Suppliers risk non-compliance penalties for lackluster SMETS2 transitions

Ofgem has expressed concern that some suppliers are being “unambitious” in their preparations for the switchover to SMETS2 meters.

In a letter to the industry, the regulator’s head of smarter metering, Jacqui Russell, reviewed progress on the national smart meter rollout, as well as supplier plans for the rest of 2017.

In a section addressing the adoption of SMETS2 meters, rather than the earlier iteration SMETS1 meters which have limited smart functionality, Russel said Ofgem expects suppliers to “be actively engaged in end-to-end testing [of SMETS2 meters] at the earliest opportunity”.

She also said they should “be actively managing issues arising from end-to-end testing…to enable initial SMETS 2 installations to commence at the earliest opportunity; and have robust and deliverable plans in place to complete their SMETS 1 to SMETS 2 transition by the SMETS 1 end date.”

However, Russell added: “We are concerned that some suppliers have apparently unambitious approaches to these preparations and for the subsequent installation of SMETS2 meters.”

She warned: “This could hamper progress later in the rollout and suppliers must carefully consider their strategies for the critical transition from SMETS1/ advanced meters to SMETS2 or otherwise risk non-compliance with their regulatory obligations.”

In her letter Russell also said the regulator is investigating evidence which suggests some suppliers are failing to comply with their obligations to support smart meter customers through a change of supplier process.

SMETS1 meters currently have some interoperability issues which mean smart functionality can be lost if they decide to switch.

Nevertheless, Russell pointed out that “When gaining a customer with a smart meter, suppliers have obligations under their licence conditions to take all reasonable steps to enter into an agreement with the meter asset provider (MAP) for that meter; or if an agreement cannot be made to return the meter to the MAP”.

Furthermore, Russell emphasized that “a large supplier should not replace a smart meter with a traditional meter” when on-boarding a new customer.

“We have some evidence that suggests suppliers may not be fully complying with these obligations,” said Russell.

She urged all suppliers to consider whether their current actions represent compliance. “We will continue to monitor this area and may take action if necessary in accordance with our Enforcement Guidelines,” she added.

Other insights in Russell’s smart meter update revealed that some 1.3 million smart gas meters and 1.7 million smart electricity meters were fitted in the UK in 2016.

Of these however, it is thought a “significant” proportion will require firmware updates in order to become fully compliant with SMETS1 standards.

Until these meters have received updates, “they will not count towards suppliers’ 2020 obligations as they do not meet the licence condition definition of a smart metering system” said Russell.

Suppliers must ensure that all SMETS1 meters installed in homes are compliant with the specification standards before the SMETS1 rollout end date, or they may need to be replaced with SMETS2 meters.

Government is yet to confirm when the SMETS1 end date will be.

Russell’s later also noted that some suppliers have reported “that their installation partners had not performed as well as expected during 2016”.

Folloiwng conversations with MAP representatives, Utility Week understands that such shortfalls are relatively commonplace. In part, they are attirbuted to a volatile installation cost which is being pushed upwards due to competition for skilled labour.