This Commons Library briefing contains background information on smart meters and the roll out, discussion on the clauses of the Smart Meters Bill 2017-19, and comment on the Bill. The Bill passed Report Stage and Third Reading on 5 February 2018 after being amended by the Government at Committee to give Ofgem the power to modify licence codes to enable half-hourly billing to be calculated using information obtained from smart meters. The Bill had its First Reading in the Lords on 6 February 2018.Jump to full report >>
Energy smart meters cover gas and electricity usage. By 2020, the Government wants every home and small business in Great Britain to have been offered an energy smart meter. Government data shows that as of June 2017, nearly 7.7 million smart meters have been installed in homes and businesses. More details on Smart Meters is available in the Library Briefing paper on Smart Meters.
Potential benefits of energy smart meters are that they make energy visible to customers, enabling reduced customer consumption; helping demand management, and ensuring security of supply. Consumers also benefit from more accurate billing, and potential for new tariffs. Suppliers benefit from avoided site visits, reduced enquiries and customer service overheads from estimated billing, and networks benefit from outage detection and management and more informed decisions on network capacity.
Customer concerns regarding energy smart meters include data protection and privacy, connectivity issues with some meters, installation visits and doorstep selling, health concerns, disconnection of prepayment meters, and the ability to switch supplier and keep the ‘smart functionality’. There have also been concerns raised about the cost of the rollout, which is paid by suppliers and recovered over time through all energy bills. Concern has also been raised about the timescale of the roll out, and whether it will be completed by 2020.
Legislation for Smart Meters is included in the Energy Act 2008, Electricity Act 1989 and the Gas Act 1986. These Acts include existing powers for the Secretary of State for activities relating to smart meter licensing, modifying licence conditions and industry codes. The powers were originally due to end in the 2013 but the Energy Act 2011 extended them until 2018.
The management of the communication with smart meters is central to the smart meter roll out. The Government granted Smart DCC Ltd (also known as the Data Communications Company or the DCC) a licence in September 2013 to establish and manage the data and communications network to connect smart meters to the business systems of energy suppliers (and other intermediaries and authorised users). The DCC system went live in November 2016. The Government consulted in 2011 on whether a special administration regime should be created to provide protection against financial failure of the DCC, recognising that additional legislation would be needed to put this in place. In January 2016, the Government published draft legislation including provisions to:
The Smart Meters Bill 2017-19 (referred to in this paper as ‘The Bill’) has two main purposes. First, it extends the powers relating to smart meter licensing granted to the Secretary of State in the Energy Act 2008 again, from 2018 to 2023. Second, it introduces a special administration regime for the DCC in the “unlikely” event of its insolvency.
The Bill passed its second reading on 24 October 2017. During the debate a number of concerns were raised around the possibility that the 2020 deadline would be missed, and that customers already paying for the roll out could also end up liable for bankruptcy of the Data Communications Company.
Committee Stage scrutiny of the Bill commenced on 21 November 2017, and concluded on 28 November after six sittings.
The Opposition tabled a number of probing amendments to clause 1 of the Bill relating to:
All Opposition amendments were either withdrawn after debate, or rejected following a division. The Government committed to setting up a round-table with DEFRA (the department responsible for waste policy), BEIS, Steve McCabe and the Shadow Minister to discuss the issue of meter disposal further. The Opposition also tabled new clauses calling for the Government to carry out reviews of the smart meter roll-out, all of which were withdrawn.
Some Opposition amendments were tabled to clauses 2-9 to probe how smart meter communication licensee (smcl) administration orders would work in practice. There was only one division, namely amendment 16 in clause 4 which applies Sections 156 to 167 of, and Schedules 20 and 21 to, the Energy Act 2004 in relation to an smcl administration order. This Opposition amendment sought to apply the affirmative procedure to the use of provisions of Schedule 20 of the Energy Act 2004 under this Bill. Following a lengthy debate, the amendment was pressed to a vote and defeated (8 votes to 9).
The Government tabled three new clauses (and consequential amendments) which were added to the Bill. The Government’s new clauses amended the Bill to give Ofgem the power to modify licence codes to enable half-hourly billing to be calculated using information obtained from smart meters. The Minister told the committee that although these new clauses were being added after Second Reading, the Department had consulted with industry and Ofgem, and the amendments are “very well spoken about in the industry.” Although there were opposition concerns that these new clauses had been added to the Bill at this stage, and were not directly about smart meters.
The Bill passed Report and Third Reading without division on 5 February 2018. The Opposition said it did not oppose the Bill, but felt there were still real questions to be addressed around the rollout and insolvency arrangements of the DCC.
The Bill had its First Reading in the Lords on 6 February 2018.
Commons Briefing papers CBP-8120
Authors: David Hirst; Suzanna Hinson; Lorraine Conway