Ofgem has published an open letter on the “lessons learned” from its investigations into compliance with the advanced meter rollout (AMR).
The letter, written by the regulator’s head of metering and market operations, consumers and markets, Jacqui Russell, explored the decisions made following investigations into big six suppliers Npower, Eon and British Gas.
Suppliers must have taken “all reasonable steps” to install advanced meters for their larger non-domestic customers.
For failing to comply with the obligations of the AMR, which ended in April 2014, British Gas was fined £4.5 million, Eon £7 million and Npower £2.4 million.
Russell said as the smart meter rollout for household customers enters its final two years, there are a “number of lessons to be learned” from Ofgem’s AMR investigations that are worth highlighting as suppliers work to meet their obligations.
She highlighted several issues which led to the investigations including programme governance, customer engagement and interoperability.
Russell said: “In making its decision regarding compliance with the AMR obligation, the Enforcement Decision Panel (EDP) sought to objectively evaluate whether Npower had taken ‘all reasonable steps’ to deliver their obligation. In doing so, the EDP highlighted that ‘there was no fixed measuring stick by which the reasonableness of any particular measure at any particular time could be assessed. It would depend upon all the circumstances’.”
“A common theme”, Russell added, “across all three AMR cases was that the suppliers in question failed to put in place adequate internal programme governance and oversight throughout the AMR.”
“As a result, the suppliers failed to identify reasonable steps that could have been taken and thus to act in time to meet their obligations”, she said.
In response to the letter, an Npower spokesperson said: “Npower has always been committed to the AMR.
“We continue to do our utmost ensure our customers benefit from AMR and smart metering more broadly, including how we make sure that factors such as IT platform migrations do not impact regulatory programmes.”
All three companies were found not to have taken “all reasonable steps” to resolve issues around the interoperability of advanced meters between suppliers, considered a serious serious breach of their licences which “left affected non-domestic customers unable to access the benefits of advanced meters”.
An Eon spokesperson said: “As one of the first suppliers to start installing smart meters, we firmly believe in the benefits smart meters offer customers.
“We’ve already installed more than 1.4 million smart meters across the country and are currently playing a leading role for the industry in installing next generation SMETS2 meters.
“While we’re obliged to contact our customers about upgrading their meters to smart meters as part of our commitment to Ofgem, we’re committed to doing everything we reasonably can to help as many customers as possible to access the benefits smart meters can bring.”
With regards to interoperability, Russell said it was of “critical importance” that suppliers take a proactive approach to solving any issues.
She added: “This will involve continuing to work with the Data Communications Company (DCC) to overcome any technical issues as they arise and carrying out sufficient and timely testing.”
In her closing remarks, Russell said suppliers must be “mindful” in the context of the smart meter rollout.
“We expect suppliers to be mindful that in the context of the smart meter rollout, the obligation is much greater due to the scale and breadth of the rollout and therefore the importance the rollout has in the government’s energy policy.
“In this light, we will continue to provide regulatory oversight, ensuring consumers’ interests are protected, and to monitor and investigate where we believe a supplier may be in breach of the relevant licence obligations.”
British Gas declined to comment on the letter.