Half of suppliers with more than 250,000 customers failed to hit their annual smart meter installation milestones in 2019, Ofgem has revealed.
Larger suppliers have annual installation milestones which they must hit as part of their rollout obligations. First-generation (SMETS1) devices no longer count towards this target, unless they were installed before the deadlines or were within a derogation. Utility Week has previously reported on how suppliers continued to install these devices after the initial deadlines.
In a letter outlining its observations of the rollout, Ofgem notes that most suppliers reported that they installed a number of SMETS1 meters after the SMETS1 end-dates and outside their allowed derogation volume.
Ofgem’s letter reveals that for half of the larger suppliers, the proportion of customers with compliant smart meters in their portfolio at the end of the year was within the allowed tolerance for the 2019 milestones. However, half of the larger suppliers failed to meet the annual milestones they had set for themselves and were outside of the permitted 10 per cent tolerance.
Although a failure to reach the milestones constitutes a licence breach Ofgem says it deferred engagement with those suppliers, even where it was not satisfied with the reasons given, in light of Covid-19 and to enable suppliers to focus on ensuring customers’ needs were met.
The letter recognises the impact Covid has had on installations but adds suppliers have gained “significant experience” in rolling out smart meters and should be able to “take into account these evolving circumstances” and should work to optimise delivery.
Furthermore, the regulator points out that it sees a “great deal of variation” across suppliers in the effectiveness of their customer journey, from contacting customers through to successful installations. It also adds that most suppliers still have significant scope for improvement across the areas of customer eligibility, engagement and abort rates.
There are suppliers who are not yet able to offer a SMETS2 meter to some customers, due in part to individual suppliers’ commercial decisions and, in part, due to the required technical solutions not yet being available. Ofgem anticipates that many of these technical constraints will be resolved this year.
Although customers are not obliged to accept a smart meter, Ofgem calls on suppliers to consider appropriate “re-contact strategies” based on their preferences, contact history and reasons for not previously accepting a device. It warns that overly repetitive and coercive approaches, as opposed to “innovative, holistic and tailored re-contact strategies”, can be counterproductive in delivery of the rollout obligations.
In addition, there was not much of an improvement in installation abort rates in 2019. According to Ofgem the best performers are able to achieve a total abort rate of around 15 per cent which covers aborted installations due to technical issues as well as customer- led aborts. This is in contrast to the average abort rates of 26 per cent across the large suppliers.
The regulator expects suppliers to be working to minimise customer aborts by ensuring they have a comprehensive “keep warm” strategy in place which should include optimising the time between the customer booking and the actual appointment as well as active cancellation management.
Ofgem also wants to see industry drive the development of SMETS2 solutions to allow second-generation meters to be installed in all instances.
Last year it emerged that the smart meter rollout deadline was to be extended to 2024 as part of a new framework. Due to the impact of Covid-19, it was recently announced that the existing rollout obligation will be extended by 6 months to 30 June 2021, after which the four-year framework will begin.
According to the latest figures, 21.5 million smart and advanced meters had been installed in homes and small businesses in Great Britain as of 31 March 2020.