Smart Metering: Electricity and Gas
Stephen Metcalfe Excerpts(7 years, 3 months ago)
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Stephen Metcalfe (South Basildon and East Thurrock) (Con)
I beg to move,
That this House has considered the Sixth Report of the Science and Technology Committee, Evidence Check: Smart metering of electricity and gas, HC 161, and the Government response, HC 846.
It is a pleasure to serve under your chairmanship, Mr Turner. It is good to see some fellow Committee members here for what I am sure will be an interesting debate for us, and hopefully for the Minister and shadow Minister.
By way of background, the Government’s smart metering implementation programme requires energy suppliers to offer smart electricity and gas meters to all homes and small businesses in Great Britain by 2020. The idea behind smart metering is that the meter communicates directly with the supplier using wireless technologies, removing the need for meter readings or estimated bills and allowing price information to be transmitted to the home. Through an in-home display, the customer can see in pounds and pence how much electricity or gas is being used, nearly in real time.
The smart meter roll-out is a major project, with total costs of nearly £11 billion and projected benefits of around £16 billion. Millions of people already have some experience of the roll-out of smart meters, and millions more will be offered one in the next few years. It should be no surprise, then, that the Select Committee on Science and Technology was not the first to look at smart metering. Colleagues on what was then the Select Committee on Energy and Climate Change examined the beginnings of the smart meter roll-out in 2013 and again in 2015, and the Public Accounts Committee held an inquiry in 2014. Their work provided an excellent foundation for the Science and Technology Committee’s scrutiny.
My Committee’s report was published on 24 September 2016. It was the output of a short inquiry concentrated specifically on the evidence behind the smart metering policy, rather than on exploring the roll-out’s progress from a value for money or project management perspective as other Committees had done. The inquiry took place under the direction of my predecessor as Chair, my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood), to whom I am grateful for all her work in guiding the Committee so well before she was promoted to Government. We received the Government’s response at the end of November, shortly after I became Chair.
This debate is timely. A few months after our report, the Government published an updated cost-benefit analysis of the smart meter roll-out that shed further light on the issues explored by the Committee. We were pleased by the publication of that document, as it fulfilled our recommendation that an update to the 2014 figures should be provided. However, the analysis included some concerning figures and information that I am sure will feature prominently in this debate. In my remarks, I will focus on three of the report’s recommendations in particular: first, the need to act with greater urgency to address some of the technical limitations of the early first-generation smart meters; secondly, the need for the Government to be clearer about the national benefits of smart metering, as opposed to those for the individual consumer; thirdly, the need for excellent consumer engagement to realise the benefits of smart metering before, during and after installation.
We learned during our inquiry that the roll-out began in 2013 with a foundation phase of smart meters built to a specification known as SMETS 1, if Members will excuse the ugly acronym. The latest quarterly figures from the Department for Business, Energy and Industrial Strategy show that there are now more than 4 million such meters in homes across Britain. We are now moving towards the mass roll-out phase, which will use meters described as SMETS 2. However, SMETS 2 meters rely on the implementation of a piece of national infrastructure, the Data Communications Company, which has been delayed several times in going live.
During our inquiry, we heard that the early SMETS 1 meters had some unfortunate technical limitations. One relates to interoperability among suppliers: customers who switch their energy supplier after installation run the risk of losing the meters’ smart functionality. Depending which supplier they switch from and to, the meter could revert to being a “dumb”—or, perhaps more kindly, a traditional—meter. Last year, The Daily Telegraph reported that more than 130,000 smart meters were now operating in dumb mode as a result of switching.
It appears that it might be technically possible to modify the early meters to work with the national communications infrastructure—the phrase is “adopt them into DCC”—to ensure that smart functionality is retained when the customer switches supplier. The DCC has been commissioned to undertake a feasibility project to assess the options, but at present, the Government merely have an ambition to sort it all out by 2020. The problem is that the scale of the task of adopting the early meters into the DCC is growing by the day.
As the Minister will know, the DCC finally went live in November, but the delays mean that suppliers will still be installing SMETS 1 meters for some time to come while the DCC undergoes testing. The latest cost-benefit analysis suggests that 8 million SMETS 1 meters will be installed in total during the roll-out, far more than the 5.4 million estimated during our inquiry and double the 4 million installed so far. In fact, the DCC estimates that there could be more than 10 million SMETS 1 meters, affecting more than 6 million households. From a consumer point of view, that means that 6 million households, or around one in five, will effectively have to choose between smart and switch. If they switch supplier to get a better deal, they risk losing smart functionality, but if they stay with a bad tariff, they get a better idea of what their bills will be and are more able to take action to reduce them.
I am sure that hon. Members will agree that it is a difficult choice. Those who wait for SMETS 2 can have it all, but until the problem is solved, those with SMETS 1 meters will be forced to choose. The most extreme scenario is the early adopter who received a meter in 2013 but must put up with the situation until 2020, or perhaps even longer if the Government’s ambition is not met. I am sure that we would all agree that seven years of waiting for the full benefits of smart is a long time. I would not blame someone in that situation for being somewhat unimpressed with the roll-out.
Our report recommended timely action, not least because the problem was known at the very start of the programme. The Government’s response to us was essentially that it is a work in progress, but we know that the scale of the problem has grown. In his remarks at the end of this debate, will the Minister address the need for greater urgency to prevent a poor experience for up to 6 million households? Moreover, will he consider setting a hard deadline by which suppliers must take necessary steps for their SMETS 1 meters to work with the DCC system?
The Government also told us that they had put in place protection
“to ensure consumers are appropriately informed that they may lose smart services”.
Effectively, it is a condition of suppliers’ licences that they provide that information at the point of installation, and when the supplier gains a customer through switching. However, in a Citizens Advice survey last year, just 3% of consumers said that they had received information about the limitations of SMETS 1 before installation and only 13% thought that their meter functionality would be affected if they switched. Is the Minister confident that customers are receiving information about the limitations of SMETS 1 and that they understand that information?
The second theme that I would like to explore is the need to better communicate the national benefits of smart metering. Put simply, one of the advantages of the communications link between the supplier and the meter is the scope for offering time-of-use tariffs. Some hon. Members may be familiar with the idea of economy 7 meters, which have a day rate and a night rate. Smart metering enables a concept that is broadly similar but much more flexible. Broadly speaking, if suppliers can incentivise customers to run their dishwashers while the sun is shining or their washing machines when the wind is blowing, they can take advantage of renewables without the network cost of having to store the electricity until it is needed. As a result, they may be able to avoid having to build a new fossil fuel plant. As we know, there is a problem with peak demand; if we can smooth out electricity use and lower the peak, we will not need quite so much fossil fuel capacity in the energy network to keep the lights on.
There is also an element of future-proofing. In coming years, we may all be driving electric vehicles. The first thing someone will do after coming home from work will be to begin charging the car so that it is ready for the morning commute the next day, which could mean a huge spike in demand in the early evening. Smart meters could pave the way for smart charging—charging in the sense of replenishing the battery—to balance the total demand on the network, and hence the price, against when cars need to be charged. They may not need to be charged straight away to get to 100% capacity by 8 o’clock the following morning. Optimising when they are charged may mean being able to avoid having to fire up gas plants to deal with the evening surge in demand.
That is my very general description, with no numbers attached, of some of the national benefits of the smart metering project. The Committee concluded that, without a proper description,
“there is a risk that the project will become viewed solely as an inefficient way of helping consumers to make small savings on their energy bills.”
When the Committee published its report, the estimated saving for the average dual fuel bill through smart metering or through the behaviour change that it prompts was £26 per year by 2020—about 50p per week. That is the national figure, although I accept that for some people the saving may be considerably greater because they have used the installation of a smart meter to change their own habits at home. The latest assessment downgrades that benefit to only £11 per year by 2020. Surely that is a harder sell to a consumer if the Government cannot explain why smart metering is good for the country too and why it is a valuable investment for the future.
The Committee was clear that the national benefits of smart metering need to be communicated
“alongside emphasising savings for individual customers.”
Unfortunately, the Government dismissed that recommendation on the basis that successful smart metering projects in other countries
“have messages focussed on benefits that are immediately relevant to consumers and not complicated by references to longer-term benefits.”
Will the Minister confirm whether that is still the Government’s view?
We asked the Government to provide us with more information on the national benefits. Disappointingly, that information took the form of a list of three items, which were,
“reduced need for new generation capacity to be built…more efficient use of existing generation assets… and…avoided investment in transmission and distribution networks.”
I think we would all agree that there is a distinct lack of specifics there. Perhaps we are wrong and the national benefits are not of any significance, but if so, the analysis needs a rethink.
If hon. Members had time last week, which I suspect they did not, they may have watched an ITV documentary on smart meters, which concluded that
“the only ones who are sure to benefit are the power companies themselves—and to millions of hard-pressed bill payers, that will sound all too familiar.”
Is it any wonder that reporters are focusing on the tensions between benefits to the individual and to the suppliers, when there appears to have been little attempt to communicate the much wider national benefits of smart metering? If the project is considered only in such simple terms, the Government may have millions of annoyed consumers on their hands. I ask the Minister to address in his remarks the need to explain the national benefit as well as the saving to individual households of £11 a year.
The final theme that I would like to highlight from the report is the need for consumer engagement in order to realise the benefits of smart metering. Witnesses to our inquiry told us that “fit and forget” was not an appropriate approach, because the smartness lies not in the technology itself but in what can be done with it. We told the Government that there must be no compromise on consumer engagement in the rush to meet the roll-out deadline of 2020. If suppliers skimp on their obligations to get as many meters on the wall as possible, consumers will not have the confidence to make use of the information that they provide. I was encouraged by the Government’s response:
“The Government agrees with this recommendation. Consumer engagement is at the heart of the smart meter roll-out in Great Britain. It is central to ensuring consumers realise the benefits of smart metering…The Government is…carrying out further work to assess the provision of post-installation support for vulnerable and pre-payment consumers and will seek to ensure good practice is shared across industry.”
Will the Minister tell us a little more about how that work is going?
Does the Minister think that there is adequate aftercare for consumers? What form is it taking? After all, a new gadget can be quite intimidating for some people. If that gadget ends up in a drawer, it has all been a waste of effort. Vulnerable and pre-payment customers have the most to gain from smart meters, but they strike me as the ones who are most at risk of being neglected after installation. What does the Minister think is the minimum standard of aftercare that we should look for? Is he confident that it is being delivered at the moment?
To allow other hon. Members plenty of time to speak, I will draw my remarks to a close, although the Committee’s report explores many other interesting themes that I am sure will be touched on in the debate. I will conclude with the words of one of the Committee’s final recommendations, which might provide a helpful segue into many other aspects of the project:
“The Government has invested in trialling smart meters and in studies of their impact. Smart Energy GB is also making use of evidence in understanding consumer behaviour. Despite the growing evidence base underpinning the project, there are a number of areas where the Government clearly believes there are misconceptions and misunderstandings about the utility, impact, and security of smart metering. The Government should reflect on these in the context of the mass rollout and consider how best to communicate with consumers on some of these topics.”
Today’s debate could serve as a helpful way of communicating with Members and the wider public on these topics, given that people may already have concerns about the smart metering programme. I look forward to contributions from other hon. Members and to the Minister’s response, which I am sure will address many of the concerns that have been raised.
Mr Andrew Turner (in the Chair)
Members have about 10 minutes each. I call Patricia Gibson to speak.
Stephen Metcalfe
Welcome to the Chair, Mr Flello. I thank the Minister for his words and for some of his assurances. Forgive me if I failed to recognise the scale of the challenge. I do not; I get that it is a huge undertaking. However, he will agree that the role of the Science and Technology Committee is to provide challenge where possible. We all recognise that there are huge potential benefits to be found through smart metering. We want those benefits to be available as quickly as possible and for them to be rolled out in a way that we can all understand.
We heard praise and concern in all the contributions. I have a long list of people, which I will not have time to go through, but they covered issues around fuel poverty and who actually gains: the consumer or the supplier? The one issue I had not imagined would come up this afternoon was using a smart meter as a replacement for a television, running around the house, seeing what to switch off. However, from my experience, I know when someone has left their straighteners or a television on in the house, because the meter goes into the red, and we do benefit from that.
We all want this programme to work, and with enough effort I am sure we will get it to work. We will continue to keep an eye on it, and I am sure that the Minister will also—
Robert Flello (in the Chair)
Order.
Motion lapsed (Standing Order No. 10(6)).
Oral Answers to Questions
Stephen Metcalfe Excerpts(7 years, 3 months ago)
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Mr Hurd
This country and this Government are on track to invest in excess of £8 billion a year by 2020 in continuing the transition to a clean energy system. We are talking about a low-carbon economy that is generating, at the last count, at least 450,000 jobs. As I made clear in an earlier announcement, there are new commitments to contract for difference auctions for less mature renewable technologies, so the Government’s commitment to clean energy is not in doubt.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Greg Clark
I very much hope that my hon. Friend’s Committee will engage with the consultation. If we are to have a strategy that endures, it is important that it takes into account the views of all those on both sides of the House with an interest in securing our economic prosperity and future scientific excellence.
Industrial Strategy Consultation
Stephen Metcalfe Excerpts(7 years, 3 months ago)
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Greg Clark
My responsibilities are broad enough and keeping me busy without my taking my right hon. Friend the Home Secretary’s job. That said, the hon. Gentleman’s question gives me the opportunity to re-emphasise that the strategy is a whole-Government approach, and of course it is important that the brightest and the best can continue to be employed here and to make the contribution they do to the whole UK economy.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
There is obviously much to be welcomed in the strategy, but may I express my particular support for the importance being placed on science investment and developing skills? To that end, will my right hon. Friend, first, seize the moment and make the case across Government for increasing spending on science and technology to 3% of GDP, which many of our competitor nations have done and which the Science and Technology Committee, which I chair, has called for? Secondly, will he please publish the digital strategy as a matter of urgency?
Greg Clark
I am grateful to the Chairman of the Select Committee for pushing us in that direction. He will see in the Green Paper that we are clear sighted about the need to invest in science and research, and this is not just Government investment; we want to create the conditions in which the private sector can invest in research and development. On the digital strategy, that is very much part of the programme that this industrial strategy is leading, and he will not have long to wait before he sees it.
Exiting the EU: Science and Research
Stephen Metcalfe Excerpts(7 years, 5 months ago)
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Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Thank you for calling me so early in this important debate, Madam Deputy Speaker. May I also thank the Government for putting aside Government time to discuss this important issue and for agreeing to tag the recent report by the Select Committee on Science and Technology, “Leaving the EU: implications and opportunities for science and research”? I am very appreciative.
Before I turn to the report and its obvious relevance to this debate, as this is the first opportunity I have had to address the House since my election as Chair of the Science and Technology Committee may I place on record my gratitude to the House for electing me to this important role? I hope I can live up to the example set by my predecessors. I pay particular tribute to my immediate predecessor, my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood), for her stewardship of the Committee over the last 15 or so months. She moved quickly to launch the inquiry back in June, and I am sure the report’s findings will inform today’s debate. I also pay tribute to the interim Chair, my hon. Friend the Member for Twickenham (Dr Mathias), who stepped into the breach prior to my election. I am very grateful to her as well. I also thank the Clerks and the staff of the Committee for all their support and guidance in these first few months. Finally in the thank yous, I would like to thank the more than 270 individuals and organisations who took time to provide written evidence in response to the Committee’s call for evidence in the preparation of the report.
I had hoped to talk a little about Brexit itself, but because time is short and there is a great deal of interest in this debate, I will leave that for another time, except to say that Brexit was not about science, which was one of the casualties, along with many other sectors that got caught up in a much bigger argument.
As we have heard, our report identifies five key themes in the concerns of the science and research community, all of which I expect will feature in hon. Members’ contributions this evening—indeed, they already have. They are: funding; people; collaboration, leadership and influence; regulation; and facilities. I will talk properly about funding and people, but as for collaboration, leadership and influence, it is of paramount importance that UK researchers continue to be part of multinational projects and continue to influence the EU’s research agenda. On regulations, it is important that those which facilitate research collaboration and EU market access are retained while others that hinder innovation are revised. As for facilities, we will have to work hard to ensure ongoing access to the multinational research facilities hosted in other countries and to protect those based in the UK.
Our report outlines some of the opportunities arising from Brexit that should be maximised, such as the opportunity to embed science and technology at the heart of the Government’s industrial opportunity; the opportunity to look at genetic modification regulation, and to improve on the EU’s overly cautious approach; and the opportunity to revise VAT rules to stimulate university and business collaboration. However, above all the Government need to set out a truly ambitious vision for science in the context of Brexit, to send the message around the world that Britain’s position as a science superpower will continue to grow. They are starting to do that, but merely being open for business is not enough if we do not have any customers. The Government must think beyond the “open for business” model.
As time is short, I will concentrate on the two main issues: people and funding. My Committee agreed to highlight people as a significant theme. We called on the Government to make an immediate commitment to exempt EU citizen scientists and researchers already working in the UK from wider potential immigration controls. Telling EU scientists and researchers who are already working in the UK that they are allowed to stay is one way in which the Government can reduce uncertainty. I have heard many warm words from the Minister for Universities, Science, Research and Innovation, from the Under-Secretary of State for Exiting the European Union, the hon. Member for Worcester (Mr Walker), and from the Prime Minister. Taking that extra step to provide reassurance for the 40,000 people to whom that applies is not a particularly big ask. Along with the risk of brain drain, the risk is that the UK will become a less attractive place for EU scientists to live, work and study.
On funding, when our report was published, I said that the autumn statement would be a chance for the Government to demonstrate their commitment to science and research in the context of Brexit, so hon. Members can imagine how delighted I was when the Chancellor responded by increasing Government investment in research and development to the tune of £2 billion a year by 2020. That is a huge step in the right direction, and a step towards meeting that 3% of GDP commitment to which all hon. Members want to sign up.
Our report noted that the Government had provided welcome and helpful short-term reassurances for the science community following the referendum, including underwriting EU funding for research and maintaining access to student loans. It is clear that the Government have done the right thing in the short term but my Committee is worried that there is no comprehensive communication strategy for those messages of reassurance. The Minister for Universities, Science, Research and Innovation has said all the right things, but I worry that not everyone has heard him. That was brought home to me this week when I met the interim chief executive of the Biotechnology and Biological Sciences Research Council, who said that she attended a meeting at which someone said they had not heard about those reassurances. There is more to be done. The message is good, but do the Government know whether it is being received? The Government clearly cannot do all the communication, but they can have a strategy for providing reassurance, a clear idea of who their message needs to reach, and an idea of who is best placed to reach those people. The recommendation from my Committee is simple. The Government have taken some very helpful first steps, but they need a clear strategy for getting that message out to everyone who needs to hear it.
As we have heard, another key concern is that science and research is not at the heart of DExEU thinking. That was highlighted to the Committee during the inquiry by the fact that a chief scientific adviser is yet to be appointed to DExEU. I hope the Minister addresses that in his closing remarks.
The Government will respond to our report in due course, but I hope its themes give hon. Members an overview of the big issues for science and research. Science and research is the jewel in the UK crown, and needs to be front and centre of the Government’s thinking. If we get this right, we can go from strength to strength and support major life science industries here in the UK, but if the needs of science are forgotten, our position as a science leader will diminish. Science is not a zero-sum game. We can create a Brexit that is both a win for UK science and a win for EU science, but that comes with a warning. Getting it wrong will not only damage the UK, but hold back the cause of science, along with our understanding of the world and our ability to exercise appropriate stewardship of it, and our capacity to make it a better place to live.
I apologise in advance for my conclusion. It is the season of good will and Christmas is coming. The Chancellor has given us some gold. We now need some frankness, some sense, and a sustainable, sensible and suitable im-myrrh-gration policy.
Oral Answers to Questions
Stephen Metcalfe Excerpts(7 years, 5 months ago)
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Greg Clark
I am grateful to the hon. Gentleman. Like him, I commend Ofgem for the arrangements that it put in place. He raises a reasonable point, and as Chairman of the Business, Energy and Industrial Strategy Committee he will want to work with me to ensure that the right arrangements are in place.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
Margot James
Earlier this year, the Prime Minister commissioned Matthew Taylor to carry out an independent review of modern employment practices, such as in my hon. Friend’s example, as part of ensuring that our economy works for everyone. I am sure that my right hon. Friend the Secretary of State for Work and Pensions will also consider my hon. Friend’s suggestion.