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HomeD: Regulatory and Policy

(‘Space to experiment’ opportunities to operate outside full regulatory regime (Ofgem, DECC etc) – and what could be done)
(‘Space to experiment’ opportunities to operate outside full regulatory regime (Ofgem, DECC etc) – and what could be done)
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== ‘Space to experiment’ opportunities to operate outside full regulatory regime (Ofgem, DECC etc) – and what could be done ==
 
== ‘Space to experiment’ opportunities to operate outside full regulatory regime (Ofgem, DECC etc) – and what could be done ==
  
Ofgem recently launched a public consultation on 'non-traditional business models'. They aim to start a public conversation on benefits and risks to consumers of non-traditional business models and how they interact with the regulatory system. Ofgem are keen to ensure regulation does not step in the way of delivering desirable customer outcomes, protects the interests  of consumers and allow them to understand the benefits, costs and risks in changing regulation. They may face challenges at present due to their size or the structure of the energy market.
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Ofgem recently launched a public consultation on 'non-traditional business models'<ref name=":6" />. They aim to start a public conversation on benefits and risks to consumers of non-traditional business models and how they interact with the regulatory system. Ofgem are keen to ensure regulation does not step in the way of delivering desirable customer outcomes, protects the interests  of consumers and allow them to understand the benefits, costs and risks in changing regulation. They may face challenges at present due to their size or the structure of the energy market.
  
 
'''Who are they?'''
 
'''Who are they?'''
  
'''Why non-traditional business models?'''<ref>Ofgem, 2015. Non-traditional business models: Supporting transformative change in the energy market. Available from: https://www.ofgem.gov.uk/ofgem-publications/93586/non-traditionalbusinessmodelsdiscussionpaper-pdf</ref>
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'''Why non-traditional business models?'''<ref name=":6">Ofgem, 2015. Non-traditional business models: Supporting transformative change in the energy market. Available from: https://www.ofgem.gov.uk/ofgem-publications/93586/non-traditionalbusinessmodelsdiscussionpaper-pdf</ref>
 
* Help enable the transition to a low carbon supply system
 
* Help enable the transition to a low carbon supply system
 
* Allow rapid technological innovation
 
* Allow rapid technological innovation

Revision as of 16:21, 21 July 2015

It may be useful to start with a timeline of the background policy development, and the development stages (Tranches 1 to 6). The key regulations governing the UK energy sector are the Electricity Act 1989 and Gas Act 1986, which have been amended many times[1]. The Energy Acts, 2008 and 2011 govern these changes in relation to smart metering[1]. The Acts prohibit activities such as supplying electricity without holding a licence to do so. Licence holders must comply with the Licence conditions and this is enforced by Ofgem, the Gas and Electricity Markets Authority[1]. Under the licence conditions sit the industry codes detailing the technical and commercial obligations[1].

The regulatory framework is undergoing changes to get up to speed on smart meter roll-out. Changes include updating energy licences and codes, for example requiring energy companies to roll-out smart meters. Additional licenseable activity has been introduced including the provision of communication between suppliers and other parties and smart meters in consumer premises. In addition a Smart Energy Code sets outs the rules, rights and obligations of all parties for the new metering obligations.

A timeline of the policy leading to smart meter rollout, governing regulation and licensing [2, 3, 4, 5, 6, 7, 8]
[2] [3] [4] [5] [6] [7] [8]

Smart meter roll-out plans and timetable (incl. opportunities for involvement, data issues, support for vulnerable etc)

Overall progress and plans

We are currently at the Foundation Stage (since December 2012[9]). We are expected to enter the 'mass-roll out' phase April 2016, which is later than the most recently revised date of December 2015. The delays are caused by difficulties in developing specifications and protocols and there is now further delay in notifying SMETS2 and GBCS which has a knock on effect to the DCC[10][11]. However, delays are resulting in increased cost, for example energy companies who have invested in training, such as British Gas are keen to keep the momentum going so they can continue to keep the trained installers in work[11].

DECC have named the current phase the 'Transition phase' of the Smart Metering Implementation Plan (SMIP)[10]. This is considered to be the stage where commercial, technical and regulatory plans will enable energy suppliers to roll-out the smart meters, in collaboration with the DCC. The Government are working with industry and consumer groups to develop the regulatory framework.

Energy companies are responsible fro the roll-out of smart meters, DECC and Ofgem can impose financial penalties if they do not meet targets. The energy companies must sign and work to the Smart Metering Installation Code of Practice (SMICoP). The current smart meters are designed to the Smart Metering Equipment Technical Specification 1 (SMETS1). This will be replaced by SMETS2, once finalised. Previously, there was discussion the opportunity for District Network Operators (DNOs) to lead the roll-out as they could easily lead roll-out on a street by street basis, however this could have created issues clarifying ownership and leasing of meters[11],. Also, they do not have a regular customer relationship - except recently through the Priority Services Register customer care.

Technical challenges relating to the Smart Metering Equipment Technical Specifications (SMETS1 and SMETS2)

There are some concerns from energy suppliers, relating to the standard of initial smart meters already installed, such as an example provided by Andrew Ward of Scottish Power[11]:

"Of the initial 30,000 meters that we deployed in 2010, we have had to replace 5,000 of the SIM cards that are in those meters. The understanding we had when we installed the meters was that the SIM cards would be sufficient to last the life of the meter, so that has gone wrong. We have had to interrupt the lives of 5,000 customers and reinstall those meters.”

Concerns were highlighted by the Energy and Climate Change Committee in 2013 on the technical specification development of SMETS2[11]:

"...the fact that the technical specifications that will ultimately need to be met by smart meters—SMETS 2—have not yet been finalised....the need for the Data Communications Company (DCC) and communications system to be up and running for SMETS 2 meters to be fully operational and the need for proper end-to-end system testing before mass roll-out.”

Other concerns relate to interoperability between SMETS1 and SMETS2 meters. Skanska, a company which installs and maintains meters stated[11]:

“The fact that there is no truly interoperable system or standard “churn” contracts make it very difficult to obtain long term finance. This could result in a newly installed SMETS 2 meter being removed and reinstalled when a customer chooses to move to a new supplier, because there is no mechanism for the rental agreement to be transferred between suppliers." 

In addition, SMETS2 have been designed to work with the DCC infrastructure, which may lead to British Gas needing to replace 800,000 meters if they do

Vulnerable support

Work is being carried out by the Smart Meter Central Delivery Body (SMDB) on finding effective ways to engage with all audiences[13]. However, Jenny Saunders of NEA stated that she was unsure enough was been done and that the scope of 'vulnerable customers' should be extended to include those who have language barriers and caring responsibilities[12]. British Gas have expressed concern in getting customers engaged or interested in the first place. In addition, they find that the lengthy boooking process resulting from regulatory requirements often deters customers. They feel that a broad, consistent message could help with this - one question they are often asked is 'What is a smart meter?'. Smart Energy GB may assist in this area - or may adopt 'advertising campaigns' as oppose to customer engagement ideas[12].

Licensing of different roles in energy system (supply, distribution, meter operation, access to DCC etc)

The transition stage started in September 2013 with the DCC receiving a licence and the contracts awarded to the Data Service Provider (DSP) and the Communications Service Providers (CSP). This coincided with the start was also the launch of the Smart Energy Code (SEC)[10]. The Smart Metering Governance Structure is outlined in the diagram below.

Smart Metering Governance structure [10]
  • Smart Metering Steering Group (SMSG): Strategic level of progress. Members include: six main energy suppliers; two smaller energy suppliers; ENA; Energy UK; Consumer Futures; Ofgem; DCC Licensee; SEC Panel; CDB; Critical Friend; DECC SRO and DECC Minister.
  • Smart Metering Delivery Group (SMDG): Senior level forum DECC can work with to monitor and deliver the programme. Members: Six large energy suppliers; two smaller energy suppliers; Energy UK; CDB; ENA; DCC Licensee; Ofgem; SEC Panel; metering equipment manufacturers (trade association level). In addition Consumer Futures and the DECC SRO will have a standing invitation to attend.
  • Technical and Business Design Group (TBDG): A working forum for resolving technical issues, consisting of: Six large energy suppliers; two smaller energy suppliers; electricity and gas network operators; Energy UK; DCC Licensee; Ofgem; SECAS; energy services providers; metering equipment manufacturers; MAP’s and meter operators (trade association level).
  • Implementation Managers Forum (IMF): A working group DECC can work with to monitor and review individual contributor projects. Members: Six large energy suppliers; two smaller energy suppliers; Energy UK; CDB; electricity and gas network operators; DCC Licensee; Ofgem; SECAS; metering equipment manufacturers (trade association level).

Opportunities to mandate ‘smartness’ in new developments and refurbishment

This could be challenging at present due to the uncertainty of whether customers with an early meter installed becoming tied to the supplier who installed the meter, or switching and having a new non-smart meter installed thus creating a 'dummy smart meter'.

‘Space to experiment’ opportunities to operate outside full regulatory regime (Ofgem, DECC etc) – and what could be done

Ofgem recently launched a public consultation on 'non-traditional business models'[12]. They aim to start a public conversation on benefits and risks to consumers of non-traditional business models and how they interact with the regulatory system. Ofgem are keen to ensure regulation does not step in the way of delivering desirable customer outcomes, protects the interests of consumers and allow them to understand the benefits, costs and risks in changing regulation. They may face challenges at present due to their size or the structure of the energy market.

Who are they?

Why non-traditional business models?[12]

  • Help enable the transition to a low carbon supply system
  • Allow rapid technological innovation
  • Some are disappointed with the consumer engagement and trust they hold in more traditional businesses within the energy sector
  • New organisations may have a greater focus on affordability and supporting vulnerable customers

The Competition and Market's Authority recently published an energy market investigation...(details to come :)

Privacy (for both individuals and commercial interests) vs public good. Can data be anonymised while still retaining sufficient detail?

DCC data pathway [13]

Data provided by Smart Meters will be the property of the consumer who must provide the DCC permission to access their data[14]. Once the DCC have the data they are not permitted to maintain a centralised database of the data[14].

DCC Users: If a company becomes a DCC User, they are permitted to request permission from households to obtain their smart meter data[14].

Data available is likely to be:

  • Electricity consumption (kWh) and gas consumption(m3) at half-hourly intervals for the previous thirteen months.
  • Electricity at three month intervals of half-hourly export and three months of hour-hourly intervals on reactive energy imported and exported (kvarh).
  • Daily electricity consumption, or gas for the previous two years.
  • Current tariff information (including price, time-of-use matrix and switching times, time-of-use blocks and block thresholds)
  • Conversion factors and calorific values of gas.

The DCC will also manage an inventory of meter identification numbers and meter point identifiers (MPxN) associated with premises name/number and postcode

How businesses can become DCC users....

  • Sign up to the Smart Energy Code (SEC) - multiparty agreement defining the rights and obligations of energy suppliers, network operators and other relevant parties involved in the 'end-to end' management of smart metering in the UK[14].
  • To ensure data communications between DCC users and the DCC are secure, DCC users will pay the DCC a one-off charge to install a DCC Gateway Connection and an ongoing annual rental fee for a dedicated connection, so they are essentially leasing a line to DCC systems. The charges will depend on a few variables and can be gained through contacting the DCC[14].
  • DCC users will need to prepare or buy,IT systems capable of communicating with DCC.[14]
  • DCC users will need to go through the Smart Metering Key Infrastructure's (SMKI) Registration Authority Policy and Procedures (RAPP). This sets out the steps organisations need to go to gain access to SMKI services[15].
  • DCC users will also go through the DCC Key Infrastructure (DCCKI) RAPP to gain access to the DCC User Gateway and Registration Data Interface [15].
  • Perform SMKI and Repository Entry Process Tests[15]
  • Complete User Entry Process Testing (UEPT)[15]

Further details available here: http://www.smartdcc.co.uk/dcc-users/becoming-a-dcc-user/

HAN to CAD pathway

The beginning of the Internet of Things??

Smart Meters will also have the ability to communicate with Home Area Network (HAN) over a wireless connection within the home in the form of a ZigBee wireless network. This will allow: live energy feedback for householders and the ability to connect with Consumer Access Devices (CADS). CADS are currently able to connect to WiFi and stream data, in future they may develop to communicate with appliances in the home, once they have been paired. Smart Meters must enable live energy feedback to householders and four CAD ports. The CAD can currently access electricity data at ten second intervals and gas meter data at thirty minute interval.

The future home? BEAMA

BEAMA[16] have been developing ideas which would enable the Home Energy Network to connect to the following, in addition to energy use:

  • Temperature sensors
  • Humidity sensors
  • Switching controls
  • Intelligent controls
  • Audible alarms
  • External communications
  • In-home communications
  • Occupancy sensors
  • Access control
  • Perimeter sensors
  • Vital signs monitoring

They are at the stage of informing policy makers for development of regulatory frameworks surrounding these areas.

  1. 1.0 1.1 1.2 1.3 DECC, 2013. Smart meters: information for industry and other stakeholders. Available from: https://www.gov.uk/smart-meters-information-for-industry-and-other-stakeholders#regulatory-framework-for-smart-metering
  2. Energy Act 2008, section 88. Available from: http://www.legislation.gov.uk/ukpga/2008/32/part/5/crossheading/smart-meters
  3. HM Government, 2010. The Coalitation: our programme for government, 2010. Available from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/78977/coalition_programme_for_government.pdf.
  4. EU Parliament and Council, 2012. Directive 2012/33/EU, Official Journal of the European Journal, available from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:327:0001:0013:EN:PDF
  5. EU Parliament and Council, 2012. Directive 2012/27/EU. Official Journal of the European Journal. Available from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:en:PDF. Accessed 15/07/15.
  6. EU Parliament and Council, 2009. Directive 2009/73/EC. Official Journal of the European Journal, available from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0094:0136:en:PDF
  7. EU Parliament and Council, 2009. Directive 2009/72/EC. Official Journal of the European Journal, available from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:211:0055:0093:EN:PDF.
  8. EU Parliament and Council, 2012. Directive 2012/27/EU, Official Journal of the European Journal, available from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:315:0001:0056:en:PDF.
  9. Smart Metering Working Group, 2014. Smart Metering: conditions for a successful roll-out. Available from: http://www.lowribeck.eu/media/3507/smart-meter-working-group-report_final_july-14.pdf
  10. 10.0 10.1 10.2 DECC, 2014. Transition Governance overview: Smart Metering Implementation Programme. Available from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/363674/transition_governance_overview.pdf
  11. 11.0 11.1 11.2 11.3 11.4 11.5 Energy and Climate Change Committee, 2013. Smart Meter Rollout: Fourth report of session 2013-14, para. 40, pp. 20. Available from: http://www.publications.parliament.uk/pa/cm201314/cmselect/cmenergy/161/161.pdf
  12. 12.0 12.1 Ofgem, 2015. Non-traditional business models: Supporting transformative change in the energy market. Available from: https://www.ofgem.gov.uk/ofgem-publications/93586/non-traditionalbusinessmodelsdiscussionpaper-pdf
  13. DECC, 2015. Smart Meters, Smart data, Smart growth. Available from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/397291/2903086_DECC_cad_leaflet.pdf
  14. 14.0 14.1 14.2 14.3 14.4 14.5 DECC, 2015. Smart Meters, Smart data, Smart growth. Available from: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/397291/2903086_DECC_cad_leaflet.pdf
  15. 15.0 15.1 15.2 15.3 Data and Communications Company, 2015. Becoming a DCC User. Available from: http://www.smartdcc.co.uk/dcc-users/becoming-a-dcc-user/
  16. BEAMA, n.d,, Consumer Access Devices. Avaialble from: file:///C:/Users/kates/Downloads/Consumer%20Access%20Devices%20A%20BEAMA%20Guide%20(2).pdf
 
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