by leslieAre too many smart meters running ‘dumb’?
Ofgem has launched an investigation to determine if the nation’s smart meters are smart enough. But what does that mean?
The smart meter rollout has faced a lot of challenges since it began so many years ago. There have been a series of delays, technical problems, budgetary issues and, of course, a global pandemic. But now, there’s a new obstacle for the industry to navigate. Ofgem has begun an investigation to act on concerns that too many smart meters are not running in smart mode, meaning consumers are missing out on the benefits of a smart meter.
In this article, we’ll look in more detail at why some smart meters are running ‘dumb’. We’ll also look at another recent Ofgem ruling that changes the way the power marketplace runs. Let’s get started.
Dumb meters?
Getting a smart meter installed is a two-part process. First, the engineer has to replace your traditional electricity and gas meters with smart equivalents. Next, the engineer must get the meters to communicate with the Data Communication Company’s network. Once they’re talking to the network, they can function in ‘smart’ mode, sending information to your supplier so you no longer have to read your meter, for example. If they’re not connected to the network, all you’ve got is a regular energy meter. This is known as ‘dumb mode’.
The problem for Ofgem as they attempt to regulate the UK’s smart meter rollout is that all the supplier has to do to get an installation counted against their target is to install it. They’re not required to connect it to the network (only take ‘reasonable steps’ to connect it). As a result, Ofgem is concerned that suppliers might be cutting corners in order to install more meters faster, and not connecting all new meters to the network. To find out, it’s launching an investigation of the big six energy suppliers (British Gas, EDF, Eon, Octopus, Ovo and Scottish Power). While it’s important to stress that there is no evidence yet of wrongdoing, if Ofgem finds that something is amiss, it could change the shape of the smart meter rollout moving forward.
Currently, there are around 35.5 million smart meters installed in the UK. Of that total, around 4 million (11%) are running in dumb mode. We will wait and see if this number decreases because of Ofgem’s action.
Acquisition-only tariffs still outlawed
In other Ofgem-related news, the regulatory body has also announced that it is renewing its ban on acquisition-only tariffs for another six months. The ban, introduced during the recent energy price crisis, was due to expire in October of this year, but it will now continue until March 2025. Furthermore, Ofgem is consulting on extending the ban until March 2026.
Acquisition-only tariffs are when an energy supplier offers new customers a special low rate, which expires after a year. While savvy customers with the time and expertise to discover cheap tariffs can switch suppliers regularly and save money, many people see them as unfair.
Suppliers welcomed the ban extension, seeing the ban as a way of protecting their most vulnerable customers, but it also makes it easier for them to retain business without having to resort to sharp tactics. Consumer bodies also welcomed the continuation of the ban. The most negative response to the ban came from leaders at price comparison websites, who get their business from consumers wanting to switch energy suppliers to get lower prices. They had lobbied Ofgem to lift the ban.
What’s next?
It’s been a busy month at Ofgem. The good news is that both decisions have the interests of consumers at heart. Used correctly, smart meters can deliver significant benefits and even help them save money. But if their meters are running dumb, they can’t gain any of those advantages. In addition, the extension of the ban on acquisition-only tariffs means consumers don’t have to keep switching energy suppliers to chase the best rates, which may come back to bite them later.
Let’s hope for more good news soon.
