Source · Select Committees · Public Accounts Committee
Recommendation 19
19
Accepted
One point four million smart meters lost communication; replacement incentives for suppliers are weak.
Conclusion
According to the Department and Energy UK, the third category included around 1.4 million meters that were working at the point of installation but had since lost communication.59 This includes first generation meters, known as SMETS1, that needed to be ‘enrolled’ (in effect, connected) to the central data and communication platform infrastructure to continue functioning when consumers switch suppliers. In June 2023, the Department told us it might not be possible to enrol 500,000 of these SMETS1 meters, in which case they might ultimately need to be replaced.60 Suppliers’ regulatory framework only requires them to take ‘all reasonable steps’ to replace non-functioning smart meters and doing so does not count towards their binding targets, which only cover new smart meters.61 Suppliers consider this leads them to prioritise installation of new smart meters over replacing non-functioning ones they have previously installed. The Department disagrees, suggesting the existence of a regulatory requirement for replacing a non-functioning meter means there is no practical incentive for suppliers to prioritise meeting their binding targets to install new smart meters over replacing non-functioning meters.62 However, Ofgem acknowledges that ‘all reasonable steps’ (to replace non- functioning meters) is a harder regime to enforce than a binding target to install meters.63 56 C&AG’s Report, Key facts, para 13 57 C&AG’s Report, para 23 58 Q 48 59 Q 48; Correspondence submitted by Head of Future Retail Markets, Energy UK, dated 6 July 2023 60 Q 48 61 Qq 15, 34 and 35 62 C&AG’s Report, para 1.16 63 Q 72 16 Update on the rollout of smart meters Energy UK told us that despite the differentiation between requirements suppliers have processes in place to address metering issues and getting meters working is critical to a positive consumer experience. There are also commercial incentives to want to keep meters working. When smart meters are not working the upfront cost of the meter, i
Government Response Summary
The government acknowledges the committee's observation on non-functioning smart meters, agreeing that suppliers should monitor and maintain their metering estate, and highlighting the department's ongoing work to develop good practice, track performance, and Ofgem's role in regulating existing licence conditions. It also mentions seeking agreement on voluntary good practice for In Home Displays, without ruling out future regulation.
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation. Target implementation date: April 2024 5.2 The department agrees that energy suppliers should have the right resources and analytical insights in place to both monitor and maintain the ‘health’ of their metering estate. To provide support to this activity, the department has developed and continues to revise good practice, and tracks energy supplier performance. The department's ongoing work to drive down the number of non-operating meters has shown that those suppliers that have the right resources in place can do this effectively and successfully, with non-operating meter numbers reducing for the last 12 months. 5.3 Through licence conditions, the government requires energy suppliers to take all reasonable steps to operate smart meters in smart mode. Ofgem is responsible for regulating energy suppliers against its licence conditions requirements and in its April 2023 Open Letter, Ofgem was clear that it expects energy suppliers to be proactive in identifying and remedying non-operational smart meters and to have systems and processes in place to facilitate this. 5.4 Energy suppliers are required to maintain In Home Displays (IHD) within the first twelve months following installation and fix or replace any device which is found to be faulty. Working with industry, the department has developed and is working to seek agreement to voluntary good practice principles towards IHD provision to ensure a more consistent and positive experience beyond this twelve-month period and has not ruled out further regulation if necessary.