Update on the rollout of smart meters

Public Accounts Committee Closed Inquiry
Opened: 17 May 2023 Closed: 14 Feb 2024 Parliament page
Energy suppliers are legally obliged to meet bespoke annual individual minimum smart meter installation targets for domestic and small business customers in Great Britain in the period from 1 January 2022 to 31 December 2025. At the end of December 2022, 55% of all meters were smart, meaning they can … Read more
5 Recommendations
20 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 6 events
14 Feb
2024
Report published
20 Oct
2023
Report published
11 Jul
2023
Correspondence
10 Jul
2023
Correspondence
22 Jun
2023
Oral evidence
22 Jun
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
22 Jun 2023
View on parliament.uk
Update on the rollout of smart meters
Anne Pardoe · Citizens Advice Clive Maxwell · Department for Energy Security and Net Zero Daisy Cross · Energy UK Daron Walker · Department for Energy Security and Net Zero Marcus Shepheard · Climate Change Committee Neil Kenward · Ofgem
Title HC No. Published Items Response
Seventy-Second Report - Update on the rollout of smart meters HC 1332 20 Oct 2023 25 Responded
Recommendations & Conclusions
25 results
2 Conclusion Accepted
Seventy-Second Report - Update on …
Update smart meter benefits evidence and assess how to maximise gains for all consumers.
We are concerned that smart meters are not achieving the consumer benefits they are supposed to and are benefitting certain, often wealthier, consumers more than others. The Department’s most recent estimates of consumer energy savings are based on data from … Read more
Government Response
The government agrees and has published an independent evaluation in Summer 2023, which identified energy savings. They are also designing a new phase of program-wide evaluation and working on additional sources of evidence to supplement the existing data.
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3 Recommendation Accepted
Seventy-Second Report - Update on …
Increase understanding of smart meter geographic coverage and support households unable to install.
The Department has limited understanding of why smart meter coverage is lower in some areas—particularly London, rural and remote areas—compared to others. The extent of smart meter installation varies across Great Britain, from 5% in the Isles of Scilly to … Read more
Government Response
The government agrees and will continue to publish annual geographic progress data (next in May 2024). They are also undertaking local activities with suppliers and local authorities to improve installation processes and are rolling out new communication technologies (dual band hubs, Alternative Home Area Network equipment) and developing others to address coverage and installation challenges.
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4 Conclusion Accepted
Seventy-Second Report - Update on …
Require Ofgem to ensure supplier regulation promotes customer engagement for behaviour change.
Ofgem risks neglecting the importance of consumer engagement and behaviour change by focusing on penalising suppliers for missing targets. Energy suppliers have binding targets to install smart meters, which should be enforced by Ofgem, the energy regulator. However, energy consumers … Read more
Government Response
The government agrees, stating that Ofgem already considers consumer detriment, priority, and Net Zero obligations in its enforcement processes. They also expect energy suppliers to engage customers effectively and that this is factored into Ofgem's consideration of supplier performance against targets.
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5 Recommendation Rejected
Seventy-Second Report - Update on …
Ensure suppliers prioritise replacing faulty smart meters and deploy future-proofed technology.
Too many smart meters are not fully functioning and millions more will be impacted when the 2G and 3G mobile communication networks close. In March 2023, around 3 million (9%) of smart meters were not working properly in total. Of … Read more
Government Response
The government rejects the recommendation to exclude 2G or 3G connectivity from new installations, stating it would pause the rollout, increase costs, and reduce benefits while 4G technology is still under development.
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6 Conclusion Accepted
Seventy-Second Report - Update on …
Unclear decision-making for the smart meters programme's future and closure
The smart meters programme has been going for more than a decade and it is not clear how the Department takes important decisions relating to its future, including how it will decide when to bring the Programme to a close. … Read more
Government Response
The government agrees and commits to sharing cost and benefit information for the smart metering rollout with Parliament annually. They have also defined the criteria for program closure and will share transition plans once matured.
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1 Conclusion Accepted
Seventy-Second Report - Update on …
Evidence gathered on Smart Metering Implementation Programme progress from key stakeholders
On the basis of a Report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security & Net Zero (the Department) and Ofgem on progress with the Smart Metering Implementation Programme (the Programme).1 We also … Read more
Government Response
The government describes existing efforts, stating that DESNZ has set Smart Energy GB statutory objectives for consumer engagement, and Smart Energy GB continuously evolves its multi-channel campaign strategy, focusing on different consumer segments and vulnerable circumstances to drive smart meter demand.
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7 Recommendation Accepted
Seventy-Second Report - Update on …
Government and Smart Energy GB roles in promoting smart meter installation to consumers
The Department told us that Ministers have a role in promoting the benefits of smart meters and the Programme to consumers.21 The responsibility for consumer engagement primarily rests with Smart Energy GB, a company funded by mandatory contributions from energy … Read more
Government Response
The government agrees with the recommendation and states it has been implemented. It describes how DESNZ works closely with Smart Energy GB to evolve consumer engagement strategies and expects energy suppliers to innovate incentives to drive take-up, but does not specifically address the suggested policy changes like mandating smart meters in new builds or social housing.
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8 Conclusion Acknowledged
Seventy-Second Report - Update on …
Smart meters demonstrate energy consumption reductions for electricity and gas users
The Department has commissioned research to identify the energy consumption savings made by consumers with functioning smart meters. The estimates show energy reductions of 3.3% to 3.6% for electricity and 2.9% to 3.1% for gas. These findings are based on … Read more
Government Response
The government acknowledges the committee's observation regarding energy savings from smart meters, detailing its ongoing programme of data collection, monitoring, and evaluation, including recent published evidence and future evaluation research in development.
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9 Recommendation Accepted
Seventy-Second Report - Update on …
Need for current data to confirm smart meter monetary savings for consumers
These energy reductions show a slight improvement on earlier estimates included in the Department’s 2019 cost benefit analysis.26 The Department told us it considers the expected percentage reduction in energy use is being maintained and that in a ‘much higher … Read more
Government Response
The government agrees with the recommendation and sets a target implementation date of February 2025. It describes its ongoing data collection and evaluation programme, including recent published evidence on energy savings, and commits to designing a new phase of programme-wide evaluation and exploring additional data sources like the National Energy Efficiency Data framework.
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10 Conclusion Accepted
Seventy-Second Report - Update on …
Unequal smart meter uptake among diverse demographic and socio-economic consumer groups
The Department told us that real-time data offered by a smart meter means that all types of consumer can benefit from having a smart meter installed, and that its early learning project identified that people with smart meters who were … Read more
Government Response
The government acknowledges the committee's observations on consumer benefits and uptake patterns, detailing its ongoing programme of data collection, monitoring, and evaluation of smart meter benefits, including for consumers experiencing barriers in the energy market, and plans for further evaluation.
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11 Recommendation Accepted
Seventy-Second Report - Update on …
Significant geographical variations in smart meter coverage and installation rates
Smart meter coverage across Great Britain in 2023 varies by local authority from 5% in the Isles of Scilly to 69% in Chesterfield. Installation rates in London are only 43%, which the Department considered is due to the challenges of … Read more
Government Response
The government agrees with the recommendation and states it has been implemented. It outlines ongoing efforts to monitor geographic progress and share data annually, instigate local activities to improve installations in challenging areas, and deploy new technologies like dual band communications hubs to address technical issues in premises like blocks of flats.
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12 Conclusion Accepted
Seventy-Second Report - Update on …
Low smart meter coverage in suburban areas and hesitation among private renters
The Committee noted that some suburban areas, including the constituency of Richmond Park situated to the south-west of London, can have low coverage but have neither the characteristics of inner London nor rural or remote areas. The Department acknowledged that … Read more
Government Response
The government acknowledges the committee's observation on low smart meter coverage in certain suburban areas, explaining that it proactively monitors geographic distribution, collects and publishes data, and has instigated local activities and deployed new technologies to address installation challenges and improve coverage.
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13 Conclusion Accepted
Seventy-Second Report - Update on …
Solutions being explored for smart meter 'not-spots' in hundreds of thousands of homes
The Department told us that the Data and Communications Company, the central communications and data platform that provides the network ecosystem for smart meters, is looking into options for ‘not-spots’ which the Department considers applies to only 0.75% of homes.42 … Read more
Government Response
The government agrees with the committee's observation regarding 'not-spots' and claims the recommendation is implemented, stating it proactively identified this for monitoring, publishes data, instigates local activities, and is deploying dual-band communications hubs and other technologies to improve coverage.
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14 Conclusion Accepted
Seventy-Second Report - Update on …
Most energy suppliers failed 2022 smart meter installation targets despite binding obligations.
Energy suppliers have binding targets to install smart meters, enforced by Ofgem, the energy regulator. However, energy consumers are not required to accept an offer of having smart meters installed. The Department told us that it chose a voluntary, demand- … Read more
Government Response
The government agrees with the committee's observation and states it has already implemented measures through Smart Energy GB to build consumer demand and acceptance, evolving campaign strategies, and expects energy suppliers to invest in innovative incentives, claiming the recommendation is already implemented.
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15 Conclusion Accepted
Seventy-Second Report - Update on …
Ofgem balances stronger enforcement action for missed smart meter targets with supplier stability.
Ofgem believes that the missed 2022 targets were nevertheless achievable, even for large suppliers with ‘lots of incumbent customers’.48 It considers the role it can play in suppliers meeting their installation targets is to provide a clear signal and an … Read more
Government Response
The government acknowledges the committee's findings regarding Ofgem's approach to missed smart meter targets, reiterating Ofgem's existing enforcement guidelines and plans to continue its considered approach to non-compliance, and stating that the department already considers supplier engagement in target setting.
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16 Conclusion Accepted
Seventy-Second Report - Update on …
Smart meters are essential for driving energy market innovation and consumer net zero engagement.
The Department and Ofgem are also in the process of introducing reforms to the energy retail market, in part to increase resilience and enable innovation. This reform comes at a time when new and innovative technologies are being developed, including … Read more
Government Response
The government acknowledges the committee's observation on market reforms and innovative smart meter technologies, outlining Smart Energy GB's statutory objectives and ongoing campaign strategy to build consumer demand and encourage behaviour change, alongside expectations for energy suppliers to develop innovative incentives.
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17 Conclusion Acknowledged
Seventy-Second Report - Update on …
Nine percent of installed smart meters, totalling three million, were not working properly.
As at March 2023, 3 million smart meters were not working properly; which means that these meters were either not sending energy use information to suppliers or not displaying this information to consumers, or both. This equated to 9% of … Read more
Government Response
The government agrees with the committee's observation about the complexity of keeping smart meters working and reiterates existing requirements for energy suppliers to monitor and maintain their metering estate, including In-Home Displays, and mentions ongoing work to develop good practice and track performance.
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18 Conclusion Acknowledged
Seventy-Second Report - Update on …
One point six million non-functioning smart meters stem from transitory commissioning and switching issues.
The Department identified three main reasons why a smart meter might not be functioning. In June 2023, it told us that approximately 1 million of the 3 million non- functioning meters were new installations where the smart meter is not … Read more
Government Response
The government agrees with the committee's observation that issues can be resolved but primarily reiterates existing efforts and supplier responsibilities for monitoring and maintaining smart meter health, without committing to new specific actions directly addressing the identified categories of non-functioning meters.
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19 Conclusion Accepted
Seventy-Second Report - Update on …
One point four million smart meters lost communication; replacement incentives for suppliers are weak.
According to the Department and Energy UK, the third category included around 1.4 million meters that were working at the point of installation but had since lost communication.59 This includes first generation meters, known as SMETS1, that needed to be … Read more
Government Response
The government acknowledges the committee's observation on non-functioning smart meters, agreeing that suppliers should monitor and maintain their metering estate, and highlighting the department's ongoing work to develop good practice, track performance, and Ofgem's role in regulating existing licence conditions. It also mentions seeking agreement on voluntary good practice for In Home Displays, without ruling out future regulation.
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20 Conclusion Accepted in Part
Seventy-Second Report - Update on …
Energy suppliers lack obligation to replace faulty in-home smart meter displays after one year.
Consumers are only guaranteed to receive the benefits available from being able to monitor their energy usage via an in-home display for a year. After one year, if the device breaks the energy supplier currently has no obligation to replace … Read more
Government Response
The government agrees with the committee's observation, stating it is developing and seeking agreement on voluntary good practice principles for In-Home Display provision beyond the initial 12-month period and has not ruled out further regulation, partially addressing the lack of obligation to replace them.
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21 Conclusion Accepted
Seventy-Second Report - Update on …
Seven million smart meter communication hubs require replacement by 2033 due to network closures.
The Department also estimates that 7 million communications hubs (a modular component of the smart meter set) will need to be replaced in the South and Central regions ahead of 2033, when 2G and 3G communications networks are closed. These … Read more
Government Response
The government acknowledges the committee's observation on 4G communications hub replacement, stating that suppliers have an existing obligation to prevent loss of connection, and that the government is already facilitating and supporting suppliers in developing their replacement plans, which will culminate in detailed plans by 2026.
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22 Conclusion Accepted in Part
Seventy-Second Report - Update on …
Smart Meter Programme lacks up-to-date cost-benefit analysis despite being active for over a decade.
The government first announced its intention to mandate suppliers to install smart meters in 2008, and energy suppliers have been rolling out smart meters since 2012.70 The Programme has therefore been active for more than a decade, and although the … Read more
Government Response
The government agrees to share annual cost and benefit information with Parliament by Summer 2024 to provide visibility on the smart metering rollout. However, it does not explicitly commit to producing a full new cost-benefit analysis since the last one in 2019, instead referencing the 2019 analysis as comprehensive.
HM Treasury
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23 Conclusion Accepted in Part
Seventy-Second Report - Update on …
Department unable to provide current smart meter programme costs and benefits to Parliament.
At our evidence session, the Department could not provide an up-to-date figure for the Programme’s costs and benefits. It considers that both costs and benefits will have increased since 2019, given: a) lower installer efficiency and delays during COVID-19 increasing … Read more
Government Response
The government acknowledges the committee's finding that up-to-date cost and benefit figures are not available, and, treating this as a recommendation, commits to sharing this information with Parliament on an annual basis by Summer 2024. However, detailed plans for bringing the programme to a close will only be shared when they have matured.
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24 Conclusion Not Addressed
Seventy-Second Report - Update on …
Consumer smart meter demand potentially overstated due to practical installation barriers.
The Department characterises smart meters as a change programme, and recognises that it needs, at some point, to stop being so and become business as usual in the energy retail market.75 However, it considers that there remains significant unsatisfied demand … Read more
Government Response
The government's response details a commitment to share annual cost and benefit information and plans for program closure, which does not address the committee's observations regarding differing views on smart meter demand and rollout pace.
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25 Conclusion Accepted
Seventy-Second Report - Update on …
Smart meter rollout programme lacks a clear, long-term plan beyond 2025.
As well as the approach to the rollout there are other significant issues for the Department to consider after 2025, including the re-licensing of the DCC (the central communications and data platform), and reform of the industry code governance. Ofgem … Read more
Government Response
The government agrees to share matured plans for the smart metering programme's transition and closure with the Committee by Summer 2024, once major risks are managed and critical activities are transferred to an enduring operating state.
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Government Response AI assessment · 25 of 5 classified
Accepted 17
Accepted in Part 3
Acknowledged 3
Not Addressed 1
Rejected 1
Total 5 recs + 20 conclusions
Correspondence 2 letters
11 Jul 2023 Correspondence from Daisy Cross, Head of Future, Retail Markets, Energy UK, re Follow-up from PAC Committee session on ‘The rollout of smart meters’, dated 6 July 2023
Parliament page
10 Jul 2023 Correspondence from Dan Brooke, CEO, Smart Energy GB, re Update on the rollout of smart meters, dated 30 June 2023
Parliament page