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New horizons: DCC plans to expand remit over next 5 years

Rowan  Hazell Rowan Hazell Senior Analyst
19th August 2020

The government awarded the Data Communications Company (DCC) licence to Capita subsidiary Smart DCC Ltd in 2013. As an Ofgem-regulated monopoly, the DCC’s remit was to set up the smart metering communications infrastructure, linking up 53mn electricity and gas meters with the systems of energy suppliers, network companies and third parties. Since the award of the licence, there have been concerns in the industry that the DCC has not performed as well as it should have done and costs have increased dramatically. For 2020-21, costs as set out in Capita’s original licence application were forecast to be £213mn but are now expected to be over £660mn.

The DCC’s latest Business and Development Plan, published on 10 August, sets out a range of new activities beyond the original remit that it plans to take on over the next five years. While there is merit in the proposals, care needs to be taken to ensure that the reuse of the DCC network for such a wide range of activities is the right route to take.

The DCC argues that its network can provide a centralised data and communications platform for managing electric vehicle charging, which would be used to avoid overloading local networks and ensure interoperability of service when customers change their charge point provider. Arguing that the existing infrastructure can be used to provide secure load control on a national basis, the DCC said that using a common platform would ensure confidence in security and data privacy and encourage open innovation and differentiated services. The DCC is already demonstrating load control at its testing facility, with an auxiliary load control device wired into a smart meter and controlled remotely by the energy supplier. It is also developing a demonstration of wireless load control and plans to showcase to customers its capabilities later this year.

Also included in the plan is the intention to explore opportunities to offer new services around the data that the DCC platform holds and generates. The DCC said that it could become a platform for mass innovation by securely and openly exchanging data, while complying with privacy and confidentiality rules. It also intends to consider offering services to allow devices other than smart meters to connect to the Home Area Network. It said that this could include the connection of remote sensors to support smart homes, smart buildings, smart cities or precision agriculture.

The DCC is in a unique position, and there are clear benefits of using the network for other purposes if this ultimately leads to an overall reduction in costs. Yet there are several issues to contend with. The DCC is funded by energy suppliers, with significant costs being passed through to customers. While the DCC’s additional services could bring benefits to some, it is crucial to ensure that customers, already bearing the brunt of spiralling costs, do not end up overpaying to support services that may not bring universal benefits. Many companies are already offering data services in the energy industry, primarily to business customers, and the introduction of centralised services from the DCC threatens to erode some of the benefits that the competitive market has brought forward. While Ofgem does have a rigorous price control process for the DCC, there needs to be a careful consideration of how far the monopoly should be allowed to extend.

Cornwall Insight provides regular reporting on the smart metering programme. For more details please contact r.hazell@cornwall-insight.com