House of Commons Library

Smart Meters Act 2018

Published Friday, August 17, 2018

This Commons Library briefing contains background information on smart meters and the roll out, discussion on the clauses of the Smart Meters Bill, and comment on the Bill. The Bill received Royal Assent on 23 May 2018 without amendment, becoming the Smart Meters Act 2018.

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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 Energy 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:

  • extend the powers of the Secretary of State to implement and direct the rollout of smart gas and electricity meters from 2018 to 2023; and
  • to create a ‘special administration regime’ for the national smart meter communication and data service provider.This Briefing Paper contains background information on smart meters and the roll out, discussion on the clauses of the Bill, and comment on the Bill.

The Smart Meters Act 2018 (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.

This Briefing Paper contains background information on smart meters and the roll out, discussion on the clauses of the Bill, and comment on the Bill.

The Bill received Royal Assent on 23 May 2018 without amendment.

Commons Briefing papers CBP-8120

Authors: Suzanna Hinson; Lorraine Conway

Topics: Electricity, Energy, Energy conservation

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