Competition will deliver best results in smart metering
June 1st 2009

Howard Stark, managing director of Stark Software International examines DECC's consultation on the roll out of smart metering and discusses how there is a need for competition in the market and to act now and not wait until the domestic implementation

At the end of May 2009, DECC published its long awaited consultation on the roll out of smart metering.

This document signals an important shift in strategy: in it DECC rightly acknowledges that the needs of the domestic consumer are different to those of the non-domestic energy user.The consultation document devotes 14 pages to DECC's 'Proposal for the Domestic Sector' and, thankfully, only five pages to its 'Proposals for the Non-Domestic Sector'. On the assumption that the readers of this journal are more interested in DECC's proposals for the smaller industrial and commercial consumer (electricity profile classes 3–4), this article reviews DECC's recommendations for this sector and considers the impact they are likely to have on those who will have to pay the bill.

Advanced or smart metering

For those of you unfamiliar with DECC's terminology, 'smart' is applied to meters that meet the requirements for domestic households.That means it can send data to a real time display unit (RTD) and include features such as remote disconnect. 'Advanced' is applied to meters that can be remotely read and, as a minimum, provide consumers with access to half hourly electric and hourly gas consumption data. It is an advanced meter that has already been specified for the mandatory Profile Classes (PC) 5-8 market.

DECC has added that the data from advanced meters should be 'available no more than 24 hours after use'.While the Government, via recent changes in the Supplier licence conditions, has not made the provision of data at Day+1 mandatory, this is not the first time DECC has made public statements on this point.

Electricity profile class (PC) 3-4 and gas supplies <732MWh

In this consultation, the Government proposes to introduce new mandatory metering requirements for the PC3-4 sector and all gas supplies less than 732MWh. All told, this action will take in around 2.2 million electricity meters and 1.5 million gas meters.The Government accepts that a 'one solution fits all' approach is not applicable and it is now seeking industry views on how best to proceed.

Electricity

My meter operator colleagues at Western Power Distribution inform me that in PC3-4 approximately 33% of all sites take a three-phase supply.

Assuming this figure applies nationally, that gives us a little over 700,000 sites where an advanced meter, as per the PC5-8 market, can be specified.Given that it is reasonable to argue that three phase-sites are likely to be larger energy consumers than singlephase (domestic size), early mandating of this market makes good sense.The single-phase market, however, is more problematic. Some, like the Electricity Retail Association, better known as the Big 6 electricity suppliers, have been arguing that all domestic/single-phase sites should be captured in the domestic smart meter roll out.Others argue that since a decision on the domestic roll out could be three or more years away, delaying is simply a lost opportunity for engaging with the whole of the nondomestic sector. Single phase advanced metering is available today, the benefits are well documented, so why procrastinate?

Gas

It is estimated that one third of all industrial and commercial (I&C) gas meters do not have a pulse device fitted, and a small percentage of those that do are found to be defective when tested. I would like to say that upgrading existing gas meters into advanced gas meters is straightforward but, in practice, it's challenging and potentially very disruptive if a meter has to be replaced.However, there are new technologies on the horizon that hopefully will eliminate the need for meter replacements and thereby reduce costs – for example, ATEXapproved pulse transmission devices using low power radio to send data to the electricity meter.

Interoperability

DECC's consultation document says: "In setting rules for advanced metering for larger non-domestic sites (PC5-8), the Government did not impose an interoperability requirement. It is, however, supporting the voluntary work on interoperability being taken forward by interested parties and facilitated by Ofgem.As advanced metering becomes available to a greater number of customers, it is likely that interoperability arrangements will become essential for suppliers and customers alike, and this view was overwhelmingly supported by respondents to the consultation. If interoperability arrangements for larger sites can be successfully concluded, the Government would then expect them to be widened to encompass medium and smaller sites."

I am pleased to report that the industry, and in particular the meter operators and accredited data collectors, have endorsed the need for interoperability and are working together to bring about the necessary changes in industry processes and practices to make this happen.Removing barriers to competition will accelerate consumer adoption of the technology.Most importantly, this move will empower consumers to nominate their preferred meter operators, data collectors and data service providers, rather than being funnelled by their supplier into adopting their bundled offering.

Meter Code of Practice 10 (CoP10)

To further facilitate interoperability, a new metering standard, CoP10, is in the process of being adopted for PC5-8 and, as I suggest above, it is very probable that the same standards will be applied to the PC3-4 market. For a significant number of consumers there is a 'hidden'benefit of advanced metering.

Profile class is not based on the size of a supply; it is a measure of the supplies load factor.To calculate load factor, one needs to know the maximum demand.

However,many existing metering systems cannot measure maximum demand and so, by default, the site is classified as PC 3 or 4 whereas in reality they may be a 5-8.

Load factor is a significant factor in determining electricity prices.With the availability of half hourly data from advanced metering systems, an accurate analysis of the load factor will benefit many consumers by way of more competitive energy prices.

Unlike in the domestic market where DECC seem to favour the creation of a monopoly provider of communications and data services, there are positive signals that in the non-domestic sector DECC is prepared to endorse a competitive model for delivering the goods.

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