. This includes consideration of consumer detriment, the priority of the issue and, in line with Ofgem’s new duties, the impact on Net Zero obligations before proceeding. Ofgem intends to continue this considered approach into the future and always look for ways to make this process more comprehensive and robust. 4.3 The department considers that energy suppliers need to engage their customers effectively to convert demand for smart metering efficiently into successfully completed installations. They should be continually adjusting and trialling approaches in response to evolving consumer attitudes, as well as events and emerging opportunities. Those energy suppliers that are doing this more effectively are performing better against their minimum installation targets. In addition, when setting minimum annual installation targets, the department took account of levels of consumer demand over time as smart meter penetration increases. Therefore, a lack of progress in this area can reasonably be taken into account by Ofgem when considering enforcement against energy supplier performance.