As the government consults on extending the smart meter rollout to 2024, suppliers should be allowed to offer small businesses a choice in metering, according to metering and data provider Stark.
The firm reckons advanced meters unlock greater benefits at lower cost – and fears the current Data Comms Co set up risks creating an expensive monopoly that is incentivised to take on more and more services. That places further pressure on independent metering firms as well as businesses, according to managing director, Joel Stark.
The choice issue
At the moment, suppliers are obliged to offer only smart meters to businesses that consume fewer than 100MWh per annum (that threshold is roughly 30 times higher than the average household’s annual electricity consumption). Smaller firms at or below that threshold can choose advanced meters – but these will not count towards suppliers’ mandated smart meter targets. Stark believes that is a costly mistake.
“We are huge advocates of next generation metering, because it unlocks the digital currency the UK needs to decarbonise,” says Stark.
“But the UK smart meter programme was not designed with businesses in mind: Of 94 different work streams, only one focused on the non-domestic market. That has led to tradeoffs that are detrimental to businesses.”
Stark believes the department for business, energy and industrial strategy (BEIS), should use the consultation to rethink that approach, and enable suppliers to offer a choice between smart or advanced meters to businesses of all sizes, with either counting towards their mandated targets.
Otherwise, he says businesses risk having to pay more to access energy data, or face dealing with an intermediary that may not be incentivised to provide timely, accurate consumption data.
“Legislation introduced in the nineties enabled competition in metering services. That enables any business to take control of their metering and data: some businesses prefer to have an independent data services provider rather than rely on their supplier to tell them how much they have used,” explains Stark.
“That legislation remains in place, but it is being drowned out by the supplier obligation to install smart metering. So businesses may not realise there are alternatives that remain fully complaint.”
Stark believes advanced meters offer businesses greater benefits for several reasons. Smart meters are required to be enrolled into the central data and communications hub, or DCC (run by Capita, whose costs are currently forecast to be 103 per cent higher than the original bid). However, for businesses with DCC-enrolled smart meters across multiple sites, that requirement can present unnecessary challenges, he suggests.
“Businesses can physically go to each site and collect the data, or they can try and build an interface into the DCC, which will cost about £1 million,” claims Stark. “Or they can ask their supplier for the data. But suppliers, which buy, sell and bill for energy, may not have appropriate incentives or may simply lack resource to do that effectively,” he says.
“So the smart metering programme, as it stands, erects barriers for businesses in gaining access to their data. That is a very retrograde step.”
Stark believes government could solve the problem by allowing suppliers to offer all their business customers advanced meters, and for those installations to count towards smart meter obligations.
“We would like to see suppliers have that choice,” says Stark, “[enabling them to remind businesses] that they have a choice and do not have to lock themselves into an expensive platform that sacrifices independent access to data.”
Costs ‘out of control’
Stark has commissioned research by Oxera that questions government’s cost-benefit analysis of the smart meter programme.
It suggests that Beis is significantly overestimating costs of advanced meters and underestimating costs of smart meters (£36 for a single phase meter), while omitting additional costs necessary to unlock demand-shifting benefits that make up £1.4bn of the benefits case. Meanwhile, the report states quantitative evidence to support energy savings assumptions – about a third of the benefits case, some £6.2bn – is also lacking.
“The programme is in a difficult place right now. The cost to benefit ratio is about 1.44. By government’s own measures, anything less than 1.5 is a low value exercise. For business, it is even poorer value for money,” says Stark.
“We want the programme to be a success; we don’t want to be one of those companies throwing rocks at government all the time. But we don’t feel we can avoid it this time. We need a level playing field that ensures all businesses will benefit.”