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Smart Meters - Utopia or IT Disaster ?

September 13, 2017 2:11 PM
By Nigel Orchard in GLD Challenge Magazine (Summer 2017)

Gordon Brown's government announced the smart meter implementation program (SMIP) in 2006 - every home will have one by 2020, the biggest infrastructure change since natural gas in 1974. Eleven years later we have not seen much progress. True about 25% are installed, but these are only compatible with a single energy supplier. When you change, the meter becomes dumb and needs to be replaced. At £250 a pop, and 10% churn, that's a cost of £25 per household per annum, greater than the £18 savings from being "in control". Not very smart according to recent papers by the Institute of Directors (IoD), Institute of Engineering and Technology (IET) and several BBC broadcasts.

The SMIP started well. Government, regulator, energy companies and technologists in the downward supply chain all working together to achieve the utopia - a robust, secure, low bandwidth communication channel to every home in the country, paid for by socialised costs to support innovation and free trade in energy. A level playing field for all to participate. Sounds good doesn't it? However things soon things started to go awry when government realised they were totally dependent on the energy companies to make this work. Specifications were developed to bring benefits to the industry. No such specification were drawn up by consumer groups. The meter has always acted as the legal "arbitrator" between supply and demand; that solid spinning wheel with dials quoted so often in court cases throughout the world. Not anymore it seems. Energy companies can receive data accurate to every half-an hour; the consumer receives no such data. Energy companies can disconnect a consumer remotely at the flick of a switch (and there are several cases when they have done so to compel a consumer to pay up if there is a dispute). No such opportunity for a consumer to switch energy supplier quickly and effectively. Installation costs are passed directly on to the consumer, hidden in the bill. No such contribution from the supplier's profit line to this huge investment.

The second problem has been the sever lack of expertise. Engineering professionals in metering were made redundant in the 90s when the industry was privatised. A cost not deemed essential by the Thatcher City boys and not reviewed properly during the Blair years. Surely markets will sort it out. Trouble is, markets won't solve anything if there is not substantial expertise within them. Junior engineers from competing meter vendor on standards working group are not sufficient to develop the requirements on which this whole infrastructure depends. Many say the SMIP should have been the responsibility of of the distribution businesses, with their natural monopoly, as in the rest of the world. But actually, if we get it right, the energy supplier is the best advocate because he is most customer facing.

Thirdly the change of government has not given us the consistency we needed. True, it was policy of the three major Parties, and our Ed Davey did well as Energy Minister to increase the number of small energy suppliers participating in the market. But after 2010 the SMIP was taken over by a succession of Tory peers, who instead of challenging the already obvious polarisation of the market, allowed banks and public creamers to profit from the open cheque book the suppliers had been given.

What has resulted is a mish-mash of already out-dated technology serving the ambitions of technology corporates rather than supporting the consumer to achieve best practise. An inward looking down-ward supply chain that is aggressively protecting its unearned and unwarranted revenue stream. The 2017 manifestos gave it away, with Lib Dems and Labour not even mentioning smart meters, and the Tories down-grading it from "mandate suppliers" to "offer consumers". An offer they can't refuse ? I don't think so.

Fortunately all is not doom and gloom. The utopia is possible; consumers incentivised by real market rewards for sustainable micro-generation, energy demand reduction, and storage. Plus a huge market for the third party energy advisor, acting for the consumer (rather than just a supplier's agent) and helping him to achieve best value without compromising sustainability. With such a utopia, we would not have an energy crisis. We would not need to frack, or depend on nuclear. We could invest in solar, micro-CHP, electricity storage, electric cars with confidence that we were in control of the outcome of our investment. And the energy companies would be the main enablers, similar to the banking and telecoms world.

There are also businesses out there that provide the interoperability and smart metering technology we badly need. At a fraction of the cost of the current incumbent (the DCC, a Capita company, appointed in 2013, costing over a £100 M per annum, delivering nothing as yet). And as a consumer and into politics, you can help if offered a smart meter, insist that;

  1. it is compatible if you change supplier, and if not you get a refund of the costs

  1. you will not be remotely disconnected or moved to prepayment without the same legal provisions required for a mechanical meter (warrant of entry)

  1. you have the option receive the half-hourly data that the supplier is reading, for your own use

  1. you have an immediate replacement or refund if communications is poor, or display fails

Here is an example when we need consumer protection, markets, and infrastructure with socialised costs. An ideal challenge for the Liberal Democrats, and one I am eager to take. Will you join me ?

Nigel Orchard is Chairman of the Hammersmith and Fulham Lib Dems, and on the Executive of the Green Lib Dems and Lib Dem Christian Forum.