Clause 170 - Smart meters: extension of time for exercise of powers

Energy Bill [Lords] – in a Public Bill Committee at 3:15 pm on 8 June 2023.

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Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero) 3:15, 8 June 2023

I beg to move amendment 100, in clause 170, page 146, line 7, at end insert—

“(5) Within six months of the date of this section coming into force, the Secretary of State must produce and lay before Parliament a report setting out options for securing a guaranteed roll-out of smart meters to at least 70% of premises in all regions and nations of the United Kingdom by 2025.

(6) The report under subsection (5) must consider, among other options—

(a) obligatory smart meter installation,

(b) transfer of responsibility for smart meter roll-out to Distribution Network Operators, and

(c) time limits for phasing out meters which are not smart meters.”

The purpose of a report under this amendment is to emphasise that the Government should be aiming for at least 70% coverage in all regions and nations of the UK by 2025.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

The amendment relates to clause 170, which is very much another stand-alone clause; it concerns smart meters, and nothing else in the Bill relates to smart meters. We think that there ought to be a rather more serious approach to the question of smart meters and their present position in the energy firmament than the clause provides. I want to amplify that for a moment.

Where we are with smart meters is nothing short of a creeping long-term disaster as far as the UK energy economy is concerned. I am sure that Members will be aware that the introduction of smart meters came about through a 2012 piece of legislation with a view to starting the roll-out in about 2013 or 2014. The Minister responsible for the 2012 legislation said that the roll-out would start in 2014 and would be complete by 2019, when we would have 100% smart meters across the country. Ever since the 2012 legislation and the beginning of the roll-out, there have been repeated returns to the legislative process, including the Smart Meters Act 2018, which among other things included various measures on the Data Communications Company, about which I perhaps should not say too much for fear of becoming upset.

The thrust of that Act was to extend the timescale during which there would be jurisdiction over the process by the regulator, various other people and the DCC from 2019 to 2023. And here we are in 2023, having a further go at doing exactly the same: extending the exercise of powers from November 2023 to 1 November 2028. It is as though, if we continue to flog the dead horse for another five years, maybe the horse will miraculously come back to life again and we will all have the smart meters installed.

Photo of Katherine Fletcher Katherine Fletcher Conservative, South Ribble

I can speak from my own personal experience about why the horse is not dead and is benefiting from new technology. I wanted to have a smart meter and I could not, because the mobile phone signal was not good enough in the north of England. We have made great strides since 2019, so I think that horse still has a breath of life as technology, especially gigabit coverage, expands.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

My dead horse was perhaps something of an over-dramatic metaphor, but at the very least the horse is pretty sickly. That is partly because the smart meter wide area systems in the north of England are different from those in the south of England; the roll-out of smart meters in the north of England and in particular regions has been much slower and more problematic than has been the case in the south of England.

When we see the roll-out of smart meters now being 56% of all meters in Great Britain, the figure hides a number disturbing points, one of which I think the hon. Member for South Ribble will certainly want to worry about: that the roll-out in certain parts of Great Britain—strictly speaking, statistics are not provided on a regional basis, so I am citing evidence gathered by other means—could be as low as 30-odd per cent. in certain regions of the UK.

That is important not just because it is a good idea to have a smart meter that reads bills so that people do not have to continue to send their reading in, and not just because someone can look at their meter and see what sort of energy they have used and therefore can economise —although those are important things. One of the overwhelmingly important parts of the smart meter roll-out has always been and will always be the extent to which the smart meter network gives the country the opportunity to move forward radically with different forms of managing its electricity structures, including: a demand-side basis equivalent to the supply-side basis; ensuring that systems are resilient in terms of the information the smart meters are giving out; and enabling both prosumers and consumers to come closer together when it comes to what is going in and out of the smart meter via self-generation or other devices. There are all sorts of things, including half-hourly settlements, that will collectively make our energy system much greener, much better and much more resilient.

Indeed, the ability of smart meters to aggregate data—another area that we might want to consider—means they can read in real time the nation’s electricity activity. In the context of the roll-out of electric vehicles and all that goes with it, and all sorts of other things such as heat pumps, the ability to gauge in aggregate electricity demand at particular times, including where that demand may stress the system, means that activities can be undertaken that will divert from that and use the system much more effectively. That all depends on what is happening with smart meters and the information they give out. It is about—Daily Mail, take note—not capturing people’s personal information but capturing aggregate information that comes out of smart meter use as a whole. And that is where we are in a potentially disastrous position for the future, because the 55% roll-out does not mean 55% of all meters; as I have said, there are big regional divergences. I am very pleased that the hon. Member for South Ribble has got her smart meter in—[Interruption.] She has not.

Photo of Katherine Fletcher Katherine Fletcher Conservative, South Ribble 3:30, 8 June 2023

Unfortunately, I have only an electricity one now, after the mobile phone signal was upgraded; the gas cannot take it, because of the construction of the house. There are a number of practical problems that we have to get over. The issue is not just consumer desire.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

Indeed. That was why I was pretty dubious about the 2G system, essentially, being used for this purpose in the north of the country. It is not fit for purpose and will not be fit for purpose in the future. It needs to be substantially revised.

Photo of Katherine Fletcher Katherine Fletcher Conservative, South Ribble

No, we haven’t got any phone signal: not 2G—nothing.

Photo of Katherine Fletcher Katherine Fletcher Conservative, South Ribble

It doesn’t matter what G it is if you haven’t got one.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

Yes. The various retail energy companies that have been responsible for the roll-out have in many instances tried their hardest, but they have been overcome by the sort of obstacles that the hon. Member mentions. For example, in an urban environment, meters may be in the basement of a block of flats and then somehow the smart meter is supposed to communicate from the 7th floor to the meters in the basement—the arrangements between the meter and the householder. That is over and above the problems with radio signals and phone signals that there have been in the north of England.

The roll-out is 55% after nine years of active operation, so let us say that that goes on at the same rate, although it very probably will not, because we have captured all the low-hanging fruit as far as smart meters are concerned, and smart meters are getting more and more difficult to install.

Photo of Charlotte Nichols Charlotte Nichols Labour, Warrington North

My hon. Friend the shadow Minister is making an important point about where smart meters cannot always be installed and some of the difficulties that there have been in this process. I am sure that both he and the Secretary of State will be aware of the situation in the area around RAF Fylingdales, for example, where, because of the strength of some of the radio technology used there, people cannot get a smart meter in something like a 40-mile radius of the airbase. Does he think that the Government considered such things when they put in the 2019 target that they have so spectacularly failed to hit?

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

My hon. Friend is absolutely right: the Government did not consider that. There were discussions at the time of the earlier smart meter roll-out about radio systems that could get over precisely those problems by patching in—that is, going on the back of a good radio signal and patch in on the next radio signal, where the overwhelming radio signal is against signals operating properly. But that decision was not made at the time. It was a one-frequency signal for the south of England and phone arrangements for the north of England, with the results that we now see.

Halfway through the roll-out it was decided to change the specification of the meter itself. Because the process of changing the specification was so slow, a number of retail companies that had large stocks of the original meters continued to install the SMETS1 meters long after they should have stopped installing them—just because they had those stocks, which the new specification had not got round to replacing because of the delays in the so-called SMETS2 meters coming on to the market and being installed. Consequently, a number of meters are still not operating in smart mode, because they are either awaiting update or replacement so that they can go into the smarter system. Of the 31.3 million smart and advanced meters that are currently in homes, only 28.1 million are operating in smart mode. The roll-out is worse than it looks from the overall statistics.

What do we do about all that? The Government have put a clause in the Bill that simply says to retail companies, “Okay, we are going to give you more of the same. We are going to regulate you and give you targets”—which, by and large, the retail companies are not achieving—“and if you don’t achieve those targets we are going to fine you and whip you harder to ensure you achieve them.” Frankly, if we go on in the present direction we will get to 2028, and we do not need detailed maths to demonstrate that we will not be much further forward in the roll-out.

That is important because, in terms of the use of smart meters across the board to collect aggregate data for marking our system as a whole, we probably need about 70% penetration to get the figures right under the circumstances. We are way away from that, and we will be for a quite some time. We may well have a situation where our smart systems are racing ahead, but the means of communication on those smart systems are not, thus the smart system itself is compromised in the medium to long term.

Amendment 100 seeks to put some options in front of the Government. It states that

“the Secretary of State must produce and lay before Parliament a report setting out options for securing a guaranteed roll-out of smart meters to at least 70% of premises in all regions and nations of the United Kingdom by 2025.”

That is a reasonable target to try and aim for. Not that we would necessarily adopt this approach right now, but the amendment then states that the report must consider, among other options, different ways of rolling out smart meters for the future.

Members may push back substantially on obligatory smart meter installation. Do we transfer responsibility for the remaining smart meter roll-outs from the retail companies, perhaps to distribution network operators? That would put an end to the current system, in which literally four or five installers could go up the same street on the same day to try to install smart meters on different premises, depending on what retail company the person was with. There would instead be one body that would be installing smart meters in the various regions, and doing so in a much more systematic way. By the way, a lot of the to-ing and fro-ing that goes on when someone switches supplies to their smart meter, and how that can be transferred in an operable way, would be ended as well.

I am on record from about 2015, I think, saying that it was not a bright idea to have given the roll-out of the smart meter system to energy retailers, and that it should have been given to distribution network operators at that particular point. That is now a widespread view, and, looking back with the wisdom of Captain Hindsight, it is something that we should have considered. We can still consider it now because smart meters are not owned by the companies that install them. They pretty much all employ third parties, which actually own the meters in people’s homes, to run them. We could relatively easily —without transferring the ownership of the smart meters from those third parties—transfer the contracting agent from energy retail companies to district network operators.

The Minister is a little less advanced in years than I am, and may not remember the switchover in television lines from 405 to 625. That was basically accomplished by saying, “You can keep a 405 line television—you don’t have to have a 625 one—but it might not work in a few years’ time if you have kept your 405 TV.” The switchover was accomplished pretty much in good time, and universally. We are asking the Government for a report that considers all the different options for getting us out of the hole that we are in regarding the smart meter roll-out, to ensure that smart meters can fully play the role that we want them to play in our future low-carbon energy economy, and that we have the means to do that and can confidently come back with something better than the flog-a-sickly-horse routine in the amendment.

I hope the Minister will have a positive response to the amendment. I feel so fed up with yet again considering a Bill that just seeks more of the same that I am tempted to press it to a Division if he is unable to come substantially towards what we are saying regarding the future of smart meters. It is that important. I am trying to ensure that some Government Members go home so that we can win, but obviously it is up to the Minister how far he can come towards that view regarding the future of smart meters.

Photo of Olivia Blake Olivia Blake Labour, Sheffield, Hallam

The amendment is eminently sensible. I speak with the experience in my constituency before Christmas of what is now referred to as the great gas flood of Stannington. Hundreds of millions of litres of water entered the gas system, causing 3,000 properties to have water ingress, in some cases it was so harsh that water was coming through gas appliances and hitting the ceiling with force, or wrecking the whole interior of people’s properties. I mention that because almost every property involved in the crisis had to have its meter replaced. To the exasperation of some of my constituents, their smart meters had to be replaced with refurbished meters. We had issues with the second-hand meters that were put in.

I am still carrying out conversations with the energy companies because there were differences in the units of some of the meters. Some measure cubic metres and some measure cubic feet, which means that some people are getting a very good deal at the moment on their energy, because their energy company does not know that they changed the unit, and some people are getting awfully ripped off. It is very complicated, but because Cadent, which did a fantastic job during the crisis to make people’s homes safe and to ensure that the faulty gas meters were immediately replaced—I have no problem with that—did not have any agency providing smart meters, there was a missed opportunity to upgrade or keep them.

We have actually seen a decline in the number of smart meters in my constituency because of that major incident. We know that such incidents will probably become increasingly likely and with climate change there are likely to be more problems with water ingress—although hopefully not at the scale we had in my constituency, which left constituents without hot water and gas for many weeks during a very cold snap when there was snow on the ground.

The amendment, and especially proposed new subsections 6(b) and (c), would have helped my constituents not only to have their smart meters resolved at the right time by the right people—that is, the distribution network operators—but to not have the issues they are having to grapple with now as they try to tackle bills of £5,000, which some people have received as a result of what happened. Given the way things unfolded, it all fell to Cadent to sort out the problem and the suppliers were nowhere near the situation. If we have another situation in which 3,000-plus properties get affected in some way, the same thing will happen, and not in a way that is helpful to consumers.

I hope that has given the Committee food for thought as to why this might be a useful amendment to support, given that it is, in its very nature, difficult when we have such a complicated system with suppliers. We have quite a simple system of distribution network operators, as my hon. Friend the Member for Southampton, Test has outlined, so that approach would be useful. The phasing out is just another obvious step that we should look at. In my experience, it is simply not good enough if there are warehouses full of meters that are not fit for purpose that are going to be used in an emergency. That is one of the last things that should be learned from the significant incident that affected many people in my constituency.

Photo of Andrew Bowie Andrew Bowie Parliamentary Under Secretary of State (Department for Energy Security and Net Zero) 3:45, 8 June 2023

I thank Members for their contributions on amendment 100. The situation in the hon. Member for Sheffield, Hallam’s constituency over the winter period sounds dreadful. My heart goes out to all those affected and I would be happy to arrange meetings with the relevant Minister in the Department for Energy Security and Net Zero, if she has not already had one, because it cannot be that we find ourselves in that situation again, should that event take place—we hope not—in her constituency or, indeed, in any other constituency throughout the country. That has to be addressed.

On the amendment more widely, I like to think of myself as a glass half-full, positive guy. I think we should be celebrating the fact that more than 32.4 million houses, homes and residences in the United Kingdom now have smart meters. That is nearly 54% of homes and we should celebrate that. Indeed, on the point about older smart meters not being able to connect to the network, I am happy to tell the Committee that more than 12 million SMETS1 meters have now been connected to the Data Communications Company’s network, which enables communication with all energy suppliers so that consumers regain and retain their smart devices. That work continues at pace and, indeed, I can inform the Committee that through the wonders of modern technology the upgrade is happening remotely without consumers needing to take any action themselves. That is all good stuff and I hope people can join me in being positive and congratulate the work of officials and everybody in the industry who has been in charge of the roll-out thus far.

I thank the hon. Member for Southampton, Test for his amendment. I know that it comes from the right place and that he wants to see an increase in the pace and scale of our smart meter roll-out in the United Kingdom, for all the reasons he set out. I reassure the Committee that His Majesty’s Government have already taken measures to normalise smart metering as the default meter offer across Britain. Indeed, under the smart meter targets framework, which began only in 2022, energy suppliers have minimum annual installation targets for smart meters until the end of 2025. We believe that will drive the highest possible levels of smart meter coverage. I know, however, that the hon. Gentleman disagrees. Those targets are binding and Ofgem is responsible for regulating suppliers against them, with a range of enforcement tools at its disposal.

Energy suppliers have a long-standing obligation to take all reasonable steps to install a smart meter when a meter is fitted for the first time or an existing meter needs to be replaced. Their installation targets for 2022 and 2023 have already been set and, as the Committee may be aware, we have recently consulted on suppliers’ minimum installation targets for 2024 and 2025—here is a number that we can all cheer about—at coverage levels over and above the 70% called for in the amendment. We are currently considering the evidence provided by stakeholders and industry, and the Government will issue their response in due course. That work supersedes the need for the report requested in the amendment.

The amendment also calls for the report to consider the transfer of responsibility for the smart meter roll-out to distribution network operators. The Committee might recall that the option of a DNO roll-out was carefully considered and consulted on in 2009, at the start of the smart meter programme, when another party was in government. It was discarded as an inappropriate model for a roll-out that has, rightly, always prioritised consumer benefits. Who am I to question the decisions of the then new Labour Government?

A supplier-led roll-out will deliver more benefits for Great Britain. Metering has also been the responsibility of energy suppliers which, unlike network operators, have an existing direct relationship with their consumers. To change the approach at this stage would slow down roll-out progress considerably, reducing the crucial resultant benefits for consumers and our energy system.

Finally, the amendment proposes mandating smart meters or a date-limited phase-out of non-smart meters. You will be interested to learn, Ms Nokes, that such an approach to installations would present considerable practical barriers. For those who refuse, energy suppliers would in practice need to obtain forced powers of entry, which would be costly and highly intrusive for consumers.

I have already described the comprehensive regulation in place that is driving industry to deliver the highest levels of smart coverage, without mandating consumers. There remains good consumer demand for smart meters and, as I have explained, making smart meters mandatory is unnecessary and counterproductive, given the current high levels of uptake. I hope that, given the reassurances I have provided, the hon. Member for Southampton, Test will feel able to withdraw his amendment.

Let me turn briefly to clause 170. As I have said, 32.4 million energy meters in homes and small businesses across Great Britain were smart by March 2023. That is a significant achievement in one of the most ambitious upgrades to our energy infrastructure for a generation, but there is still more to do.

On 1 November 2023, the regulatory powers that the Secretary of State has in relation to smart metering are due to expire. Those vital powers have been used by the Government to establish and develop the framework necessary to support a successful smart meter roll-out across Great Britain, giving households and small businesses the information they need to feel in control and manage their energy usage. Clause 170 would extend by five years, from 1 November 2023 to 1 November 2028—we will be coming to the end of this period of Conservative government then—the period within which the Secretary of State can exercise the powers in relation to smart metering contained in the Energy Act 2008, the Electricity Act 1989 and the Gas Act 1986.

The powers provide Government with the ability to modify energy licence conditions and documents maintained in accordance with the energy licence conditions—for example, industry codes—and create new licensable activities or veto a proposed transfer of the whole or any part of a smart meter communication licence. The clause does not change the nature of the existing powers. So far, the powers have enabled the Government to drive significant progress in the smart meter roll-out, realising huge benefits for consumers and our energy system. They have been used to require energy suppliers to use smart meters that are interoperable and meet robust security requirements, and to ensure that consumers receive energy efficiency advice at the point of installation.

Clause 170 will also enable us to deliver the four-year targets framework for smart metering through to December 2025, ensuring that energy suppliers’ smart meter installation targets remain robust and effective, after which we must maximise the long-term benefits of a Great Britain-wide smart metering system, following a post-implementation review.

There is robust evidence from the roll-out to date that consumers are achieving sustained savings using their smart meters and in-home displays. Unleashing the full potential of smart systems and flexibility in our energy sector will reduce the costs of managing Britain’s energy system by up to £10 billion a year by 2050. I therefore commend the clause to the Committee.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Department for Business, Energy and Industrial Strategy) (Energy and Climate Change), Shadow Minister (Climate Change and Net Zero)

The Minister is not just a glass half-full guy; he is a glass overflowing and going down the side of the glass on to the table kind of guy. I am not sure I can work out the best metaphor. This is like someone being just over halfway round a marathon course and noticing that all the officials have gone home and everyone else has packed up. This person is unlikely to complete the course because everybody has gone and they are not quite sure how to get to the end, but then they sit by the side of the road and say, “Yippee, I have done 14 miles. That is a great achievement. We should all be proud of ourselves for doing that.” That was never the purpose of the smart meter roll-out; the purpose was to get full smart meter coverage in the shortest time. That was what the Government said at every stage of the process.

Some very early consultations took place when the last Labour Government were in office, but no legislation was passed and no formal material about legislation was published until the Conservatives had been in power for two years. I really do not think it is much to do with the previous Labour Government, though it was a good try.

I am disappointed, to be honest. The Minister has given us a Panglossian version of the smart meter world, but I am sure he knows that things are not well at all in that world. There is no gainsaying the really hard work of officials, companies, installers and everyone who has done such good, hard work to get the roll-out complete—I am not saying anything about them. I am saying that the original goal of the smart meter programme is so far off beam now as to make it really difficult to achieve its original purpose in the time that is left for us to get our act together and get those smart meters in place.

I know we are all about to go home—I hope we are all about to go home—so I hope the Committee will not feel too bad about being detained for another five minutes to have a brief Division on this amendment, because it is important that we put on the record that we really want something more to happen in respect of smart meters than is currently happening. I am sure, Ms Nokes, that you will be in the unenviable position of having to decide on the tie and where we go next. That is an exciting duty. [Interruption.] Oh yes, sorry—the SNP spokesman slipped out unnoticed; that is not like him at all. We would still like to push the amendment to a vote, even though it is likely to be negatived, for the reasons I have outlined.

Question put, That the amendment be made.

Division number 4 Energy Bill [Lords] — Clause 170 - Smart meters: extension of time for exercise of powers

Aye: 5 MPs

No: 6 MPs

Aye: A-Z by last name

No: A-Z by last name

The Committee divided: Ayes 5, Noes 6.

Question accordingly negatived.

Clause 170 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Joy Morrissey.)

Adjourned till Tuesday 13 June at twenty-five past Nine o’clock.

Written evidence reported to the House

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