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Advanced meter deadline fine sets precedent for smart meter rollout

Rowan  Hazell Rowan Hazell Analyst
8th August 2018

Last week we saw npower fined £2.4mn by Ofgem for failing to take all reasonable steps to install advanced meters at around 4,000 meter points before the April 2014 deadline. The regulator warned that suppliers should ensure that similar mistakes are not repeated in the smart meter rollout.

In issuing its decision, Ofgem said that npower had not taken all reasonable steps to install advanced meters. It took the view that npower had left it too late in the roll-out period for its efforts to install advanced meters to be effective, that sufficient efforts to engage with customers to resolve installation difficulties had not been made, and that the supplier had not ensured that all meters were able to send meter readings. The regulator said that as a result of npower’s actions, business customers had lost out on the benefits of advanced meters, including the opportunity to save money on bills.

Although this case concerns the non-domestic advanced meter rollout, it sets a precedent for how potential failures in relation to the domestic smart meter rollout could be handled. npower had approximately 22,400 meter points at which it needed to install advanced meters, and in comparison, our market share data suggests that npower has over 8mn domestic meter points. This highlights the differences in the scales of the two programmes, and, we can only imagine what Ofgem’s stance would be if it judges that a supplier has failed to take all reasonable steps to install smart meters at the properties of their domestic customers. Given that the consumer detriment would likely be viewed as being greater for domestic customers than for business customers, the regulator may seek to impose even greater penalties.

The first financial penalty in relation to the smart meter rollout was issued in June, when Ofgem announced that EDF Energy would pay out £350,000 after it missed its target to install meters for 2017. Although the supplier met its target less than a month later, the regulator’s approach signals that it is taking the enforcement of smart metering obligations very seriously.

All suppliers are required to take all reasonable steps to install smart meters at their domestic customers’ properties by the end of 2020. The regulator’s view that npower had not acted early enough to ensure its advanced meter rollout would be effective should send a signal to suppliers that they need to act now to ensure that they can effectively participate in the smart meter rollout, while meeting all of the complex regulatory requirements that the programme requires.

We’ve launched a service to help suppliers untangle the world of smart meter regulation. By providing a clear, plain English version of all the smart metering obligations in one place, suppliers can easily understand what they need to do in order to succesfully roll out smart meters. The service also includes a monthly update report, which tracks all the latest developments in the world of smart meter regulation, including policy developments, changes to code governance, and Ofgem decisions.

For more information on the Smart Meter Regulation Service please contact Rowan Hazell at r.hazell@cornwall-insight.com