Recommendation 53

HM Government · verbatim extract Acknowledged

The Department and Ofgem want as many homes and small businesses as possible to benefit from smart meters. These are the default form of energy metering in Great Britain, with over half of meters now smart. BEIS and Ofgem agree with the Committee’s presentation of the benefits of smart meters in prepayment mode, considering these to be an effective incentive for consumers to switch from outdated traditional prepayment meters. The consumer choice approach to the smart meter rollout in Great Britain was informed by extensive research, which found the extent to which consumer benefits of the rollout were realised depended upon consumers engaging with their smart meters and energy consumption data. The research found a mandatory approach was likely to erode these longer-term benefits, as consumers are less likely to engage with their In-Home Display, and change their energy consumption behaviour, if they are not persuaded of the advantages of doing so. Furthermore, a mandatory approach to smart prepayment installations would present considerable practical barriers. For example, the prevalence of indoor meters in Great to their premises for meters to be installed. In a mandatory approach, for those that refuse installations, energy suppliers would in practice need to obtain forced powers of entry, which would reduce overall installation capacity, be costly and intrusive for consumers, and would be particularly undesirable in the current energy market context. Instead, BEIS continues to favour a consumer centric approach. To drive consumer uptake of smart meters amongst prepayment consumers across Great Britain, BEIS works in close collaboration with Smart Energy GB (an industry-funded body obligated through energy supply licence conditions to assist consumers with low incomes or prepayment meters to realise the benefits of smart metering) and their partner organisations, including National Energy Action, to run targeted campaigns and tailored partnerships activities. Further activity to promote the benefits of smart prepayment services is planned to continue throughout Autumn 2022. approaches to incentivise smart prepayment take up, including some adding free top-up credit to their customers’ meters. 16 Responses to the Committee’s Third Report of Session 2022–23 These approaches are effective. 13% of all smart meters are in prepayment mode which is broadly in line with the overall levels of prepayment meters in the market (14%)1. of the gas and electricity supply licences. These licence conditions require energy suppliers to meet minimum annual installation targets and publish their progress on providing smart meters to their prepayment customers on their websites. The ‘New and Replacement Obligation’ (NRO) is one of a number of obligations in the supply licences requiring suppliers to provide all customers with interoperable smart meter technology. These obligations affect both credit and prepayment customers. Ofgem expects suppliers to comply with the NRO; regularly engaging with suppliers and assessing their compliance with the obligation, in addition to other obligations relating to smart metering. Ofgem will continue to review suppliers’ performance against the NRO and other obligations relating to the smart meter rollout, and has been clear to suppliers that, if they do not meet these obligations, they will consider enforcement action against them, in line with enforcement guidelines and in the context of other enforcement priorities. We expect new installations of traditional (non-smart) meters to continue to decline, as smart meters are now the default meter in Great Britain, and stocks of traditional meter equipment are run down. BEIS and Ofgem will continue to work with Smart Energy GB, consumer groups and wider industry to encourage the uptake of prepayment smart meters by consumers and their installation by energy suppliers. While BEIS will continue to closely monitor smart prepayment delivery and take up, we consider for the reasons outlined above our current approach remains appropriate in the current energy market context.