I am pleased to inform the House that the Department of Energy and Climate Change is today publishing Towards a smarter future: Government response to the consultation on electricity and gas smart metering. This document summarises responses to the consultation on smart metering published by the Government in May 2009 and sets out the Government's conclusions.
Smart meters will pave the way for a transformation in the way that energy is supplied and consumed, contributing to our goals of energy security and carbon reduction. They will provide energy consumers with real-time information about their energy use, enabling them to monitor and reduce their energy consumption and carbon emissions. Smart meters will support improved energy efficiency advice and facilitate smoother, faster switching between suppliers. They are an important first step towards the future development of a smarter grid delivering improved network efficiency and responsiveness; in turn this will help facilitate the introduction and increased use of renewable energy and ultra low carbon vehicles (electric and plug-in hybrids).
In October 2008 we announced our intention to mandate a rollout of electricity and gas smart meters to all homes in Great Britain with the aim of completing the rollout by the end of 2020. The May 2009 consultation document addressed fundamental issues for the organisation of the rollout. In particular the consultation document made proposals for the delivery model for domestic smart meters, the minimum high-level functional requirements for smart meters, and the approach to extending meter functionality requirements in the small and medium non-domestic sector. Our decisions on these fundamental points will provide the platform for the detailed work now required to move towards the rollout of smart meters.
The delivery model for domestic smart meters
The Government have concluded that the central communications model offers the best approach to Britain's domestic smart meter rollout. Under this model the energy supply companies will be responsible for procuring and installing meters, while communications between the meters and utility companies will be co-ordinated centrally. The central communications model combines strong incentives for energy suppliers to deliver a high quality service to their customers, with wide scope to simplify and improve industry processes, making it easier to switch between suppliers. We believe that this approach will minimise the time and risk involved in preparing for rollout, in particular since it avoids changing the disposition of responsibility for metering services. Metering is currently the responsibility of energy suppliers and this model avoids fundamental change to these arrangements. We also believe that the development of smart grids can be fostered effectively under this approach, in particular by ensuring the requirements of network business are reflected appropriately in the minimum meter specification and the communications solution.
The high-level smart functionality requirements for domestic electricity and gas meters and the provision of a real-time display and information
The Government also confirm the proposals set out in the consultation document on high-level smart meter functionality requirements, with the exception of functionality to remotely enable/disable gas supply. In respect of the latter issue, we believe further work is needed to assess issues raised in consultation responses before reaching final decisions. A range of proposals were made in relation to the requirements of smart grids, but we have concluded that smart grid functionality is a subset of the high-level requirements already proposed in the consultation. The next stage is to develop these high-level proposals in more detail.
Consultation responses expressed a range of views on the issue of standalone displays. Having considered the response, the Government's position remains that a standalone display should be provided with the smart meter. In our view the provision of a display is important to securing the consumer benefits of smart metering, delivering real-time information to consumers on their energy consumption in a readily accessible form. The next step will be to develop the requirements in more detail. As part of this work we will consider further what specific requirements should apply in cases where it is clear that the individual consumer does not wish to have such a display. However it will be important that this does not detract from the general premise that a freestanding display should be provided with the meter.
The approach on smart functionality requirements for non-domestic meters
The Government have adjusted their proposals in this area following the consultation. We are confirming our intention to mandate the installation of meters with smart functionality at non-domestic sites covered by the consultation (those in electricity profile classes 3 and 4 and non-domestic gas sites with consumption of less than 732 MWh per annum) on the same timescale as for domestic sites, with exceptions under certain circumstances. However, under our revised proposals, the exceptions will be much more limited in respect of meters installed after April 2014. We therefore propose to require that electricity and gas meters at sites in this category must have smart functionality by the end of 2020 except:
where advanced meters have been installed before April 2014 and the customer wishes to retain the existing meters;
where advanced meters have been installed after April 2014 under pre-existing contractual arrangements; or
where there are technical constraints on the achievement of smart functionality.
We consider that this approach will best balance the need to support future smart grids by maximising installation of smart functionality with the desirability of allowing energy and carbon savings from advanced installations to continue in the short- to medium-term. However, we recognise that exceptions will need to be carefully framed, taking into account the technical and commercial complexities. We will discuss these revised proposals with suppliers, purchasers, meter and energy service providers and other stakeholders to refine the details before consulting on more detailed proposals.
The proposed implementation programme
Decisions set out in the response document provide the platform for the major programme of detailed implementation work that will be needed to support the mass rollout of smart meters under a mandate. A central smart meter implementation programme is therefore being established to design and implement new cross-industry arrangements, in co-ordination with the change programmes which industry participants will need to implement themselves. The first phase of the smart metering programme will be a joint DECC/Ofgem initiative. DECC will chair an overarching DECC/Ofgem Strategic Programme Board. This board will provide the necessary strategic oversight and direction to the programme. Ofgem E-Serve will manage and ensure effective delivery of phase one of the programme on behalf of DECC.
We firmly agree with those consultation respondents who have emphasised that the implementation programme must effectively engage the full range of stakeholders. In particular, a focus on the needs and perspectives of consumers must be at the heart of decision-making at each stage under the programme, as well as the views of industry participants who will take on responsibility for delivery. The implementation programme will therefore develop a range of mechanisms to ensure that stakeholders' views are captured and taken into account.
I have placed copies of Towards a smarter future: Government response to the consultation on electricity and gas smart metering in the Libraries of the House. I have also placed in the Libraries copies of a number of associated documents which we are also publishing today: Impact assessment of a GB-wide smart meter roll out for the domestic sector; Impact assessment of smart/advanced meters roll out to small and medium businesses; and a report from Baringa Partners Smart meter roll-out: energy network business market model and definition and evaluation project.