The government's announcement in May on the delivery of smart gas and electricity meters to every home in Britain by 2020 truly heralds a new era for domestic energy use, an announcement the Energy Retail Association (ERA) wholeheartedly welcomes.
However, as the extensive consultations get under way, there are still many details to be discussed and finalised before we can move forward with an agreed rollout programme. During the next three months of consultations, the details of a smart meter rollout need to determined, and a clear timetable provided in order for energy suppliers to be able to push ahead. Any delays risk this ambitious target being missed.
It is worth emphasising once again what a revolution this will be for energy supply in Britain. The outdated technology being replaced by smart meters is woefully inadequate and unable to cope with the demands being placed on it by an industry keen to innovate, and a general public that expects new technology in every part of life. Sticking with our existing meters would be akin to us still using telegrams instead of wireless broadband.
Many of the options for the smart meter roll-out outlined in the government's announcement were in line with the industry's thinking. The ERA is pleased to have clarity on the government's preferred market model - the centralised communications model. Without this clarification, energy companies would have been effectively hamstrung.
The industry now needs further direction in a variety of areas: the design of the delivery model; the technical specifications of the meters themselves; interoperability and communications; and how existing governance arrangements will change. Due consideration also needs to be given to consumer protection and data handling issues. The industry is keen to work alongside government to ensure a swift resolution to all these aspects of the project so that work can begin.
Now that the model for the delivery of smart meters has been suggested by the government, attention needs to turn to how this will work in practice. One point at issue is the "thick" or "thin-ness" of the centralised communications model - in other words, how much data management will be centralised.
The nature of the body to be set up by government to manage the project and the governance structure surrounding it is also under discussion. Since the need for change to the existing governance structure has been recognised, industry will be able to assist government to ensure a rapid set-up. Once the structure and functionality is established, suppliers look forward to working with the newly created government body to get the rollout started.
Data ownership and consumer protection issues need to be closely examined during this process. We anticipate that individual energy suppliers will control the data and, of course, they will be bound by the Data Protection Act. Suppliers will have the responsibility for obtaining, storing and retrieving data from the meter. This data is likely to be a necessary component of suppliers' ability to provide new, innovative tariffs that will help customers to better control how much energy they use and when they use it. Suppliers may also form commercial arrangements with third parties to enable them to access meter data, but this is unlikely to mean that third parties will have access to the metering systems themselves.
Suppliers also want to ensure they can offer flexibility in terms of how information on energy consumption is presented to their customers. Rather than the government dictating the specifications of display units for the home, the industry wants the range of information that should be provided through any display device to be properly defined. This should include basic information on the amount of energy used and how much it costs, which will allow suppliers to innovate and to find different ways of presenting information, and to better tailor their offerings to individual customers' needs or preferences.
Clearly, there is much still to be discussed and decided upon during and immediately after this period of consultation. The industry is keen to move quickly to deliver smart meters and, although the May announcement from the government is a significant in that respect, many critical decisions still need to be made in a relatively short timeframe. We are close to a revolution in how we use energy as customers and manage it as suppliers, and we can't afford to squander this opportunity - we have to make it work.
Garry Felgate, chief executive, Energy Retail Association
