Do regulators really want change in billing and metering?


Amatsia Kashti 
Energy regulators the world over are supposed to protect the interests of consumers, yet more often than not they find themselves caring more for the health of the utility industry. It is not a conspiracy, but the result of a natural human instinct.

Like other interested parties Ofgem, the British electricity and gas regulator, responded to a Department for Trade and Industry (DTI) consultation paper entitled ‘Energy Billing and Metering: Changing Customer Behaviour’.

Ofgem, an organisation that prides itself on being independent, could challenge some of the assumptions underlying the DTI’s outlook. After all, their interests are contradictory: Whilst the DTI looks after the interests of the industry, Ofgem represents the customers.

The two sides should not necessarily see eye-to-eye when profits, costs or environmental interests are at stake.
Yet they appear to be in perfect harmony. Both consider real time metering combined with a sophisticated customer information display as an immature and expensive venture that should be delayed for as long as possible, hopefully until someone else has to deal with this expensive hot potato.

One can understand where the DTI is coming from: Investing large sums in new technologies traditionally scares industry and is only resolved when challenged by a successful maverick newcomer who makes the majority follow. But why does the regulator follow suit? 

Is the regulator trying to protect the industry on the back of the customers? Or is it that it simply does not understand the issues involved? My guess is the latter. 

The metering world has been intertwined in a symbiotic relationship with the utility industry since its conception. Neither party can or wants to imagine operating independently and hence their monolithic approach to everything ‘metering’. It is, of course, always cheaper in the short run not to change.

Ofgem’s response to the latest consultation paper is therefore the classic response of a unit that has ready-made reactions stored in the drawer for any occasion:  

  • Smart metering and customer information systems? – Of course we are for it.
  • Competition? – We are the champions! 
  • When? – Well, this is a complicated matter and will need ‘some time’ to be investigated further.

The regulator with its well-meaning personnel cannot see beyond the box into which it has been forced in the past. The logic that it follows stipulates that customers will benefit from a stronger and healthier industry. True by itself, but how can it not see that maintaining the historic interdependence between the utilities and the metering industries causes more harm than good to all parties?

For a summary of Ofgem’s response click the link below:

U.K. energy regulator releases response to government consultation