London, U.K. --- (METERING.COM) --- November 7, 2007 - Ofgem, the U.K. gas and electricity regulatory authority, has called on the government to create a stable and sound policy platform for smart meter delivery as soon as possible, saying that the continued debate over the metering market model is stalling progress on interoperability and other important matters.
Responding to the government’s Energy Billing and Metering consultation, which is aimed at seeking views on a nationwide smart meter rollout, Ofgem says: “Without clear direction, the debate will drift and smart meter investment plans for domestic customers will be further delayed... We urge government to do all it can to end the current debate about the metering market model as soon as possible, and to create a policy platform for real progress on smart meter delivery.”
Ofgem says the proposals for domestic energy billing and metering set out in the consultation document go some way to recognising that any government action, whether to meet carbon targets or to achieve compliance with the EU Energy Services Directive, needs to be proportionate and no more prescriptive than necessary.
However, the proposal to require suppliers to provide electricity clip-on visual display units for an interim period is a costly intervention that is unlikely to deliver any benefits and will distract suppliers and delay the introduction of smarter meters. In particular the concern is that offers of a free display are likely to be taken up disproportionately by better off customers, but the costs will be paid for by all customers, including poorer and more vulnerable customers.
Ofgem says suppliers have strong incentives to introduce smart metering to provide their customers with energy management services and improved customer service, given the high and volatile energy prices of the last few years and the prospect of them continuing given the challenge of reducing carbon emissions to tackle climate change. However, the 5 year rollout program to the business market that the government proposes to mandate is counterproductive and raises all kinds of compliance and implementation issues which do not in themselves contribute to carbon reduction. Moreover, for the rollout to domestic customers government is urged not to adopt measures, such as the regional franchise model proposed by the larger suppliers, which are unnecessary to deliver smart meters and that would leave domestic customers to carry the risks associated with expensive meters and poor technology choices for decades to come.
While suppliers are entitled to argue that significant industry change and new areas of supplier cooperation may be required if the key benefits of smart meters are to be captured, this falls a long way short of making an effective case for abandoning the competitive market that is being established, says Ofgem.