Smart Metering – onerous obligation or unique opportunity?

UK Gas and electricity suppliers are required by their licence to take all reasonable steps to roll out smart meters to all of their domestic and small business customers by the end of 2020.

OFGEM has a role in monitoring suppliers’ compliance and the right for enforcement in cases of non-compliance. In spring of 2016 OFGEM requested smart meter roll-out plans from all suppliers. In a recent open letter to the industry OFGEM, having reviewed those plans, identified key areas of risk. The issues they stressed included:

  • – Building contingency time into the roll-out
  • – Monitoring and adapting strategies as the rollout progresses
  • – Conducting due diligence to ensure that third parties can deliver contracted work and ensuring appropriate contractual arrangement
  • – Having a comprehensive and dynamic approach to customer engagement

This is clearly a high priority for the industry, with consequent strategy and resource implications. But there are reasons to be optimistic and see this as an opportunity. It could be a timely incentive to promote and reinvigorate competition, with a significant upside for those that get it right.

Recently OFGEM have warned that the energy retail market is in a “last chance saloon” and risks becoming “a thing of the past”. The current situation, whereby around two thirds of customers are stuck on expensive standard variable tariffs, is “not sustainable or politically acceptable”.

Regulators have concluded that a fear of bungled switching is reinforcing the two-tier energy retail market and preventing engagement.  OFGEM believe that sorting out the switching process to make it “seamless and reliable” would be a real “game changer”.  So, smart meters have the potential to allow consumers to monitor their energy use and save by connecting to new ‘time-of-use’ tariffs. It also signals the end of estimated billing. This could inspire confidence in competition and open up a new wave of customer switching.

In addition, the commercialisation of smart energy technologies will benefit from the launch of a new £4.7 billion Industrial Strategy Challenge Fund, announced by the PM. Whilst the details of this are still being fleshed out, this is a clear indication of Government priorities and direction of travel.

So how do utility and network businesses turn this obligation for smart meting into an opportunity? DNASTREAM has a long track record in supporting utility and network companies in making technology useful.  We work with firms in redesigning their businesses in the age of smart metering.

We can deliver a Smart Enablement programme with a focus on business operating models, systems implementation and integration. In addition, DNASTREAM can provide resource and expertise to manage discrete work packages to support smart metering rollout. To find out what we can do for you just contact Richard Sykes.