DECC - Smart Metering-Consumer engagement strategy consultation
Executive summary
The national roll-out of smart meters will bring significant benefits to consumers, businesses and our energy infrastructure as a whole, but this requires consumers to understand smart meters and the opportunities they bring. The Government therefore recognises the importance of effective consumer engagement and the need to put consumer benefits and protections at the programme’s heart. The roll-out is supplier-led, but the Government believes that benefits will be maximised if some elements of engagement are managed centrally. It therefore proposes a mechanism for some centralised engagement, established by suppliers, but with clear routes for consumer representative input to ensure credibility.
1. The implementation of smart metering will bring substantial benefits for Great Britain, with estimated net benefits of £7.2bn. It will be one of the largest and most complex investment programmes undertaken by the energy industry, entailing the almost complete renewal of the stock of electricity and gas meters to domestic and small non-domestic customers in less than a decade. The roll-out will involve every household in Great Britain and two million smaller businesses.
2. The Government foresees the roll-out of smart meters playing a major role in changing the gas and electricity sectors to the benefit of consumers. Smart meters will do this by providing better feedback on consumption, enabling new services for consumers, and by providing a platform for improving industry processes and reducing some of the barriers which currently obstruct the effective working of the market. Improved feedback and advice on energy consumption will give consumers (including those on low incomes) the tools necessary to achieve financial savings at a time of rising prices, as well as helping them to understand the benefits of energy efficiency measures. Benefits include a more convenient range of payment options for consumers using pre-payment meters.
3. Consumers will only receive the full range of benefits if they are informed about, and engaged in, the roll-out. We therefore propose the following high level aims for the consumer engagement strategy:- Building consumer support for the roll-out by building confidence in benefits and providing reassurance on areas of consumer concern
- Delivering cost-effective energy savings, by helping all consumers to use smart metering to better manage their energy consumption and expenditure
- Ensuring that vulnerable and low income consumers can benefit from the roll-out
These high level aims are underpinned by a number of objectives, outlined in Chapter 2.
4. In order to better understand how to meet these aims, the Smart Metering Implementation Programme (the Programme) has been reviewing the available evidence on:- What drives energy-consuming behaviour and hence how best to change this behaviour
- How this varies across different kinds of consumer
- Possible consumer concerns – so we can mitigate appropriately and shape consistent messages as required
5. By understanding consumer concerns we can ensure they are properly addressed; paragraph 3.19 sets out how the Programme will support this. Our evidence and analysis has resulted in the development of a behaviour change framework (see Appendix 1) which identifies four main tools of behaviour change within the scope of this strategy: direct feedback in near real-time; indirect (summarised) feedback; advice and guidance; and motivational campaigns (paragraph 3.4). Although we have reviewed an extensive evidence base, this is a complex area and we need to continue to review and test what works in engaging consumers through a programme of Foundation learning (paragraphs 3.20 – 3.25).
6. Having established broadly what needs to be done to engage consumers, we turn to the question of who is best placed to undertake that engagement. Suppliers have the primary role as the main interface with the consumer. While suppliers’ commercial strategies for marketing and installing smart meters and developing smart products and services are clearly a matter for them, they will have significant implications for this strategy. Tangible benefits, high quality of service, an efficient roll-out and swift resolution of complaints will help to build a positive view of smart metering. Conversely, poor quality or inefficient customer service – however caused – will have knock-on effects for the entire programme.
7. Whilst the roll-out will be supplier-led, the Government has a responsibility to develop the policy framework to ensure that consumer engagement aims are met. For example, transparency of energy costs through the in-home display (IHD) has been shown to be crucial in enabling energy saving. The IHD is thus a central tool of consumer engagement and the Government is therefore placing an obligation on suppliers to make the IHD a key part of the domestic consumer offer.
8. However our current thinking is that consumer engagement should not just be left to suppliers to manage individually. This could result in messages not being consistent and coordinated, which could lead to potential confusion or inefficiencies. In addition, MINDSPACE1 and other behavioural theories strongly point to the importance of the messenger in conveying information or advice. Although suppliers will have an important role in engagement, third parties such as charities, consumer groups, community organisations, local authorities, housing associations and friends and family can be more effective, credible messengers. This may be particularly true for some vulnerable consumers.
9. Given the important role third parties could play in engaging consumers, there needs to be some mechanism for orchestrating this. Centralising some engagement activities under one delivery mechanism would address this and allow for the possibility of an umbrella brand to position individual suppliers’ roll-outs as part of a national programme. The Government is also aware that encouraging households to use less energy does not align with suppliers’ commercial interests and therefore checks and balances to reflect wider interests within any central delivery mechanism would be important. Chapter 4 looks at the question of delivery in more detail.
10. The national roll-out of smart meters will also extend to smaller non- domestic consumers (businesses and public sector bodies). This represents a disparate sector, and one which also needs to be effectively engaged if the roll-out is to be successful. We are seeking views on whether a common package of information should be developed for micro-businesses in particular (see Chapter 5). More evidence will be collected during Foundation Stage and we will continue to keep the needs of this sector under review.
11. Smart meters provide a platform for other energy policies and the Government is considering how consumer engagement can exploit synergies. Smart metering, for example, will support the Green Deal by encouraging choices which increase the energy efficiency of the home. We also expect suppliers to consider how they can bring together obligations to deliver initiatives such as the Affordable Warmth element of the Energy Company Obligation with the smart meter roll-out. Bringing these initiatives together could deliver both efficiency savings for suppliers and provide a more comprehensive and valuable package for low income and vulnerable consumers. The Government’s initial approach to exploiting these synergies is to gather evidence on how they develop. In the medium term the Government will decide whether there is a case for adjusting policy levers to further encourage suppliers to help consumers save energy in ways enabled by smart metering (see Chapter 6).
12. Monitoring and evaluating the consumer benefits of smart meters is a high priority for the Programme. We will collect evidence to understand the consumer engagement drivers of consumer benefits; to measure consumer outcomes; and to understand the interactions with other energy efficiency policies. A range of information will be used for this purpose, including data collected alongside roll-out, results of suppliers’ trials, and additional trials of community-level engagement. All this evidence will be used to review the approach being taken to consumer engagement before mass roll-out starts and we will then monitor the delivery of benefits throughout roll-out (see Chapter 7). If consumer engagement does not appear to be delivering the benefits satisfactorily, further Government action remains an option.