Posh Boys push Smart Meters

DECC – the Government department leading the Smart Metering deployment in the UK recently published their latest research on consumer attitudes to Smart Metering.  It reports the results of in depth interviews with 120 representative members of the population on their feelings about Smart Meters and IHDs.

The research was conducted in February this year, several months before the Conservative backbencher Nadine Dorries described her Prime Minister David Cameron and Chancellor of the Exchequer George Osborne as “two posh boys who don’t know the price of a pint of milk”.  She wasn’t referring to the UK Smart Metering programme, but it was a pretty good description of what these 120 respondents thought of the smart meter deployment, telling researchers that it “sounds like it’s from someone who doesn’t have trouble paying their bills”.

The report is not all bad news.  The respondents included people who had received In Home Energy Displays and in general they liked them.  They thought they provided real benefits.  In contrast, they had difficulty in seeing what the added value of the smart meter was.

I suspect DECC is busy trying to massage the results to make it look as if the survey supported smart metering, helped by some rather ambiguous leading questions.  But the content highlights a growing division within the smart metering programme, which is whether it is meant to be there for the benefit of consumers or for the benefit of utilities?

If you look at the various, different attempts to justify the cost of smart metering deployments they concentrate on a limited number of real (or supposedly real) benefits, the choice of which is largely dependent on who is driving the program.  If it’s a monolithic utility, then the justification is about optimisation of the grid, along with a desire to limit the amount of new generating capacity they have to build.  In a deregulated market, the drivers are sensitive to the cost of buying in energy, but that may be outweighed by a desire to reduce churn or to acquire market share.  And where governments are involved, the imperatives are to meet mandated emission targets, such as the EU’s 202020 mandate, with a smaller nod to the longer term paranoia of security of supply.

The bulk of these justifications rely on some degree of consumer engagement, as it’s the consumers who use the energy.  And in the eyes of most governments we’re all profligate and could do better.  So consumers are very important to the business case for smart metering.  Without the savings that we as consumers are meant to deliver, the figures often don’t add up.  And the industry is desperate to make sure they do add up, as long as there’s the prospect of stimulus money or other government support.  However, consumers, or their representatives have been noticeably absent from the technical specification groups writing the smart metering standards.  The result has been that under the name of consumer engagement, utilities and meter manufacturers have seized the opportunity to turn consumer engagement into an opportunity to impose more tariffs.

In their recent report “Energy 2.0 – Smart grid Roadmap 2012-2017”, ZPryme postulated that “Consumer engagement just may be the ‘killer app’ the Smart Grid has been missing over the past three years. Although many utilities have indicated their commitment to consumer engagement and education, the fact remains that the majority of Smart Grid designs or plans do not contain a strategic consumer engagement plan. To mitigate this problem, every utility should make electricity customers the focal point of their Smart Grid design plan. This will entail including consumer education, outreach, and education as a key component of their Smart Grid design plan. When consumers become the technology champions for Smart Grid technology, every stakeholder wins.”  That chimes well with the feedback from consumers in the DECC survey.

A fair proportion of the DECC survey respondents didn’t have smart meters – they’d been given energy displays with clip-on sensors by their utility, either as part of the Government’s CERT program, or as a customer acquisition tool.  They valued the learning that the displays provided and in contrast to the industry perception, none had put them away in a drawer after that initial learning stage, even though they admitted that they had learnt the effect of different appliances early on in the process.  They unanimously felt that the display was the agent of change.  There was also the interesting dynamic where continued to appreciate the presence of the display in the home, particularly.  That was explained by pointing out that if there were children or “unconverted” adults in the house, the bill payer or display evangelist could refer to it to remind other family members of their errant behaviour.

What these consumers liked most was having a “real-time” display that showed costs in £ and pence, as they were forthright in stating that kWh was a meaningless concept.  Showing real cost is the most useful thing a display can do, yet it’s something that has been largely ignored by the people writing the detailed smart metering standards.

For the UK, there are two groups writing this – the ZigBee Alliance, which is producing the Version 1.2 of the Smart Energy Profile, and the UK SSWG – the Smart Specifications Working Group, which is developing the technical specification for UK smart meters and pushing these into the ZigBee standards process.

In the DECC survey, participants expressed a high level of cynicism about the utilities, who were criticised for high prices whilst making huge profits, and for propagating “deliberately complex and confusing tariff structures”.  If these consumers thought that the tariffs they currently knew were complex, they’d be outraged by what is going into the smart metering specifications.  (Incidentally this survey was conducted six months after the main UK utilities agreed to simplify tariffs, since when they’ve been promoting that simplification.  So it appears that particular example of consumer engagement has not fared spectacularly well.) 

Back in March 2010, British Gas published a specification for UK smart meters, which laid the ground for meter vendors and UK utilities to concentrate on two items very far from the consumer’s heart – tariffing and prepay.  These documents and the successive standards which have evolved from them have concentrated on defining a tariff structure so complex that tariffs could now change every half hour of a day for each day of the year.  As well as providing a financial stick to force customers to change behaviour, the standards also demand that every new meter contains an isolation switch and the capability to be remotely configured for prepay, so that utilities can increase the percentage of customers on these scheme.  This isn’t engaging the consumer, it’s demonising them.

Given its importance in the smart metering business case, you might expect the word “engagement” to figure rather prominently in these documents.  You’d look in vain – it doesn’t appear once in any of them.  Instead all of the specifications concentrate on how to disseminate impossibly complex tariffs, none of which a regulator is ever likely to allow.  The good news is that within the UK specification from DECC – the SMETS1 (Smart Metering Equipment Technical Specification), there is a mandate for an In Home Display, which is expected to allow a consumer to see their usage and the cost of it.  It also mandates that they can see their historic usage and costs on a half hourly basis for the last thirteen months.  But the costs that are displayed are only an indication of the actual cost, calculated on the fly by the Display from snippets of data it might be able to glean from the meter.  There is currently no ability for the display to show a consumer exactly what their bill will be.

The reason for that is that these specifications are about metering and control, they’re not about engagement or providing the information that consumers need.  Survey after survey shows that consumers want to be able to see how much they’ve spent – they expect the figure on the display to match the bill.  But they’re not getting that.  Largely because the billing systems that utilities run are decades out of date.  Whilst we expect to be able to access up to the minute numbers from our banks and mobile phone operators, accurate up-to-date billing is not a part of the smart metering rollout.  In the UK we have a mandate for a minimum specification gas meter, a minimum specification electricity meter and a minimum specification In Home Display.  There’s no mention of a minimum specification billing system, just the same old one we’re used to, with the sole “improvement” being that it will have a real meter reading to work from, rather than an estimated one.

Whilst the meter manufacturers and utilities have been concentrating on how to specify new tariffs which they’ll probably never be allowed to use, the energy display industry has moved on.  Over the past few years they’ve been innovating with connected displays, providing users with energy information on a multiplicity of touchpoints.  That’s one of the reasons that consumers like them and why these users are making real changes to their usage.  And it’s probably also why they see no value in the smart meter. 

It’s interesting that a new European report – “Empowering Consumers through Smart Metering”, published by BEUC, the Brussels based consumer voice in Europe, has come to the same conclusion about the value of smart meters.  Among a wide ranging survey of trials, they quote an analysis commissioned from Frontier Economics, which looks at the German potential for smart meters, which suggests that only 15% of consumers will benefit financially.

Which brings us to the crux of the problem.  The tariffing tail has been so busy wagging the smart metering dog that it hasn’t noticed the dog is dead.  What consumers want is a smart billing system and a simple meter that sends up-to-date and accurate information to a range of touchpoints, including displays, web and paper bills.  (There may well be a community of smart meter hackers and cybercriminals who disagree and are looking forward to a generation of meters which can be remotely disconnected, but that’s another story.)  To go back to Zpryme’s insight: “When consumers become the technology champions for Smart Grid technology, every stakeholder wins.” 

There’s still time to get these consumers engaged.  They’ve already told DECC that “The display delivers the information, so the smart meter is not necessary”, but it’s not clear anyone is listening.  The pendulum needs to swing back in the direction of consumers if any of the expected savings are going to be realised.  Unless it does, we may be looking at the next government IT disaster and a lost opportunity.