How much longer can UK gas and electricity regulator OFGEM carry on using its slogan “bringing choice and value to customers”? The problems caused by deregulation of the energy utilities have been highlighted in a series of reports from the National Audit Office and Energywatch, but OFGEM is ducking them and hiding behind the Regulations.
Problems in metering as a result of the way the industry has been privatised are the most important of these issues. Paraphrasing one of Lord Kelvin’s profound statements, “to meter is to know”, the writer believes that if the metering foundation stone was in order the rest would fall into place. Unfortunately the UK is going the other way, and chaos in utility metering is ensuing.
Fewer and fewer consumers are getting accurate and timely bills. This is throwing the consumer’s financial and consumption (carbon) management into chaos. At the same time energy suppliers’ administration burden is increasing, and their call centres and associated costs are out of control.
Information technology can provide the panacea – but sadly, in the UK, the use of IT in the utilities’ market has no government recognition or champion. However, The Carbon Trust may fulfil this role.
MESS AND CHAOS
Since deregulation, utility suppliers have cut their meter reading services to the bone to be competitive. The result is bills based on wildly inaccurate estimated readings, late bills, or no bills at all. Changing suppliers to get a better deal only multiplies the confusion. The old supplier may not stop billing, or may not get a proper closing reading. The new supplier often bills the wrong meter, or does not register new meters as they are added. Small to medium size enterprises (SMEs) are particularly vulnerable. What happens to the school budget when its main gas meter has not been read and the consumption (£60,000) has not been billed since 1998? What happens when a small business suddenly finds it owes £500,000 to its electricity supplier?
The most important and expensive utility supply is electricity, and this is where the chaos in metering is worst. The root cause is the way the UK electricity supply industry has been broken up, creating a confusing matrix of service providers. (See Figure 1). The seemingly endless stream of utility company takeovers and mergers multiplies the confusion.
REGULATIONS – TAIL WAGGING DOG
This is then further compounded by the complexity of the Regulations, which were drawn up by the ‘old boys’ in the industry. The whole system revolves around the Balancing and Settlements Code (BSC) which serves the interests of suppliers rather than consumers.
The BSC is essentially about accounting for the differences between what has actually been generated/consumed and what was contracted for ahead of time. To compete in the metering and data collection market under the BSC, companies have to go through endless hoops to be accredited. This discourages small entrepreneurial companies, leaving only the old denationalised service providers. And to be able to change the rules, surprise surprise, a company has to be a signatory to the BSC!
Half-hourly metering under the BSC only covers users over 100kW, which represents about 50% of total units consumed. The rest are accounted for by estimated values and assumed profiles. This makes the whole process very approximate, so that it does not justify the rigour of the accreditation process.
Where is the consumer represented in all of this? Absolutely nowhere! For a start, there is no consumer representation among the numerous ‘business suits’ on OFGEM committees who are supposed to be deciding matters on behalf of consumers. Then there is not even a right in law for the consumer to read his own meter! These issues have been pointed out to OFGEM many times, to be met with nothing but a stone wall.
The use of IT and good accurate data from high integrity AMR can simplify and transform the whole way the system operates. However, for this to happen a think tank body with enough authority needs to start with a clean sheet and an understanding of the basic needs of each party, prioritising the needs of the consumer rather than the supply industry. With good quality data from AMR and IT, it is likely that several of the bodies originally set up by the BSC will be superfluous.
A LITTLE CASE IN POINT – CODE 5 METER BLUES
Code 5 meters were introduced in 1994 as part of the second tranche of electricity liberalisation. They were the first serious attempt by the industry to use AMR, by collecting half-hourly data from consumers with demands over 100kW. Unfortunately the Code 5 specification was written around the needs of the BSC (to work in separate 30 minute accounting periods) and not the needs of the customer (for accurate totals and bills over a longer period).
At least once you get one decent meter reading in the non-half-hourly market, it will correct any previous under- or over-estimates. With Code 5 meters, the reading on the face of the meter is not used. Instead the half-hourly consumption values are logged by the meter and then added up by a remote computer to give the totals that appear on a bill. If some values go missing, the total is not correct. “Current and previous readings” are not shown on the bill, so there is no way the consumer can check against his own “eye ball readings”.
There have been many cases among EMT’s customers where the customer’s own AMR system, usually coming off the pulse output port of the Code 5 meter itself, has provided more reliable data than the half-hourly data obtained by the energy supplier through the accredited route.
CUSTOMER-OWNED AMR – THE PANACEA
With AMR and IT technology we are able to do things now that could not be done during the 1973 energy crisis, when the technology was much needed. Since 1994 Energy Metering Technology has been pathfinding the use of consumer-owned automatic utilities auditing systems, comprising DATA BIRD, radio based AMR and DYNAMAT intelligent software for energy and water management. The main focus has been to reduce consumption at large sites such as hospitals and universities.
Now metering and billing is in such a chaotic state that the technology has another appeal to consumers – it provides an accurate account of where they are financially with respect to utilities. SMEs are particularly vulnerable financially, and EMT has recently developed CHICK (son of DATA BIRD) to migrate the concepts to this market. Beyond this is the domestic market.
These systems provide accurate and timely meter readings and data integrity far superior to anything the utilities market is currently deploying – yet the bureaucratic barriers to getting the data used on the utility supply side, so that consumers can enjoy accurate and timely billing, is beyond belief! Just getting permission to connect an AMR system to a utility company’s meter can take months of bureaucracy, or require a monopoly service provider (99.5% of the market) such as Transco to carry out work on the meter at a cost determined by themselves. Then the Regulations make it virtually impossible for a supplier to accept meter readings that have come from someone other than an accredited service provider.
All this is because the subject has had no UK government champion.
NO GOVERNMENT CHAMPION
Despite endeavours to get a UK government body interested, all that has been received is lip service. The DTI and Defra say it is not within their remit. Five years ago there was the potential for UK PLC to take a world lead in technology, but the DTI has lost the plot for us! OFGEM and OFWAT, the energy and water regulators, show very little interest in helping, despite the fact that the use of such technology can assist in providing a really free market with true “choice and value to customers”.
Hopefully the relatively newly formed Carbon Trust will take up the mantle; all recent events show this might be the case. Amongst other things, a good sound metered consumption base is needed to assess the UK’s carbon savings for Kyoto. AMR and associated intelligent software is a carbon savings measure in its own right – and it seems that the Carbon Trust agrees, since ‘Automatic Monitoring and Targeting’ has been accepted on the Energy Technology List for the Enhanced Capital Allowances scheme.
Good luck to the Carbon Trust in trying to get a bit of joined-up government thinking on AMR!