Smart Metering Implementation Programme:

Consumer Protection

Document type: Supporting Document

Ref: 94a/10

Date of publication: 27 July 2010

Deadline for response: 28 October 2010

Target audience: Energy suppliers and network operators, consumers, consumer
organisations and representatives, environmental bodies, meter asset providers,
meter asset managers, meter operators and metering and communication equipment
manufacturers, academics and other interested parties
Overview:
This document is one of nine Supporting Documents published alongside the Smart
Metering Implementation Programme Prospectus.
It focuses on the domestic consumer and considers issues around prepayment,
disconnection, marketing, new tariffs, switching, vulnerable consumers and cost
recovery and sets out our proposed approach for ensuring that protections are fit for
purpose going forward. This document also identifies where further information can be
found in other Supporting Documents on a range of questions and concerns which
consumers may have about smart metering.

Contact name: Margaret Coaster

Tel: 020 7901 7000
Email: [email protected]
Team: Smart Metering Team, Ofgem E-Serve

Consumer Protection

27 July 2010

Context
The Government is committed to the rollout of electricity and gas smart meters to all
homes in Great Britain and to the broad delivery framework underpinning the
development of policy to date.
On behalf of the Department of Energy and Climate Change (DECC), Ofgem E-Serve
has been managing the first phase of a central programme to design and implement
new cross-industry arrangements for the delivery of smart metering. Ofgem EServes smart metering work has been undertaken in conjunction with Ofgems
Sustainable Development Division.
The Prospectus represents the joint views of DECC and the Gas and Electricity
Markets Authority (GEMA) based on the work conducted so far during the initial
phase of the Smart Metering Implementation Programme (the programme). It sets
out detailed proposals for consultation on the design and delivery of the smart
metering system. Alongside the Prospectus, Ofgem is publishing a number of
supporting documents which set out in more detail the alternative options
considered.
Reflecting the approach adopted to date, the remaining work to scope the regulatory
framework will be led by Ofgem E-Serve on behalf of DECC. Later this year, the
governance and management arrangements for subsequent phases of the
programme will be decided upon.

Associated Documents
DECC and Ofgem have jointly published the Smart Metering Implementation
Programme Prospectus. This document is one of a number of Ofgem supporting
documents published alongside the Prospectus.
DECC has also published updated impact assessments for the domestic and nondomestic sectors and a paper on disablement/enablement functionality for smart gas
meters.
To help inform the programme, Ofgem also commissioned specific research (carried
out by FDS) into consumer awareness of, and attitudes towards, smart metering.
All documents are available on the Ofgem website at the following location:

http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=40&refer=eserve/sm/Documentation

Consumer Protection

27 July 2010

Table of Contents
Summary ........................................................................................... 1
1. Introduction .................................................................................. 4
Context ..................................................................................................... 4
Stakeholder engagement ............................................................................. 4
Structure of document ................................................................................. 4
2. Developing services for consumers ............................................... 6
Existing consumer protections ...................................................................... 7
New tariffs ................................................................................................. 8
Marketing and sales of products and services .................................................10
Switching between suppliers ........................................................................12
Access to consumption data ........................................................................12
3. Prepayment and remote disconnection........................................ 16
Existing consumer protections .....................................................................17
Prepayment ..............................................................................................19
Remote disconnection ................................................................................21
4. Vulnerable consumers and fuel poverty ....................................... 25
Specific needs of the vulnerable ...................................................................25
5. Cost recovery and monitoring of costs......................................... 29
Cost recovery ............................................................................................30
Monitoring of costs.....................................................................................32
6. Other consumer issues ................................................................ 33
In-home display and additional smart devices ................................................33
Data privacy and security............................................................................35
Rollout and installation visit .........................................................................36
In-service performance monitoring of the smart metering system .....................38
Early movers .............................................................................................38
Value-added services and microgeneration ....................................................39
Inspection of the meter ..............................................................................40
7. Conclusions and next steps ......................................................... 41
Summary of key proposals ..........................................................................41
Next steps ................................................................................................42
Appendices ...................................................................................... 43
Appendix 1 Consultation Response and Questions........................ 44
Appendix 2 Definition of vulnerable consumers and existing
protections ...................................................................................... 47
Appendix 3 Glossary ..................................................................... 49
Appendix 4 The Authoritys Powers and Duties ............................ 55

Consumer Protection

27 July 2010

Summary
The rollout of smart metering to all homes in Great Britain will deliver significant
benefits to consumers. The in-home display (IHD) will provide real-time information
about energy consumption which will help consumers to manage their energy usage
and expenditure, and reduce their carbon emissions. Consumers can expect
improved customer service from accurate bills, as well as smoother switching
between suppliers. Smart metering will also enable suppliers to offer better tailored
energy tariffs and provide new services. Furthermore, consumers stand to benefit
from the potential for better management of, and investment in, the electricity
network.
Consumers lie at the heart of the smart metering programme. This document
focuses specifically on domestic consumers.1 To inform our proposals in this area, we
have worked closely with a range of consumer organisations and established a
Consumer Advisory Group (CAG). Ofgem also commissioned research into consumer
awareness of, and attitudes towards, smart metering. Going forward, we are
committed to continuing our engagement with stakeholders, including with the CAG.
Standards of conduct and licence obligations are already in place to protect
consumers interests. Suppliers must also comply with wider consumer protection
legislation. As smart meters are rolled out across Great Britain, we are committed to
ensuring these protections are sufficient and appropriate and, where necessary, will
establish new protections to ensure that consumers interests remain safeguarded.
The Gas and Electricity Markets Authoritys (GEMA) principal objective is to protect
the interests of existing and future consumers. In line with this, this document
specifically identifies, Ofgem, as distinct from the programme, as taking forward
certain actions. Ofgem will work closely with the programme across all smart
metering issues to ensure consistency and coherence.
Some suppliers are already providing, or have indicated that they intend to provide,
smart meters to consumers in advance of the mandated roll out. This will help bring
forward the benefits of smart metering and draw on early consumer enthusiasm.
However it is important that these suppliers do this in a way that protects consumer
interests and promotes consumer choice and benefits. Actions which, for example,
inhibit customers switching between suppliers may attract regulatory action. We will
also expect these suppliers to adhere to the measures already in place both in
suppliers licences and in general consumer law to protect consumers.
In this context, we recognise the benefits of acting quickly to maintain consumer
confidence and safeguard consumers interests. Ofgem intends to publish shortly
interim guidance on the application of current licence conditions relating to remote
switching to prepayment mode and remote disconnection. We intend to review
whether these existing licence protections are sufficient to protect consumers. Ofgem
has already proposed an amendment to the supply licence which will clarify that,
prior to disconnection, suppliers must take all reasonable steps to ascertain the
status of a consumer and the occupants of any affected domestic premises.

Issues concerning non-domestic consumers are set out in the Non-Domestic Sector
supporting document.
1

Consumer Protection

27 July 2010

Building on this work, Ofgem intends to introduce a package of measures in spring

2011 to provide for the continued safeguarding of consumers interests. This includes
protections relating to prepayment and disconnection. Ofgem is therefore consulting,
as part of this document, on whether changes to existing supply licence conditions
are required in light of the ability for suppliers remotely to disconnect consumers and
remotely to switch them to prepayment mode. This consultation includes whether
current obligations to install a prepayment meter only where it is safe and
practicable are sufficient to ensure the consumer is not switched to prepayment
mode inappropriately. This package could also include measures around
interoperability aimed at ensuring that consumers will not face any barriers in
switching suppliers.
Smart metering has the potential to improve the services offered to consumers by
introducing better tailored energy tariffs. Throughout the rollout and beyond,
suppliers will be expected to comply with existing obligations and have regard to
standards of conduct when introducing new tariffs, products or services to the
market. Ofgem will take appropriate enforcement action where suppliers do not
comply with their obligations and will continue to monitor the suitability of existing
protections governing the quality and accessibility of information provided to
consumers by suppliers.
The installation visit is an important opportunity to engage consumers and , it is
important that consumers view this as a positive experience. The programme
therefore proposes to require suppliers to develop a Code of Practice on installation,
which would be underpinned by a high-level licence obligation. This Code would set
out the details of what consumers can expect at the installation visit and help ensure
that high standards are maintained. We are also seeking views on the potential
scope for a national awareness campaign.
During the actual visit, selling of new products and tariffs may raise particular
concerns for consumers. The programme wishes to ensure that the visit is not used
for unwelcome sales activities. At the same time, it recognises the potential value of
consumers being offered advice and information on energy efficiency and related
products and services. We are therefore requesting views on what could be
considered acceptable and unacceptable uses of the installation visit and why.
Looking beyond the installation visit, the programme is minded to consider if
additional protection is needed to prevent the IHD provided during rollout from being
used to transmit unwelcome marketing messages. In our view, such messages could
lead to consumers ignoring the IHD, thus undermining the benefits to be achieved
through consumers receiving real-time consumption information.
Smart metering will result in a step change in the amount of information available to
consumers on their electricity and gas usage. We propose as a principle that
consumers should choose in which way their consumption shall be used and by
whom, with the exception of data required to fulfil regulatory duties.
In addition to the real-time information provided by the IHD, it is important that
consumers are able to access their detailed historical consumption data, for example
to compare tariffs. The programme is proposing that consumers should be able to
access their information free of charge, in an appropriate format and at an
appropriate level of detail. We propose to undertake further work on what an

Consumer Protection

27 July 2010

appropriate format and level of detail would be - for example to enable like-for-like
tariff comparisons. In addition, Ofgem intends to review existing licence conditions
around information provision to ensure that consumers can access the enhanced
consumption information that smart metering offers on an ongoing basis. The
programme recognises the potential sensitivity of data on consumers' energy use
and has taken a rigorous and systematic approach to assessing and managing the
important issues of data privacy and security.
Addressing the needs and protecting the interests of vulnerable consumers and the
fuel poor during the rollout is a priority for the programme. The installation visit may
raise particular concerns, including security concerns, for some vulnerable people.
Some protection is already provided through the Priority Services Register (PSR),
although many vulnerable consumers are not on the register. The programme
therefore envisages that the Code of Practice on installation could include additional
protection for particular groups of consumers. We are also requesting views on the
options for providing the advice and support that will be needed to help all
consumers realise the benefits of smart metering. This includes the establishment of
a help scheme which could provide dedicated assistance to those consumers who
need it during rollout, to supplement existing legal and other protections.
The competitive energy supply market acts as a price restraint on suppliers and
creates incentives on them to deliver, and charge for, smart metering in a way that
minimises costs to consumers and offers them best value-for-money. The rollout of
smart metering will however increase costs for suppliers. We expect these costs, less
any associated savings, to be recovered from consumers. While these additional
costs will be relatively small in comparison to other components of customers bills,
the way in which the costs of smart metering are recovered from customers raises
important issues of fairness and also has the potential to affect consumers attitudes
to smart meters. The programme proposes to prohibit suppliers from imposing
upfront charges on customers for the smart meters and IHDs that they are required
to provide. Suppliers will be able to offer their customers value-added products and
services, such as an enhanced IHD, for an upfront charge or as part of a new tariff
package.
We also recognise that the rollout of smart metering may create a number of other
questions and concerns for consumers, including what information will be provided
on the IHD and when they will receive a smart meter. These and other issues are
considered in more detail in other supporting documents. The final chapter of this
document signposts to more detailed information.

Consumer Protection

27 July 2010

1. Introduction
Context
1.1. This document is one of nine supporting documents published alongside the
Smart Metering Implementation Programme Prospectus. It focuses on the domestic
consumer and the issues around prepayment, disconnection, marketing, new tariffs
and cost recovery associated with smart metering, and sets out our proposed
approach for ensuring consumer protections are fit for purpose going forward.

Stakeholder engagement
1.2. In developing this document we have focused on the consumer perspective. We
have established a specific smart metering Consumer Advisory Group (CAG) in order
to fully identify and understand key consumer issues. The membership of this Group
is made up of representatives from Consumer Focus, the Fuel Poverty Advisory
Group, Which?, the Public Utilities Access Forum, Age UK and the Centre for
Sustainable Energy. The CAG has discussed a range of issues considered in this
paper, including remote disconnection, remote switching to prepayment terms, cost
recovery and marketing during the installation visit. We have also consulted Ofgems
Disability Advisory Forum (DAF) on remote disconnection, rollout and the in-home
display.
1.3. In addition we have held a number of stakeholder events and workshops. These
have covered a range of topics including issues relevant to consumer protection such
as remote disconnection and remote switching to prepayment terms. To help inform
the programme, Ofgem also commissioned specific research (carried out by FDS)
into consumer awareness of, and attitudes towards, smart metering. This has been
published alongside the Prospectus.2
1.4. We are committed to continuing our engagement with stakeholders going
forward, including with the CAG.

Structure of document
1.5. The introduction of smart metering should bring benefits to consumers through
development of the services offered to consumers. This includes the offer of
innovative tariffs and energy services products, smoother switching and improved
access to historical consumption data. However we recognise that an increase in the
number, variety and complexity of tariffs may lead to consumer confusion. Concerns
have also been raised around sales during the installation visit and how consumers
will access their data easily and securely. Furthermore the rollout of smart metering
must not create barriers to switching supplier. Chapter 2 of this document examines
the issues around new tariffs, marketing, switching and access to consumption data.
2

Consumers views of Smart Metering: Report by FDS International, FDS, July 2010
4

Consumer Protection

27 July 2010

1.6. Suppliers ability to switch the meter remotely from credit to prepayment mode
can provide a better debt management service and an improvement in service for
prepayment customers. The ability to remotely disconnect customers can also assist
suppliers in debt recovery and prevent costs being borne by other customers.
However, the ability to carry out these functions remotely may mean that there are a
number of areas where further protection of consumers may be needed. Chapter 3 of
this document requests views on this issue and details how Ofgem will ensure
protections in this area are fit-for-purpose.
1.7. Smart metering will have particular implications for some vulnerable consumers
and those in fuel poverty. Better information on energy consumption may help those
on low incomes manage their budget better but it may also lead to self-rationing or
increased self-disconnection amongst those on low incomes, which could adversely
affect health and quality of life. Some vulnerable consumers may be hard to reach
and could have particular concerns about letting a stranger into their home to install
the meter. Several stakeholders have raised the possibility of prioritising rollout
towards particular groups of customers such as the fuel poor. Chapter 4 of this
document considers the implications of smart metering for vulnerable consumers and
the fuel poor and sets out how we are addressing their particular needs.
1.8. The implementation of the smart metering programme will increase costs for
suppliers which will be recovered from their customers. Stakeholder groups have
raised concerns around the level of the costs that suppliers will pass through to
customers and stressed the importance of monitoring the costs of the smart
metering programme. These issues are considered in Chapter 5.
1.9. Finally there is a range of other questions and concerns which consumers may
have about smart metering. These range from the in-home display to data privacy,
from rollout to meter technical specifications. Chapter 6 of this document provides a
single point of reference, identifying where further information can be found in other
supporting documents published alongside the Prospectus.

Consumer Protection

27 July 2010

2. Developing services for consumers

Smart metering has the potential to improve the services offered to consumers,
including new tariffs and smoother switching between suppliers. On the other hand,
stakeholders have raised concerns regarding tariff complexity and marketing of new
products and services, barriers to switching and security and ease of access to
historical consumption data. This chapter considers these issues and sets out
approaches to ensure that consumers are properly protected and can access the
benefits of smart metering.
Question 1: Do you have any views on our proposed approach for addressing
potential tariff confusion? What specific steps can be taken to safeguard the
consumer from tariff confusion while maintaining the benefit of tariff choices?
Question 2: Do you agree with our proposed approach for addressing unwelcome
sales activities during visits for meter installation?
Question 3: What do you consider as acceptable and unacceptable uses of the
installation visit and why?
Question 4: Do you agree with our proposed approach to ensuring that the IHD is
not used to transmit unwelcome marketing messages?
Question 5: Do you agree that consumers should be able to obtain consumption
information free of charge at a useful level of detail and format? How could this be
achieved in practice?
2.1. Smart metering has the potential to improve the services offered to consumers
by introducing better tailored energy tariffs. However, it is possible that more choice
and more complex tariffs could lead to customer confusion and create the potential
for customers to be misled. Ofgem already has a broad range of powers to tackle
these issues. As smart metering is rolled out and new tariffs are developed, it will
continue to keep these issues under review.
2.2. The rollout of smart metering presents significant commercial opportunities for
suppliers to offer consumers new tariffs, more sophisticated energy advice and
integrated energy service packages. However, consumer groups have raised
particular concerns about selling during the installation process. We recognise these
concerns but also believe that some marketing may deliver potential benefits to
consumers. We wish to ensure that the installation visit is not used for unwelcome
sales activities and are considering the coverage provided by existing protections to
assess what further action we can and should take to achieve this objective.
However, we need to ensure that the installation visit can also be used to maximise
the benefits that can be realised through a single visit, for example, in cases where
consumers have expressed an interest in additional information or products that the
supplier can provide.

Consumer Protection

27 July 2010

2.3. Smart metering can also improve the services offered to consumers by
facilitating quicker and smoother switching between suppliers and tariffs. By
switching supplier, consumers can often make significant savings on their bills or
obtain improved customer service. We are considering the scope for reforming
existing industry processes to reduce the time that it takes to switch and to reduce
errors. We are also working to ensure that smart metering does not make it more
difficult to switch supplier. To prevent technical barriers to switching, we have
specified the functional requirements that will be used as a basis for developing a
detailed technical specification for the smart metering system. Ofgem is also
considering the commercial arrangements for allowing suppliers to take over existing
meters as part of its ongoing review of metering arrangements.
2.4. Further, consumers will have improved information on their historical
consumption which can help them make informed choices about different tariffs.
While there is a variety of options for accessing detailed consumption data, the key
principles are that consumers should be able to easily, securely, and free of charge,
obtain information at an appropriate level of detail and in an appropriate format.
2.5. This chapter begins by giving an overview of the existing protections and then
looks at issues around tariff complexity, sales and marketing, switching and access
to consumption data.

Existing consumer protections

2.6. Ofgems Energy Supply Probe which examined the operation of the Great Britain
retail energy market3, introduced a package of remedial measures to improve the
functioning of the market for all consumers including small businesses and help
improve the information available to consumers. These remedies cover areas relating
to unilateral contract variations, conduct of sales and marketing activities by
suppliers and improved customer information for domestic customers. For example,
Ofgem amended Standard Licence Condition (SLC) 25 of the domestic supply licence
to require suppliers to ensure that information provided to consumers is fair, clear
and not misleading, and that sales activities are conducted in an appropriate and
professional manner. SLC25 was also amended to ensure that prior to the conclusion
of any face to face sale consumers must be provided with a written estimate and/or
a written comparison with the consumers current deal.
2.7. Ofgem also introduced a set of overarching Standards of Conduct as guidance
for suppliers to have regard to, which amongst other things, emphasises the need for
suppliers to provide appropriate and easy to understand information to the consumer
as set out below.

Energy Supply Probe - Summary of Initial Findings, Ofgem, October 2008

7

Consumer Protection

27 July 2010

Standards that we expect suppliers to take all reasonable steps to adhere to in their
dealings with domestic and small business consumers:

You must not sell a customer a product or service that he or she does not fully
understand or that is inappropriate for their needs and circumstances;

You must not change anything material about a customers product or service
without clearly explaining to him or her why;

You must not prevent a customer from switching product or supplier without
good reason;

You must not offer products that are unnecessarily complex or confusing ; and

You must make it easy for customers to contact you and act promptly and
courteously to put things right when you make a mistake.

2.8. Suppliers are expected to take all reasonable steps to adhere to these standards
of conduct in the domestic and small business retail markets and, while not directly
enforceable through licence conditions or legislation, Ofgem will take account of
these standards in its approach to enforcement.
2.9. Furthermore, Ofgem can take legal action to address breaches of the Unfair
Terms in Consumer Contracts Regulations 1999 (UTCCRs) and the Consumer
Protection from Unfair Trading Regulations 2008 (CPUTRs). The UTCCRs control the
use of unfair contract terms such as clauses seeking to limit liability for faulty goods
and unsatisfactory services and clauses imposing excessive financial penalties or
excessive notice periods for termination. The CPUTRs regulate commercial practices
before and during contracts to provide a wide range of goods and services. The
CPUTRs contain a general duty not to trade unfairly and prohibit the provision of
false or misleading information and use of aggressive sales practices. The CPUTRs
also list 31 trading practices that are banned in all circumstances. These include, for
example, falsely claiming to be a signatory of a Code of Practice, falsely claiming to
be endorsed by a public body, and persistent and unwanted telephone or email
marketing.
2.10. The Energy Retail Association (ERA), which represents the major electricity and
gas suppliers in Great Britains domestic market, has established its own Code of
Practice for doorstep selling.4 The Code of Practice for face-to-face marketing of
energy supply covers, amongst other things, the recruitment and training of sales
agents, contact with consumers and arrangements for managing complaints.

New tariffs
2.11. The introduction of smart meters could potentially lead to a wider range of
tariff options. We welcome tariff innovation because consumers can benefit from
greater choice and opportunities to optimise energy consumption, save money and
4

Code of Practice for Face-to-Face Marketing of Energy Supply, Energy Retail Association
8

Consumer Protection

27 July 2010

reduce carbon emissions. For example, consumers may choose to move on to Timeof-Use (TOU) tariffs, which may offer different unit prices at different times of the
day or week, enabling consumers to save money by shifting consumption to lower
cost periods without reducing overall energy consumption.
2.12. However, consumer groups have raised concerns that an increase in the
number, variety and complexity of tariffs may lead to possible consumer confusion.
Consumers may find it harder to identify tariffs best suited for their needs and may
be less willing to search and switch supplier. Consumers, including vulnerable
consumers, may also end up paying more for their energy because they may not
fully understand the pricing structure of new tariffs and/or are unable to shift their
demand patterns. This is especially relevant for TOU tariffs under which the size of
the bill reflects not only volume of energy consumed but also the time at which it is
consumed. It is important that suppliers do not attempt to sign customers up to such
tariffs until an appropriate volume of consumption data is available to the consumer,
or any authorised party, to assess if the tariff is appropriate. Customers will not be
forced to take TOU tariffs.
2.13. Suppliers might also offer consumers innovative products or services if they
agree to contracts of longer duration which allow the supplier to recoup the upfront
costs. Such contracts may benefit consumers by helping them to manage usage, for
example through the provision of more sophisticated in-home displays (IHDs).
However, there may be concerns that consumers are not fully aware of the nature
and implications of their agreement to a contract of significant duration. Long term
contracts may deter consumers from switching supplier (for example, some contracts
may carry substantial exit fees). Therefore, there is a need to ensure transparency
and customer awareness.
2.14. Switching sites are a useful source of information that can help consumers
compare tariffs. While Ofgem does not have direct jurisdiction over switching sites, it
will continue to engage with Consumer Focus on the Confidence Code (a voluntary
Code of Practice for online domestic price comparison services), to ensure that
consumers can make well informed switching decisions through these sites.
2.15. Consistent with existing consumer protection legislation, other applicable rules
and our guiding Standards of Conduct, Ofgem expects suppliers, in introducing new
tariffs, to ensure that:

Consumers are clear about the terms and conditions of such tariffs; and
No consumers are offered tariffs that are inappropriate for their circumstances.

2.16. Ofgem will continue to monitor suppliers adherence to these standards of

conduct, the domestic supply licence and wider consumer protection legislation. At
this stage, Ofgem does not believe that there is a need for any specific additional
protections around tariffs beyond those that already exist. However, as new products
and services start to emerge we will keep this position under review. We would
welcome views from respondents on our proposed approach.

Consumer Protection

27 July 2010

Question 1: Do you have any views on our proposed approach for

addressing potential tariff confusion? What specific steps can be taken to
safeguard the consumer from tariff confusion while maintaining the benefit
of tariff choices?

Marketing and sales of products and services

2.17. The rollout of smart metering presents significant commercial opportunities for
suppliers to offer consumers new tariffs, more sophisticated energy advice and
integrated energy service packages. Such an approach may build consumer
awareness and enthusiasm for smart metering. However, while some consumers
may welcome marketing of new products and services, there are concerns amongst
consumer groups that inappropriate marketing and sales activity during the
installation visit or through the IHD could undermine consumer confidence in the
rollout as well as achievement of the benefits.
Marketing and sales during the installation visit
2.18. Consumer groups have raised concerns over the possibility of sales activities
occurring as part of the installation process. Their concerns have related to a number
of factors, including the treatment of vulnerable consumers and the risk that
inappropriate selling could undermine consumer confidence in the rollout. For
instance, if some consumers believe that installation may include such sales activity
then they may refuse access, and more generally may perceive smart meters as a
supplier sales opportunity and not a benefit for them. Our consumer research also
identified concerns about sales approaches during the installation visit.5
2.19. At the same time, the installation of a smart meter provides the opportunity to
raise a consumer's awareness of actions they can take to manage their energy
usage, thereby helping them to make cost savings and reduce their carbon
emissions. For example, this might include raising the profile of how installing
insulation could help reduce heating bills. Such conversations are an opportunity for
links to be made with other Government energy efficiency programmes.
2.20. We wish to ensure that the installation visit is not used for unwelcome sales
activities. In our view, it would be wholly inappropriate for suppliers to gain entry to
a customers home on the pretext that the visit is solely for the purposes of meter
installation and then once inside to use that opportunity to attempt to effect a
sale. However, we also want to ensure that the installation visit is able to maximise
the benefits that can be realised through a single, visit, where consumers have
expressed an interest in additional information or products that the supplier can
provide. There are already existing consumer legislation and licence conditions
protecting consumers against, for example, misleading, aggressive or unfair sales
and marketing activities. We are looking at the coverage provided by existing
protections to assess what further action we can and should take to achieve this
objective.
5

Consumers views of Smart Metering: Report by FDS International, FDS, July 2010
10

Consumer Protection

27 July 2010

2.21. We would welcome views on what could be considered acceptable and

unacceptable uses of the installation visit and why. Examples of key considerations
here could be:

Whether the customer has given explicit, advance consent to the visit being used
for sales or marketing;
The nature of the activity (provision of information only, referral to another body
or signing of contracts);
The source of service to which the consumer may be directed (e.g. is it a
government-supported or accredited energy efficiency programme or a
commercial service provided by the supplier/others);
The involvement of local authorities or other third party not-for-profit
organisations; and
The category of customer (e.g. certain vulnerable customers).

Question 2: Do you agree with our proposed approach for addressing

unwelcome sales activities during visits for meter installation?
Question 3: What do you consider as acceptable and unacceptable uses of
the installation visit and why?
Marketing using the in-home display
2.22. The IHD will provide consumers with real-time information on their energy
consumption in a readily accessible form. Suppliers or authorised third parties may
go beyond the minimum requirements as set out in the In-Home Display supporting
document and offer a more advanced IHD and to use the IHD to market new
products and services to consumers.
2.23. Consumer groups have, however, raised concerns that marketing could
discourage consumers from looking at the IHD, undermining the central benefits
derived from the IHD in terms of its role in providing energy consumption
information. At the same time, the IHD may provide a channel for useful information
about new energy saving products, services and tips.
2.24. Subject to views from respondents, we are minded to regulate to prevent the
IHD provided during rollout from being used to transmit unwelcome marketing
messages. In our view, such messages could lead to consumers ignoring their IHD,
thus undermining the benefits achieved through consumers receiving real-time
consumption information. We are looking at the coverage provided by existing
protections to assess what further action we can and should take to achieve this
objective. We welcome views on our proposal and on what should be considered as
unwelcome in this context which may depend, for example, on whether the
customer can opt out and on the nature of the offering (new tariffs or energy
efficiency messages).
Question 4: Do you agree with our proposed approach to ensuring that the
IHD is not used to transmit unwelcome marketing messages?

11

Consumer Protection

27 July 2010

Switching between suppliers

2.25. The rollout of smart meters will facilitate smoother, faster switching between
suppliers. By taking advantage of the competitive market and switching supplier,
consumers may obtain significant savings on their energy bills. Consumers may also
switch to secure better customer service or new products, such as green energy
tariffs. Switching drives suppliers to compete to retain existing customers and win
new ones by offering more competitive prices, improving customer service and
developing innovative products.
2.26. Smart metering provides the potential for switching to be simplified. In
particular it allows suppliers to take accurate readings on the day a consumer
switches and may mean that consumers do not have to take their own meter
readings when switching supplier. There is also scope to reform the industry
switching processes. Currently switching processes are complex, with separate
processes for gas and electricity (making dual fuel switching more complex). Reform
of the industry processes could deliver significant benefits to consumers by
improving the effectiveness and increasing the speed of the process. These reforms
are linked to the scope of the DataCommsCo (DCC)6 and are discussed further in the
Communications Business Model supporting document.
2.27. Definition of technical specifications will ensure that equipment at customer
premises does not need to change with a change of supplier. In addition, suppliers
will need to develop commercial terms for use of their meters on change of supplier
(to deliver what we term "commercial interoperability"). We recognise that this issue
will become more important as smart meters are rolled out since the value of the
meter and cost of installation are greater than the comparable costs of traditional
metering. We will work with the industry to consider how best to address this issue,
taking into account the findings emerging from the review of current metering
arrangements launched by Ofgem on 1 April 2010.7 The programme will, if
necessary, bring forward proposals to ensure the effective operation of this aspect of
the market.

Access to consumption data

2.28. Smart metering will result in a step change in the amount of information
available to consumers on their electricity and gas usage. Through the IHD provided
to all homes, smart meters will provide consumers with real-time information about
their energy use, enabling them to monitor and reduce their energy consumption and
carbon emissions. Coupled with the installation of energy efficiency measures such
as insulation, and tailored advice about energy saving behaviours under the Green
Deal, this should deliver a step change in household energy efficiency.

We are proposing that the DataCommsCo will be a new entity responsible for the design,
procurement and contract management of a range of data and communications services.
7
Review of Current Metering Arrangements, Ofgem, April 2010
12

Consumer Protection

27 July 2010

2.29. Outside the direct feedback provided through the IHD, access for consumers to
their consumption data is central to ensuring consumers benefit as much as possible
from smart metering. Consumers may want access for a variety of purposes, not
least in identifying the best tariff to suit their needs. We believe that a number of
principles should underlie this access. These include that consumers should be able
to access their information easily, securely, free of charge, in an appropriate format
and at an appropriate level of detail. We propose to undertake further work on what
would be a useful format and level of detail, for example, to enable like-for-like
comparisons of tariffs.
2.30. While the increase in the amount of information potentially available from
smart meters brings clear benefits to consumers, we recognise the concerns
consumers may have about the security and privacy of their consumption data. We
have adopted 'privacy by design' and security by design principles to ensure that
any issues and risks are identified early and the end-to-end smart metering system
is designed from the outset to deliver appropriate privacy and security protection for
consumers.
2.31. Our proposed privacy policy reflects the important principle that data control
rests with the customer, while recognising that there are a range of instances when
third parties will have a legitimate need to access that data. The programme will be
undertaking further detailed analysis to establish the different potential data
requirements of industry participants and whether such data collected needs to be
individual or aggregated.
2.32. This will help to ensure that personal data will only be transmitted outside of
the home where it is essential or where the consumer gives consent. Data privacy
and security issues are discussed more fully in the Data Privacy and Security
supporting document.
2.33. In terms of how consumers access their data, to compare tariffs or obtain
energy advice, the supplier is clearly one potential channel. We are of the view,
however, that it would not be appropriate for consumers to rely solely on their
supplier to gain access. Such reliance could give rise to privacy concerns because
consumers may not want to provide their supplier with access to their detailed data.
Furthermore, there are competition concerns because suppliers are already
competing to offer tariffs for energy supply and may be competing with third parties
to offer broader energy management services.

13

Consumer Protection

27 July 2010

Figure 1 - Proposed smart metering architecture

2.34. Figure 1 shows the potential avenues through which consumers may access
their data as an alternative to the IHD. For example, we have proposed that the
smart meter be required to store twelve months of half hourly data. This data could
be accessed through the Home Area Network (HAN) subject to appropriate security
arrangements. The HAN enables the meter to communicate with other appliances in
the home. We propose that suppliers have an enduring obligation to provide a
defined data set to the consumer via the HAN if they request access to it. As part of
the Regulatory and Commercial Framework supporting document, we have set out
proposals on which data items should be included in the mandated HAN data set,
including the half hourly data stored on the meter.
2.35. Provided the HAN data set includes the half hourly data stored on the meter,
consumers who have access to a computer could purchase a device, which when
authorised could be used to collect this data via the HAN. Some consumers do not
have access to a computer or may not want to access the data of their own accord.
For these consumers, an alternative option would be to authorise a third party to
collect the data on their behalf.
2.36. Furthermore, Ofgem proposes to review existing supply licence conditions
around information provision with a view to ensuring that consumers are able to
benefit from the enhanced consumption information that smart metering offers.

14

Consumer Protection

27 July 2010

Question 5: Do you agree that consumers should be able to obtain

consumption information free of charge at a useful level of detail and
format? How could this be achieved in practice?

15

Consumer Protection

27 July 2010

3. Prepayment and remote disconnection

Smart metering will enable remote disconnection and remote switching between
credit and prepayment mode. This chapter reviews the existing protections in the
domestic supply licence conditions concerning disconnection and use of prepayment
meters. It also requests views on whether these protections are fit for purpose going
forward and on the issues that may arise as a result of the remote functionality of
smart meters.
Question 6: Do you consider that existing protections in the licence are sufficient to
ensure that consumers are not remotely switched to prepayment mode
inappropriately?
Question 7: Could provision of an appropriate IHD help overcome meter
accessibility issues to facilitate prepayment usage?
Question 8: What notification should suppliers be required to provide before
switching a customer to prepayment mode?
Question 9: Do you believe that suppliers should be required to provide emergency
credit and friendly credit periods to prepayment customers or whether, as now, this
can be left to suppliers?
Question 10: Do you consider that an obligation similar to Prepayment Meter
Infrastructure Provision (PPMIP) may be required?
Question 11: Is the obligation which Ofgem is proposing to introduce on suppliers
to take all reasonable steps to check whether the customer is vulnerable ahead of
disconnection sufficient? If not, what else is needed?
Question 12: What notification should suppliers be required to provide before
disconnecting a customer?
Question 13: Do you have any views on the acceptability of new approaches to
partial disconnection and how they might be used as an incentive to pay bills?
Question 14: Do you agree with our approach for addressing issues related to
remote disconnection and switching to prepayment?
Question 15: Have we identified the full range of consumer protection issues
associated with the capability to conduct remote disconnection or switching from
credit to prepayment terms? If not, please identify any additional such issues.
3.1. The Government has decided that the meter functionality for electricity should
include remote switching between credit and prepayment terms and remote
disconnection and reconnection and is of the view that, subject to consultation, the
same functionality should be included in all gas smart meters. The analysis
underpinning the inclusion of a gas valve in the minimum functional requirements is

16

Consumer Protection

27 July 2010

set out in the DECC supporting paper on disablement / enablement functionality for
smart gas meters and the analytical annex to the updated Impact Assessment.
3.2. The ability to switch payment methods remotely brings direct consumer
benefits; the consumer can switch payment methods easily if his or her
circumstances change and can potentially top-up remotely over the internet or
telephone. In addition, consumers will not need to insert a key into the meter to topup, which is currently the cause of a high level of faults on prepayment meters
(PPMs).
3.3. However, the remote functionality of smart meters also creates new issues in
that it will become much easier for suppliers to disconnect a customer or switch them
to prepayment terms. Given the importance of these issues and the fact that some
suppliers are starting to install smart meters ahead of the formal rollout
commencing, Ofgem is reviewing this area as a matter of urgency.
3.4. Ofgem intends to publish an open letter shortly setting out interim guidance on
the application of the current licence conditions relating to remote switching between
credit and prepayment terms and remote disconnection.
3.5. Ofgem is also in the process of reviewing the current consumer protections in
light of the early provision of smart metering. This chapter sets out the existing
consumer protections relating to PPMs and disconnection, and then consults on a
number of areas where further protection may be needed.
3.6. Subject to the consultation, Ofgem intends to introduce a package of measures
in spring 2011 to provide for the continued safeguarding of consumers interests.
Given that some suppliers are starting to move early and install smart meters on a
commercial basis, we recognise the need to move swiftly to ensure that any
necessary additional consumer protections especially in important areas such as
prepayment and remote disconnection are in place.

Existing consumer protections

3.7. The rights of suppliers to use PPMs and disconnect customers are set out in the
Gas Act 1986 and the Electricity Act 1989. The Acts stipulate that the customer must
be given at least 28 days to pay their bill and then at least 7 days notice before the
supplier can install a PPM or disconnect the supply following non-payment of
charges.
3.8. The domestic supply licence provides additional protections regarding
prepayment, including a requirement that, where the supplier has more than 50,000
customers, they must offer a wide choice of payment methods, including payment
through a PPM. That licence condition also stipulates that suppliers must offer a PPM,
where it is safe and reasonably practicable to do so, to domestic customers who are
struggling to pay their bills.

17

Consumer Protection

27 July 2010

3.9. Ofgem has previously provided supplementary guidance8 alongside the licence
conditions explaining that what is safe and reasonably practicable should be
considered from the domestic customers perspective. Ofgem indicated that relevant
factors are likely to include whether the customer is able to understand and operate
the PPM and visit a local top-up point to add more credit. Ofgem also said it may not
be reasonably practicable to provide a PPM if a customer needs to travel over two
miles to top-up the credit.
3.10. There is an obligation on former Public Electricity Suppliers (PESs) to provide
Prepayment Meter Infrastructure Provision (PPMIP) services on non-discriminatory
terms to other suppliers for electricity PPMs operated by tokens or cards. There is no
equivalent obligation in the gas market. The PPMIP service provides for customers to
make advance payments at outlets, such as corner shops or post offices, and these
payments to be reconciled back to the relevant energy supplier. It was considered
unnecessary to have such an obligation for key PPMs (the majority of electricity
PPMs) because such services are widely available and, therefore, suppliers are able
to make their own arrangements.
3.11. In relation to disconnection for unpaid charges the supply licences include a
requirement to offer consumers alternative methods of payment (such as
prepayment) and an affordable repayment plan prior to disconnection. Suppliers are
also prohibited from knowingly disconnecting customers of pensionable age during
winter (October to March). Suppliers must take all reasonable steps to avoid
disconnecting premises during winter where the customer or occupants are disabled,
chronically sick or of pensionable age.
3.12. Ofgem is proposing an amendment to the electricity and gas supply licences to
clarify that suppliers must take all reasonable steps to identify the status of
customers and the occupants of premises prior to disconnection.9 Subject to the
outcome of the collective licence modification process we anticipate this change
coming into effect in September 2010.
3.13. Members of the ERA have also introduced further voluntary protections through
their code of practice known as the Safety Net. Among other protections, this
precludes the disconnection of vulnerable customers at any time.
Applicability of current obligations
3.14. Ofgem is considering how the current obligations on suppliers apply in the
context of smart metering where the supplier is remotely switching a meter from
credit to prepayment mode, or remotely disconnecting the supply (or using other
forms of disconnection such as load limiting).

Supply Licence Review Final Proposals, Ofgem, June 2007

Statutory Consultation to Amend SLC 27, Ofgem, July 2010
http://www.ofgem.gov.uk/Pages/MoreInformation.aspx?docid=168&refer=Sustainability/SocA
ction/Publications
9

18

Consumer Protection

27 July 2010

Prepayment
3.15. We set out below a number of areas where further consumer protections may
be required when a smart meter is switched to prepayment mode.
Identifying where safe and practicable
3.16. As explained above, suppliers can only install a PPM if it is safe and reasonably
practicable for the customer to use the PPM. There are a number of factors which
may make it difficult or unsafe for the customer to pay this way. These include:
where the meter is in an inaccessible place, such as in an in-take room (often found
in flats) or if its location is at an unreasonable height, or where the customers
circumstances mean they are unable to understand or operate the PPM.
3.17. Today a supplier would know whether it was safe and practicable for the
customer to use a prepayment meter because it would have visited the premises to
install it. However, where remote switching to prepayment mode is possible, there
may no longer be an operational reason to visit the customers premises. Therefore,
the supplier will need to amend its processes to ensure it can be satisfied it is safe
and reasonably practicable to make the switch.
3.18. To ensure that they comply with the licence requirement, suppliers may opt to
register inaccessible meters with the central data and communications body (DCC)
during rollout to maintain a record. Alternatively, suppliers may put measures in
place so that all meters are prepayment-ready and, therefore, reduce the number of
safety and practicality issues that arise when they offer to switch the customer to
prepayment terms. Such measures could include moving the meter to an accessible
place although this would have significant costs. Alternatively suppliers might
provide an IHD with functionality that ensures the customer will not need access to
the meter, although the supplier would need to be confident that the IHD was still
functioning when they switched to PPM, for example by providing a third device
which is fitted to the wall in an accessible place and capable of talking to the meter.
Where the supplier decides these options are not cost effective, it will need to
determine whether the meter is accessible prior to switching the customer to
prepayment mode.
3.19. The supplier will also need to consider how to identify the customers
circumstances prior to switching the customer to prepayment terms. One method of
doing this would be for suppliers to improve and scale up the registers of priority
service customers. The visit to the customer premises to install a smart meter
represents a particularly valuable opportunity for a supplier to identify consumers
who may be eligible to join their Priority Services Register (PSR). However,
improving the PSR alone is unlikely to ensure that customers are not switched
inappropriately, in particular as a customers circumstances can change over time
and customers may move home. Where suppliers are not aware of the customers
circumstances, they will need to contact the customer prior to switching them to
prepayment terms to identify any issues and otherwise satisfy their obligations under
the domestic supply licence conditions.

19

Consumer Protection

27 July 2010

Question 6: Do you consider that existing protections in the licence are

sufficient to ensure that consumers are not remotely switched to
prepayment mode inappropriately?
Question 7: Could provision of a suitable IHD help overcome meter
accessibility issues to facilitate prepayment usage?
Informing the consumer
3.20. As noted above, currently the installation of a PPM requires a site visit. As
such, customers are fully aware they have been transferred to a PPM and can be
provided with information on how to use the meter at the time of installation. In the
future, where a customer is switched to prepayment terms remotely, it will be
necessary to notify the customer of the impending switch and make them aware of
how to operate the smart meter in prepayment mode. The IHD may be one route but
we currently do not believe this can be the only route to notification.
Question 8: What notification should suppliers be required to provide before
switching a customer to prepayment mode?
Emergency credit and friendly credit periods
3.21. Most suppliers already offer emergency credit on PPMs, which is a fixed value
of gas or electricity (typically 5) which is available to be consumed at any time of
the day regardless of credit status. Another option, which some suppliers already
adopt, is friendly credit periods where at certain times of the day the supply will not
disconnect regardless of usage or credit status. Ofgem is currently considering the
extent to which these measures could form part of the mandatory protections
available to prepayment customers in the future or whether, as now, the discretion
as to whether or not to use these measures can be left to suppliers. Ofgem would
welcome views on this issue.
Question 9: Do you believe that suppliers should be required to provide
emergency credit and friendly credit periods to prepayment customers or
whether, as now, this can be left to suppliers?
Applying credit to the meter
3.22. One of the benefits of smart meters is the potential for new ways of charging
PPMs, for example, by adding credit remotely over the Wide Area Network (WAN)10,
for example by phone or online. However, Ofgem believes that it should remain
possible to top-up remotely by cash at a local shop or garage as it is likely there will
always remain a substantial core group of prepayment customers without access to a
bank account (or at least without the transactional facilities required).

10

The smart metering WAN will be used for two-way communication between smart meters
and DCC (via the WAN communications module in the customers premises).
20

Consumer Protection

27 July 2010

3.23. We believe it is also essential that there are arrangements for topping-up if the
WAN is not available. The Smart Metering Functional Requirements Catalogue calls
for the ability for local top up. For example local top up could be achieved by
entering a code through a keypad connected to the smart meter via the HAN. Further
information can be found in the Statement of Design Requirements supporting
document.
3.24. Co-ordination will also be critical during rollout to ensure the efficient
implementation or decommissioning of shared prepayment services. Of key
importance is that no consumer is left unable to top up their old PPMs or new smart
meter. As part of the programmes ongoing work, we will work with industry to
ensure the necessary co-ordination, building on the experience of token meter
withdrawal. This is also discussed in the Rollout Strategy supporting document.
3.25. While there will still need to be infrastructure in place to enable customers to
top up by cash at local outlets, it is not clear that this needs to be arranged on a
cross-industry basis. Suppliers are of the view that PPMIP would no longer be
necessary once rollout is complete. If PPMIP is still required, there may need to be
an obligation on certain suppliers to provide PPMIP services for smart metering,
similar to the current obligation on ex-PES suppliers for electricity PPMs operated by
tokens or cards. However, as with key meters now, this is unlikely to be needed.
Ofgem would welcome comments on whether such an obligation may be required.
Question 10: Do you consider that an obligation similar to Prepayment
Meter Infrastructure Provision (PPMIP) may be required?

Remote disconnection
3.26. Suppliers may disconnect their customers for non-payment of energy bills,
meter tampering or for safety reasons. Suppliers may also disconnect a property
which is unoccupied. We set out below a number of areas where further consumer
protections may be required in relation to remote disconnection of supply for unpaid
charges.
Identification of vulnerable customers
3.27. At present, when suppliers go to disconnect a property for unpaid charges they
carry out a number of checks to establish whether a vulnerable customer is living
there, including a site visit prior to disconnection and a site visit at the point of
disconnection. With smart metering, site visits will no longer be needed for
operational reasons to physically disconnect supply. However, while the site visit at
the point of disconnection is only one of a series of checks that suppliers carry out, it
remains an important backstop opportunity to identify vulnerability.
3.28. As mentioned above, Ofgem is currently consulting on a licence amendment to
make clear that suppliers must take all reasonable steps to check whether a
customer is vulnerable before disconnecting. However, we are also considering

21

Consumer Protection

27 July 2010

whether any further protection is required to safeguard the interests of vulnerable

customers.
3.29. There are a number of steps that suppliers could take to identify vulnerability
when considering disconnection. Ofgem has previously provided guidance on the
types of proactive steps it would expect suppliers to determine the status of
consumers and occupants prior to disconnection. This includes undertaking at least
one personal visit to the property which is at risk of being disconnected. In addition
to a site visit, other steps identified in the guidance include reviewing all the notes on
the customers accounts to ensure that no vulnerability is recorded, ensuring that
customers are not registered on their PSR and seeking senior management
authorisation prior to any disconnection being carried out. Such checks may also be
important in ensuring more generally that the correct property is being disconnected
and that there are no other factors that might mitigate against disconnection.
3.30. In terms of additional protection, one potential additional measure could be an
explicit requirement for a site visit prior to the disconnection. While this could be
seen to remove one of the benefits of being able to disconnect remotely, it is
possible that non-engineering staff could be used for the visit. Ofgem would welcome
views on whether an explicit requirement for a site visit would be beneficial in the
light of the additional protection it provides.
Question 11: Is the obligation which Ofgem is proposing to introduce on
suppliers to take all reasonable steps to check whether the customer is
vulnerable ahead of disconnection sufficient? If not, what else is needed?
Form of notice of disconnection
3.31. Currently, the supplier needs to visit the customers premises to physically
disconnect supply. It is, therefore, clear to the customer that they have been
disconnected. With remote disconnection and if a site visit is not required (or could
take place prior to the actual disconnection) this may not be as clear. The customer
may assume that there has simply been a power cut, or may be otherwise unclear
what they have to do to get the supply restored.
3.32. It is, therefore, essential that customers are informed they have been
disconnected on a timely basis. Our preliminary view is that it is unlikely to be
adequate for this information to be provided through messages to the meter or IHD,
given the risk that the customer will not see them. Ofgem believes that customers
must be given adequate notification and information in formats that are easy to
understand and prominent enough for the customer.
Question 12:What notification should suppliers be required to provide
before disconnecting a customer?

22

Consumer Protection

27 July 2010

New approaches to disconnection

3.33. The new functionality of smart meters enables suppliers to offer new
approaches to disconnection for unpaid charges. We have specified that the smart
metering system must support trickle disconnection (also known as load limiting)
and the facility for remote disconnection and reconnection allows time limited
disconnection.11 These approaches could also potentially be used for PPM customers
as an alternative when credit runs out (and when the customer currently self
disconnects). Further information can be found in the Statement of Design
Requirements supporting document. It is also possible that suppliers will adopt other
approaches to debt management, such as applying a credit limit before disconnecting
the supply.
3.34. Ofgem proposes to undertake further work to understand the consumer
acceptability of these types of disconnection, the extent to which they could be used
instead of total disconnection as an incentive to pay bills, and any necessary
consumer protections that should be attached to these approaches. For example
Ofgem may need to consider what is needed for consumers to be clearly informed
that their supply is being limited and what they need to do to restore their full
supply, as well as whether there should be a prohibition on these types of
disconnections for certain groups of vulnerable customers. Ofgem will also need to
ensure that the protections properly cover the range of options that suppliers could
adopt. Ofgem invites views on these new approaches to partial disconnection.
Question 13: Do you have any views on the acceptability of new approaches
to partial disconnection and how they might be used as an incentive to pay
bills?
Remote reconnection
3.35. As well as enabling remote disconnection, the meter will also provide for
remote reconnection. Faster reconnection offers clear benefits to customers who can
be reconnected more quickly once any debt is paid off or in cases where vulnerability
is subsequently discovered. This may provide an opportunity to update the existing
timeliness of reconnection provisions in the guaranteed standards of performance12
and the industrys self regulatory Safety Net. However, there may be limitations on
what can be achieved. One potential issue with gas is that there is currently a safety
requirement for a purge and relight when the gas is restored, which requires the
supplier to have access to the customers premises.
3.36. The Smart Metering Functional Requirements Catalogue also requires that the
consumer is present in the premise and acknowledges that certain criteria are met
(e.g. appliances are off) when the electricity supply is re-enabled after self or remote
11

Trickle disconnection is where the consumer is able to use limited levels of electricity to
cover basic needs such as lighting and the fridge/freezer. Time limited disconnection involves
restoring supply overnight or simply cutting off supply for short periods as a warning.
12
SI 2010 No. 698 The Electricity (Standards of Performance) Regulations 2010; SI 2008 No.
696 The Gas (Standards of Performance) (Amendment) Regulations 2008.
23

Consumer Protection

27 July 2010

disconnection (which are distinct to outages due to supply faults). Possible solutions
include a button on the meter or on the IHD. Using the IHD would allow instructions
to be provided to the consumer and would also avoid interaction with the meter if it
is in an awkward location. However, given that the consumer may not retain the IHD
it is essential that the meter also has this functionality. It is expected that the
technical specification will define preferred solutions for restoration of supply, taking
into account instances where the customer is unable to access the meter or does not
understand what they need to do. The programme has specified the functional
requirements which will be used to draft the technical specification. Further
information can be found in the Statement of Design Requirements supporting
document.
Question 14: Do you agree with our approach for addressing issues related
to remote disconnection and switching to prepayment?
Question 15: Have we identified the full range of consumer protection issues
associated with the capability to conduct remote disconnection or switching
from credit to prepayment terms? If not, please identify any additional such
issues.

24

Consumer Protection

27 July 2010

4. Vulnerable consumers and fuel poverty

Addressing the needs of vulnerable consumers and the fuel poor resulting from the
rollout of smart metering is a priority for the programme. This chapter sets out some
of the particular implications of smart metering for different groups of vulnerable
consumers and those in fuel poverty. It examines the potential for increased
rationing amongst low income consumers. Furthermore, it looks at the specific needs
of some groups of vulnerable consumers during the installation visit.
Question 16: What information, advice and support might be provided for
vulnerable consumers (e.g. a dedicated help scheme)? Who should it be provided to?
4.1. Ofgem has a particular responsibility towards the vulnerable, with many
initiatives and projects already in place to protect their different interests. Appendix
2 outlines how Ofgem defines vulnerable consumers and the existing initiatives and
protections that are currently in place for such consumers. This supplements the
definitions of vulnerability in the wider consumer protection legislation such as the
Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs).
4.2. The previous chapter has identified a number of areas where further protection
may be needed, such as where suppliers are proposing to switch a consumer to
prepayment terms or remotely disconnect. Chapter 6 highlights a number of areas
covered by other parts of the Prospectus where we have taken particular account of
the needs of vulnerable customers. In this chapter, we consider the overall
implications of smart metering for vulnerable consumers and those in fuel poverty.13
It is important to note that whilst there is some overlap between vulnerable
consumers and the fuel poor, the two are not synonymous. One important issue not
covered in this chapter is the costs of the smart metering for low income consumers
and the fuel poor. We discuss the recovery of costs in more detail in Chapter 5.

Specific needs of the vulnerable

Energy consumption information
4.3. Consumer engagement and action to save energy is central to delivering the
benefits of smart metering. Access to information on their current and historical
energy consumption through the IHD will provide all consumers with information that
will help them to take informed action to save money, energy and carbon.
4.4. However, a particular issue highlighted in the FDS research published alongside
this Prospectus relates to concerns around the potential impact of detailed
consumption information on certain vulnerable groups. Specifically, there is a
potentially detrimental impact of real-time feedback on consumption decisions that
13

Households are considered as being in fuel poverty if they would have to spend more than
10 per cent of their household income on fuel to heat their home to an acceptable level.
25

Consumer Protection

27 July 2010

could be made by some more vulnerable elderly and low-income consumers. For
example, the concern was expressed that certain vulnerable consumers (for
example, some of the elderly) may forgo adequate lighting or heating in order to
save money, which could damage their health and quality of life.
4.5. A specific concern was raised in the context of visual (non-numerical) indicators
of current consumption on IHDs, such as a traffic light system where red is used as
an indicator of relatively high consumption. While non-numerical feedback gives the
consumer a feel for what is going on, without requiring detailed attention, it may
unnecessarily alarm some people and could potentially result in them cutting back
their usage to levels that may adversely affect their health and quality of life, it will
be important for suppliers during rollout and on an ongoing basis to provide
vulnerable customers with energy efficiency advice and measures and to properly
explain the IHD displays. This issue is discussed further in the IHD supporting
document and views are sought on how the visual display would be calibrated and
how this might address such concerns. Alternatively it may be possible for visual
indicators to be disabled where they cause, or are likely to cause, distress and/or
detrimental behaviour. Other measures may also help to reduce rationing, including
government-led campaigns and other sources of energy efficiency support.
Rollout and installation visits
4.6. The smart metering programme will mean that installers will need to visit all
households in Great Britain. The installation visit presents a very important
opportunity to provide assistance and advice to vulnerable consumers. Installers
could alert those who are of pensionable age, disabled or chronically sick that they
are entitled to be added to the PSR. Similarly, installers could alert vulnerable
consumers to other help and assistance that might be available, such as Winter Fuel
Payments, Warm Front, social tariffs as well as other initiatives that provide energy
efficiency or financial advice. However, we have concerns about suppliers gaining
entry to customers home under the pretext of installing a smart meter and IHD and
then once inside using the opportunity to attempt to effect a sale. We therefore
believe that the installation visit should not be used for unwelcome sales activities.
Chapter 2 considers this issue in more detail and requests views on what might be
considered inappropriate and why.
4.7. Some stakeholders have also expressed concern that the requirement to let a
stranger into the home may create particular anxiety for vulnerable consumers.
There are already a number of existing protections that deal with this such as
password schemes. In addition we are proposing to require suppliers to develop a
Code of Practice on installation. We envisage that this could include additional
protection for vulnerable consumers. Further information on the Code of Practice can
be found in the Rollout Strategy supporting document.
4.8. Some vulnerable consumers are also less likely to engage with conventional
media and some, particularly some elderly consumers, may be wary of the
introduction of new technology. Low-income consumers or the fuel poor may worry
that smart meters will lead to an increase in bills, while some vulnerable consumers
may be easier to reach through trusted contacts or carers.
26

Consumer Protection

27 July 2010

4.9. Local co-ordination will play an important role in engaging such consumers.
Close co-operation between suppliers and trusted local charities, consumer groups,
regional organisations, local authorities, and other local agencies will be key to
reaching certain groups of consumers and easing fears around smart metering.
Further information on local coordination can be found in the Rollout Strategy
supporting document.
4.10. Another means of providing support to vulnerable consumers would be to place
an obligation on suppliers to set up a central body to oversee the development and
running of a dedicated help scheme. This could be similar to the Switchover Help
Scheme, which was set up to offer practical help at digital television switchover to
older and disabled people. The Switchover Help Scheme offers eligible consumers
help to switch one TV set to digital, including equipment, installation and aftercare. It
also plays an important role in explaining digital TV simply and clearly and in
reaching hard-to-reach customers through links with community groups and local
charities.
4.11. A further option is to allow suppliers to decide how best to deliver a help
scheme. This could be achieved by placing a high level obligation to provide
appropriate support for vulnerable consumers.
4.12. We are currently considering the options for providing the advice and support
that will be needed to help vulnerable consumers realise the benefits of smart
metering and will explore options with relevant stakeholders in parallel with this
consultation.
Question 16: What information, advice and support might be provided for
vulnerable consumers (e.g. a dedicated help scheme)? Who should it be
provided to?
Prioritising Vulnerable Customers
4.13. Several stakeholders have raised the possibility of prioritising the rollout
towards particular groups of vulnerable consumers, particularly those on low incomes
and prepayment customers. Arguments in favour include the fact that it may allow
them to realise the benefits of smart metering earlier than might otherwise be the
case. It may also mitigate the risk that certain groups of customers are left behind.
4.14. There are, however, a number of arguments against prioritising the more
vulnerable. In particular, consumer groups believe that it is important for such
consumers to have a support network around them - others in their community who
use smart meters and who can provide advice and support if needed.
4.15. Furthermore, one of the key issues with prioritising particular groups of more
vulnerable customers would be suppliers ability to identify such customers. Under
the Carbon Emissions Reduction Target (CERT), where there are targets for priority
groups, there is a real incentive for customers to identify themselves as being on low

27

Consumer Protection

27 July 2010

incomes (for example, to get free insulation) but in general they do not readily share
information about their income and circumstances. This is a well known and major
problem in all initiatives aimed at tackling fuel poverty. For example, on social price
support the Government introduced primary legislation so that the Department of
Work and Pensions (DWP) could share data with suppliers to help them identify and
provide support to low income pensioners. A similar approach was adopted during
digital switchover.
4.16. We do not propose to set specific priorities initially but will review the need for
such measures as the rollout progresses. The Rollout Strategy supporting document
considers in more detail the operational impacts of prioritising prepayment
customers, non-domestic customers and customers in fuel poverty.

28

Consumer Protection

27 July 2010

5. Cost recovery and monitoring of costs

The rollout of smart metering is expected to increase costs for suppliers which will be
recovered from consumers. This chapter considers possible approaches which
suppliers may adopt to recover costs from consumers. It also discusses the options
for monitoring the costs of the smart metering programme.
Question 17: Do you have any comments on our proposals to prevent upfront
charging for the basic model of smart meters and IHDs?
5.1. As set out in the updated DECC Impact Assessment, the business case for smart
metering is strongly positive. There are expected to be clear net benefits both for
Great Britain as a whole and, on average, for the individual customer. The Impact
Assessment indicates that, by 2020, the bill for an average domestic customer with
an electricity and gas supply will be 14 lower as a result of smart metering. These
savings are expected to come primarily from reduced energy consumption. Individual
customers will react in different ways to smart meters, and some will make greater
savings than others from the new or improved services that the meters will facilitate.
This will depend on a range of factors, including the scope to improve energy
efficiency, the existing patterns of daily energy use and the propensity of the
individual consumer actively to manage their energy costs.
5.2. The estimated saving also assumes that, although suppliers will realise cost
savings from smart metering, implementation of the smart metering programme will
increase overall costs for suppliers. Suppliers will realise savings through, among
other things, avoided meter reading, reduced customer service costs, better debt
management and avoided costs to serve for prepayment customers. We would
expect these savings to be passed through to consumers. However, these savings
will not fully offset the additional costs suppliers will incur in meeting their
obligations to roll out smart meters. They will also incur costs associated with the
establishment and operation of the central data and communications body (DCC).
5.3. The Impact Assessment therefore assumes that, overall and over the period of
the roll-out, suppliers additional costs will exceed their savings. We expect suppliers
to recover the difference from customers through their bills. If they did so, this would
increase costs passed through to customers with both electricity and gas by an
average of 16 a year by 2020. By 2030, when suppliers transitional costs have
worked through, the costs passed through to a customer for both gas and electricity
would total 5. However, as noted above, energy bills are estimated to be lower
overall as consumers make savings facilitated by smart meters.
5.4. These costs will be no different to other supply costs, in as much as we would
expect an efficient level of costs to be passed on to consumers. The competitive
energy supply market acts as a price restraint on suppliers and creates incentives to
deliver, and charge for, smart metering in a way that minimises costs to consumers
and offers them value for money. Suppliers who do not minimise costs risk losing
customers.

29

Consumer Protection

27 July 2010

5.5. We recognise that the way in which suppliers recover the cost of smart metering
from their consumers raises important issues of fairness and also has the potential to
affect consumers attitude to smart metering.

Cost recovery
5.6. We have considered two possible ways in which suppliers could recover costs:
by levying a one-off, upfront charge when a meter is installed, or by recovering costs
over the lifetime of the meter. If they took the latter approach, suppliers could apply
a higher tariff once a household has received its smart meter, or they could identify
anticipated overall smart metering costs, and adjust tariffs for all customers to
recoup them.
5.7. In our view, levying an upfront, one-off charge may amount to an unfair
financial burden for some consumers. It could also adversely affect the success of
the rollout by deterring consumer take-up of smart metering, because, from the
perspective of the consumer, the installation of a smart meter will be associated with
an increase in expenditure.
5.8. We therefore propose to prohibit suppliers from imposing upfront charges on
customers for smart meters and IHDs which only meet the minimum regulatory
requirements. Further information on these requirements is available in the In-Home
Display supporting document. We recognise that some consumers may wish to pay
an up-front charge on installation to obtain value-added products and services, such
as IHDs with enhanced features. Our approach will retain suppliers ability to offer
innovative and enhanced products to respond to customers needs. While ensuring
that all customers have the option of a standard smart meter and IHD without an
upfront charge.
5.9. If upfront charging is excluded, suppliers will still have a choice of whether to
apply costs gradually to individual customers as they receive meters, or, from the
outset, recover costs across their whole customer base.
5.10. In the first of these approaches, suppliers would recover their costs from those
customers who had received a smart meter by increasing the customers tariff or
applying an additional standing charge. If suppliers chose this approach, only those
who are able to directly benefit from smart metering would pay towards the cost.
However, as with levying an upfront charge on installation, there would be a risk that
this could adversely affect customers willingness to have a smart meter. This is
because the bill would be likely to increase following installation as the supplier
would have to recover its capital and installation costs from a small (albeit growing)
proportion of its customers. In following this approach, a supplier would therefore
risk losing customers and increasing resistance to installation, adversely affecting its
supply business and making its metering targets more difficult to meet.
5.11. We therefore fully expect suppliers to recover costs through the second
approach, by recouping them from all customers from the start of the rollout. This is
how they recover costs now. This approach would ensure that each customer pays a
30

Consumer Protection

27 July 2010

relatively low, equalised amount throughout the rollout, which would be the fairest
approach across the board, and the least likely to generate resistance to installation.
It will, therefore, be more likely to support the rollout of smart meters and the
realisation of the associated benefits.
5.12. We have considered whether any regulatory action is needed to ensure this
approach. We note that suppliers have strong incentives not to disadvantage their
supply business or deter smart metering take-up. On the latter, if consumers oppose
installation of a smart meter this may hinder suppliers ability to achieve the
anticipated cost savings in their business. In addition, during rollout, suppliers will be
required to meet installation targets. If suppliers fail to meet these targets then
Ofgem will be able to take enforcement action. Further information on the targets
can be found in the Rollout Strategy supporting document.
5.13. In the event that suppliers did choose to raise tariffs on installation of the
meter, consumers who did not wish to pay more would have the option to switch to
another supplier. Under SLC23 of the domestic supply licence, suppliers are required
to notify customers of any unilateral contract variation to increase the charges. The
supplier must also inform the customer of their right to switch to another supplier
within 20 days of receipt of the tariff increase notification without incurring the
higher charges.
5.14. Given these significant incentives on suppliers to recover costs across all
consumers from the start of the rollout, as well as the existing protection where
changes are made to the terms of a contract, we do not see a strong case for
intervening to prevent suppliers from recovering their costs only from those
customers who have had a smart meter installed, and we do not, therefore, propose
to regulate how suppliers should recover costs over the meters life.
5.15. Whilst the costs of smart metering per customer will be lower under this
approach, it will mean that some consumers pay towards the costs of smart metering
in advance of installation, and thus before they obtain all of the benefits. This could
raise issues of fairness, because consumers without a smart meter will not, for
example, have access to better information on consumption and new tariffs and
services which will help them to reduce energy usage and expenditure. On this issue
we note that all consumers, not just those who have had a smart meter installed, will
benefit from the wider societal benefits of rollout as a result of the expected fall in
carbon emissions and the potential for better management of, and investment in, the
electricity network. We also fully expect suppliers to install a smart meter upon
request from a customer at any point during the rollout, subject to technical or
resourcing issues. Furthermore recovering costs across all consumers means that for
more difficult or costly installations the customer would not be exposed to the extra
costs.
5.16. Although smart metering costs will make up only a small proportion of the bill,
recovering costs across all customers will disproportionately impact customers on
lower incomes. In a fully liberalised supply market it is not possible to control how
costs are allocated to particular groups of consumers. The Government is therefore
considering this issue in the wider context of the costs of environmental programmes
31

Consumer Protection

27 July 2010

for energy consumers and particularly those in fuel poverty. The Government
continues to work to develop better ways to support vulnerable and fuel poor
households.
Question 17: Do you have any comments on our proposals to prevent
upfront charging for the basic model of smart meters and IHDs?

Monitoring of costs
5.17. Consumer groups have raised the need for the costs of the smart metering
programme to be monitored and for there to be transparency. There could be two
possible ways of approaching this: (i) obliging suppliers to report rollout costs on
consumer bills; and/or (ii) asking suppliers to report costs directly to the
programme.
5.18. In terms of reporting costs on consumer bills, a key test for including further
information is whether it would enable domestic consumers to engage more
effectively with energy suppliers and with the energy market more broadly. Research
from the Energy Supply Probe found that many consumers already find their bills
difficult to understand. Adding information on rollout costs to the domestic bill may
potentially lead to customer confusion. Furthermore, metering costs will make up a
small portion of the total bill compared to other larger items such as wholesale costs
or network charges, which are not currently reported. Therefore, we do not propose
to require suppliers to include information on the costs of smart metering rollout on
the bill.
5.19. In terms of reporting costs directly to the programme, we are currently
developing plans to monitor implementation and verify that the benefits of smart
metering are being delivered in practice. To assess the overall business case in an
effective way, the programme proposes to require regular reporting by suppliers of
aggregate costs of their rollout programmes. The format of this reporting will be
developed during subsequent phases of the programme to ensure consistency across
suppliers. Further information on reporting requirements can be found in the Rollout
Strategy supporting document. We welcome views on our proposed approach.

32

Consumer Protection

27 July 2010

6. Other consumer issues

This chapter provides an overview of the consumer issues addressed in other
supporting documents that form part of the Prospectus package.
6.1. Before and during the rollout consumers are likely to have questions around
what smart meters actually mean for them and when they will receive one. They
may also have concerns, for example, around the installation visit or data privacy
and security.
6.2. This chapter identifies key issues of particular interest to consumers in relation
to smart metering. In each section we also set out in a table where further
information can be found on each of these issues in the supporting documents which
are published as part of the Prospectus package.

In-home display and additional smart devices

6.3. The Government has decided that suppliers should provide all domestic
customers with an IHD. For many customers, this will be the most visible aspect of
smart metering. To be of value, it is critical that the IHD provides consumers with
the information they need in a readily accessible form. Consumers will also need to
understand how to operate the display and use the information it provides to
manage their consumption. We have proposed the minimum information
requirements that must be met by all displays. We are also proposing to require
suppliers to provide information to their consumers. This would include information
provided at the time of installation and training provided in the use of the IHD and
meters.
6.4. We are proposing that suppliers should have to take all reasonable steps to
provide customers with an IHD meeting the specified minimum requirements;
suppliers would also be responsible for maintaining and replacing IHDs for one year
after installation of the smart meter. This would be in addition, and without
prejudice, to other obligations such as those arising out of statutory consumer
protection provisions and the terms of their contracts with consumers. In the event
that a consumer declines the IHD, there would be a requirement on suppliers to
provide an IHD if the consumer requests one within one year from the installation
visit. Suppliers will be required to notify customers of their rights in this respect. We
have also considered the portability of the display and the arrangements for
households that have different suppliers for electricity and gas.
6.5. The Disability Advisory Forum has outlined a number of design features that
would allow consumers with a range of disabilities to engage fully with the IHD. This
includes the use of simple, large text displays and large buttons to help make the
display more accessible. In fact, many of these design features may benefit not only
the vulnerable but also the wider public. Of specific added value for blind or partiallysighted consumers would be displays that also included an audio output. As set out
in the In-Home Display supporting document, while we would not consider it

33

Consumer Protection

27 July 2010

appropriate to mandate detailed requirements in this area, not least to avoid

hampering innovation, we invite views on whether there is a case for a high-level
obligation around the need for appropriately designed IHDs to be provided to
customers with special requirements and/or for best practice to be identified and
shared once suppliers start to roll out IHDs.
6.6. While we intend to mandate the minimum information requirements for the IHD,
some consumers will want to acquire a more advanced display. Smart metering also
allows consumers to add devices to the HAN that can gather information on energy
consumption or in the future be programmed to control usage of household
appliances. From the perspective of the consumer, it will be important that new
smart devices or IHDs can be added easily and securely to the HAN and can
communicate with the smart meter.
6.7. In order to ensure that all parts of the system work together and that customers
can change supplier without changing their meter, there is a need for a detailed
technical specification for the smart metering system. We have specified the
proposed functional requirements that will then be used to develop the technical
specification. Our proposed functional requirements include a limit on the power
consumption of the meter, communications and IHD, and a requirement that any
solution must not interfere with existing wireless networks.
Table 6.1 Where to find further information on the IHD, the functional
requirements and the Home Area Network
Issue

In-home
display

Energy usage

Description

Supporting
Document

Reference

Minimum information
requirements for the IHD

In-Home Display

Chapter 2

Length of mandate on
suppliers to provide an IHD

In-Home Display

Chapter 3

In-Home Display

Chapter 2

In-Home Display

Chapter 3

In-Home Display

Chapter 3

Display portability

In-Home Display

Chapter 2

Power consumption of
mandated equipment

Statement of Design
Requirements

Chapter 3

Arrangements for
consumers with special
requirements
Arrangements for
households with more than
one supplier
Arrangements for
consumers who do not
want an IHD

34

Consumer Protection

27 July 2010

Metering
system

Functional requirements
specification

Statement of Design
Requirements

Chapter 4

Home area
network

Access to information via

the HAN

Regulatory and
Commercial
Framework

Chapter 4

Data privacy and security

6.8. Smart meters will allow suppliers to read meters remotely. This removes the
need for estimated readings and the inconvenience of waiting at home for visits by
meter readers. As a result, consumers can expect to receive accurate bills and
precise information on the amount of gas and electricity they consume, which, in
turn, will help them to better manage their energy consumption.
6.9. While the step change in the amount of information potentially available from
smart meters brings clear benefits to consumers, we recognise it may also raise
privacy and security concerns for individuals. Drawing on international experience
and the knowledge of experts across different sectors where such concerns have
been successfully managed, we are taking a rigorous and systematic approach to
managing privacy and security issues and ensure consumer confidence.
6.10. As noted in chapter 2, we have adopted 'privacy by design' and security by
design principles to ensure that issues and risks are identified early and the end-toend smart metering system is designed from the outset to deliver appropriate
protections for consumers.
6.11. We propose the principle that data control rests with the customer, while
recognising that there are a range of instances when third parties will have a
legitimate need to access that data. We will be undertaking further work to establish
the different data requirements of industry participants and whether data collected
needs to be individual or aggregated, for example. This will help ensure that personal
data will only be transmitted outside of the home where it is essential or where the
customer gives consent.
Table 6.2 Where to find further information on data privacy and security

Issue

Description

Data privacy

Data privacy

Data security

Security of smart metering

system

Supporting
Document
Data Privacy and
Security
Data Privacy and
Security

Reference
Chapter 3
Chapter 4

35

Consumer Protection

27 July 2010

Rollout and installation visit

6.12. Effective engagement of consumers will be key to realising the benefits of
smart metering. Raising consumer awareness of the potential benefits of smart
metering will help suppliers to gain access to customer premises. More detailed
information and support may then be needed to help some consumers use the
improved information to take action to reduce their energy consumption and hence
lower bills and reduce carbon emissions. We believe there may be benefit in a
national awareness campaign to support the delivery of the rollout and as part of the
Rollout Strategy supporting document invite views on the potential scope of any
campaign and the mechanism through which it could be delivered. We also propose
to require suppliers to provide information to their consumers at the time of
installation, including training regarding the use of the IHD and meters.
6.13. Local authorities, housing associations, voluntary organisations and other
trusted third parties can also play an important role in promoting consumer
awareness of and engagement with smart metering. Given these benefits we expect
suppliers to want to work with third parties. In the early stages of rollout we
propose to give suppliers broad flexibility to respond to consumer demand for smart
meters and to learn from experience. This flexibility will also enable suppliers to link
the rollout of smart meters with other initiatives to improve household energy
efficiency such as the Green Deal.
6.14. In parallel, through a formal review process during the initial stages of rollout,
we propose that consideration will be given to further measures that could be used
to increase the effectiveness of rollout and secure the anticipated energy savings
during later stages.
6.15. A positive consumer experience on installation is likely to make consumers
more willing to use the IHD and reduce consumption. We are proposing to require
that industry develops a code of practice for smart metering installation, which would
aim to ensure that all consumers receive a high standard of service. This would
include additional requirements for vulnerable consumers to supplement existing
protections. This code would be underpinned by a high-level licence obligation and
would need to be approved by the Authority.
6.16. Consumer groups have raised concerns about the possibility of bogus installers
or distraction burglaries. There are already a range of protections in place in statute
and licence which require all installers to be fit and proper people and wear ID at all
times. We do not consider that any further protection is needed in the licence but we
will work with suppliers and other interested parties to consider any additional steps
that may be necessary when developing the proposed code of practice.
6.17. It is in the best interest of all stakeholders that customers receive a positive
experience at installation. We therefore believe there may be value in the
programme carrying out (or requiring suppliers to carry out) research into
customers experience. The results could be published and would provide a strong
incentive for suppliers to look to continually improve their performance.

36

Consumer Protection

27 July 2010

6.18. During current day-to-day meter replacement activities, problems are

uncovered at meter sites that require more significant rework activities, such as
electricity metering backboards that are made of asbestos or safety problems with
gas appliances. Although these are business as usual problems in the sense that they
occur during the replacement of traditional meters too, the smart meter rollout would
likely accelerate the rate at which problems are found. To assist in resolving these
issues and ensure a seamless customer service, the programme will continue to
facilitate engagement with suppliers, metering agents and network companies aimed
at agreeing a co-ordinated approach.
6.19. As with traditional meter replacements, the installation of a smart meter may
bring to light errors with existing meters or bills. For example, there may be
instances of inaccurate billing or crossed meters, whereby a supplier has been billing
a customer based on meter readings taken from another customers meter. The
rollout provides an opportunity to identify and resolve such errors. The rollout
provides an opportunity to identify and resolve such errors. We also note that the
five of the Big 6 energy supply companies have signed up to the ERA Code of
Practice for Accurate Bills. This includes a requirement, where the supplier is at fault,
not to back-bill consumers beyond 12 months from the date on any subsequent
bill.14 There may also be scope to include a similar requirement in the code of
practice for smart metering installation.
Table 6.3 Where to find more information on rollout
Issue
General
consumer
engagement
Information
provided by
suppliers
Local
coordination
and planning
Installation
visit
Seamless
customer
service

Description

Supporting
Document

Reference

Broad awareness raising

of smart metering

Rollout Strategy

Chapter 2

Detailed information and

advice on energy saving

Rollout Strategy

Chapter 2

Rollout Strategy

Chapter 2

Rollout Strategy

Chapter 4

Rollout Strategy

Chapter 4

Rollout Strategy

Chapter 4

Rollout Strategy

Chapter 4

Approaches for planning

and coordination of the
rollout
Standards of service during
the installation visit
Security concerns
Monitoring customers
experience
Technical solutions,
resourcing and common
services

14

The sixth supplier has made a similar commitment in their own domestic customer energy
charter.

37

Consumer Protection

27 July 2010

In-service performance monitoring of the smart metering

system
6.20. The rollout of smart metering in the domestic sector will require the
introduction of smart metering equipment into a new environment, such as the
customers premises. We believe it is important to monitor the performance of this
new equipment in order to ensure consumer confidence and identify any potential
problems with equipment failure, both in early life and longer term, and operational
issues such as unintended interaction with unrelated equipment. We recognise that
gaining technical assurance for the smart metering equipment is key to maintaining
public confidence and maintaining benefits enabled through smart metering. We
propose to consider this important aspect as part of the work of the Smart Metering
Design Expert Group.
Issue
In-service
testing of gas
and electricity
meters

Description
Governance arrangements
of in-service testing
scheme

Supporting
Document
Regulatory and
Commercial
Framework

Reference

Chapter 5

Early movers
6.21. The rollout of smart meters to all homes and businesses in Great Britain is
being taken forward as a central programme in order to deliver a cost-effective
approach that maximises the potential benefits while protecting consumers and
promoting competition in the market. Some suppliers are already providing, or have
indicated their intentions to provide, smart meters to consumers before the
regulatory framework is established and suppliers are mandated to begin rollout.
These plans can add experience to that which is already shaping the development of
the Great Britain smart metering programme. They will also allow consumers to
realise the benefits of smart metering sooner.
6.22. We note that any investment in smart meters before the smart metering
solution is finalised is undertaken at suppliers own commercial risk and in line with
existing obligations such as those under statutory consumer protection provisions
and the terms of their contracts with consumers. It is also important that activity in
the period before the official start of the Great Britain smart metering programme is
delivered in a way that protects consumer interests, and promotes consumer choice
and benefits and does not jeopardise the successful delivery of the programme.
6.23. The programme has also considered a number of measures to ensure that
consumers can benefit from receiving smart meters early. For example, Ofgem
intends to introduce a package of measures in spring 2011 to provide for the
continued safeguarding of consumers interests. This could also include obligations
on interoperability to ensure there are no barriers to customer switching.

38

Consumer Protection

27 July 2010

Table 6.4 Where to find more information on early movers

Issue

Early movers

Description
Some deploying smart
meters in advance of the
official start of the
mandated rollout
programme

Supporting
Document
Regulatory and
Commercial
Framework

Reference

Chapter 5

Value-added services and microgeneration

6.24. The smart metering infrastructure may be capable of supporting value-added
services beyond electricity and gas smart metering. Subject to the introduction of
appropriate regulatory arrangements, such services could include communications
for water smart metering or wider services such as tele-healthcare that the customer
may choose to take up. Our proposed functional requirements specify that the HAN
should support the addition of new device classes, such as other utility meters or
smart appliances. However, we propose that the DCC should not be allowed to
support such services until the programme is satisfied that the core energy services
are being effectively delivered.
6.25. The smart metering system can also support the deployment of
microgeneration, which is defined as the small-scale production of heat and/or
electricity from a low carbon source. The launch of the Feed-in-Tariff (FIT) this year
will allow households and communities that install generating technologies to claim
payments for the low carbon electricity they produce. This requires meter readings
from the microgeneration meter to verify how much energy is being generated and
meter readings from the main meter to verify how much is being exported. The
smart metering communications infrastructure can be used to send such readings to
the supplier. To enable this, we have specified in the functional requirements that
the HAN must be able to support data transfer with devices such as microgeneration
meters. We have also specified that the smart metering system should support
import and export metering.
Table 6.5 Where to find further information on value added services and
microgeneration

Issue
Value added
services
Microgeneration

Description
Use of the smart metering
infrastructure for value
added services
Use of the smart metering
infrastructure for

Supporting
Document

Reference

Communications
Business Model

Chapter 2

Statement of Design
Requirements

Appendix 2

39

Consumer Protection

27 July 2010

microgeneration

Inspection of the meter

6.26. Under the gas and electricity supply licences, suppliers are required to inspect
meters every two years to look for damage, interference or anything which might
affect safety and proper functioning. Currently inspections are usually carried out
when the meter is read. However, once smart meters are read remotely, safety
inspections would have to be done for this purpose alone and, hence, reducing the
frequency of such inspections would save costs. The availability of alerts from the
meter, for example where there is tampering, may reduce the need for visual
inspections.
6.27. The licensing framework permits a supplier to request a derogation from the
two year must-inspect obligation. The onus is on the supplier to present a business
case that demonstrates that the Health and Safety Executive (HSE) has been
consulted and that any concerns they may have raised have been addressed. In
considering any application we would have regard to a number of issues, including
how customers will be affected and whether safety will be compromised. The
programme will keep a watching brief on this topic and review the need for action.
Table 6.6 Where to find further information on meter inspection

Issue
Meter
inspection

Description
Current licence
requirements to inspect
gas and electricity meters

Supporting
Document
Regulatory and
Commercial
Framework

Reference
Chapter 5

40

Consumer Protection

27 July 2010

7. Conclusions and next steps

This chapter summarises our proposals and next steps for ensuring that consumer
protections are fit for purpose as smart meters are rolled out across Great Britain.
7.1. The rollout of gas and electricity smart meters to every home in Great Britain
brings significant benefits to consumers through accurate billing, improved
information on energy consumption, smoother switching and the offer of new tariffs
and services. Smart metering will also play an essential role in the move to a low
carbon energy system, involving greater use of electric vehicles, renewable energy
and more active management of energy networks, often referred to as smart grids.
The smart meter rollout is also integral to the Green Deal, the Governments
overarching policy on energy efficiency. The Green Deal will enable households to
reduce the amount of energy consumed by the installation of energy efficiency
measures, and providing tailored advice about energy saving behaviours. Smart
meters will build on this by promoting active energy management by the household.
7.2. As smart meters are rolled out across Great Britain, Ofgem, in coordination with
the programme, is committed to ensuring that consumer protections are sufficient
and appropriate; where necessary, we will reinforce protections to safeguard
consumers interests. We are particularly aware of the need to act quickly in light of
the decision by some suppliers to provide smart meters to consumers in advance of
the start date for the mandated programme. Smart metering has the potential to
improve the services offered to consumers but we are alert to potential concerns, for
example around tariff confusion, unwelcome selling during the installation visit and
the need for easy and secure access to consumption data. The ability for suppliers to
remotely switch customers to prepayment mode and remotely disconnect supply
means that we are reviewing existing protections in this area. Furthermore,
addressing the needs of vulnerable consumers and the fuel poor during the rollout is
a priority for the programme. Finally we have also considered the issues around the
recovery of the costs of introducing smart metering.

Summary of key proposals

The Gas and Electricity Markets Authority (GEMA)s principal objective is to

protect the interests of existing and future consumers. In line with this, Ofgem
as distinct from the programme, is specifically identified as taking forward certain
actions in this document. These include the following activities: Consulting on
whether early changes to existing supply licence conditions are required in the
light of the ability for suppliers remotely to disconnect consumers and remotely
switch them to prepayment mode;
Monitoring compliance with, and the suitability of, existing obligations and
standards of conduct relating to marketing and the quality and accessibility of
information provided to consumers; and
Proposing to review existing supply licence obligations around information
provision.

41

Consumer Protection

27 July 2010

7.3. In addition, the programme is proposing to:

Ensure that the installation visit is not used for unwelcome sales activities;
Prevent the IHD provided during rollout from being used to transmit unwelcome
marketing messages;
Consider the scope and mechanism for establishing a dedicated help scheme for
vulnerable consumers;
Ensure that consumers can access their historical consumption data free of
charge, in a suitable format and at an appropriate level of detail; and
Prohibit suppliers from imposing upfront charges on customers for smart meters
and IHDs that only meet minimum regulatory requirements.

7.4. There is a range of other areas where we are working to ensure that sufficient
and appropriate protections are in place. Chapter 6 of this document identifies where
further information can be found on a range of consumer issues addressed in other
supporting documents that form part of the Prospectus package. These issues
include the installation visit, data privacy and security and the information that will
be provided through the IHD.

Next steps
7.5. Ofgem intends to introduce a package of measures in spring 2011 to provide for
the continued safeguarding of consumers interests. Given that some suppliers are
starting to move early and install smart meters on a commercial basis, this would
help ensure that vital consumer protections in areas such as remote disconnection
are in place to deal with early movers. This package could also include measures
around interoperability aimed at providing suppliers with the necessary confidence to
undertake the rollout and ensuring consumers can continue to switch suppliers in a
straightforward manner.
7.6. Based on responses to the consultation, we will also take forward work on issues
relating to unwelcome selling during the installation visit, access to historical
consumption data, upfront charges and the scope for a dedicated help scheme for
vulnerable consumers to ensure a framework is in place in advance of the mandated
rollout.

42

Appendices

Consumer Protection

27 July 2010

Appendices
Index
Appendix

Name of Appendix

Page Number

Consultation Response and Questions

Definition of vulnerable consumers and existing
protections
Glossary
The Authoritys Powers and Duties

44

2
3
4

47
49
55

43

Appendices

Consumer Protection

27 July 2010

Appendix 1 Consultation Response and Questions

1.1. We would like to hear the views of interested parties in relation to any of the
issues set out in this document. When responding please state whether you are
responding as an individual or representing the views of an organisation. If
responding on behalf of an organisation, please make it clear who the organisation
represents and, where applicable, how the views of members were assembled.
1.2. We would especially welcome responses to the specific questions included in
each chapter and that are replicated here. These detailed questions sit behind the
more high-level questions contained in the Prospectus.
1.3. Responses should be received by 28 October 2010 and should be sent to:

Margaret Coaster
Smart Metering Team, Ofgem E-Serve
9 Millbank, London SW1P 3GE
020 7901 7000

[email protected]

1.4. Unless marked confidential, all responses will be published by placing them on
the websites of Ofgem (www.ofgem.gov.uk) and DECC (www.decc.gov.uk).
Respondents may request that their response is kept confidential.
1.5. Respondents who wish their responses to remain confidential should clearly
mark the document(s) to that effect and include the reasons for confidentiality.
Respondents are asked to put any confidential material in the appendices to their
responses. It would be helpful if responses could be submitted both electronically
and in hard copy.
1.6. Individual responses and information provided in response to this consultation,
including personal information, may be subject to publication or disclosure in
accordance with the access to information regimes (these are primarily the Freedom
of Information Act 2000 (FOIA), the Data Protection Act 1998 (DPA) and the
Environmental Information Regulations 2004).
1.7. In view of this, it would be helpful if you could explain to us why you regard the
information you have provided as confidential. If we receive a request for disclosure
of the information we will take full account of your explanation, but we cannot give
an assurance that confidentiality can be maintained in all circumstances. An
automatic confidentiality disclaimer generated by your IT system will not, of itself, be
regarded as binding on the Department of Energy and Climate Change or Ofgem. We
will process your personal data in accordance with the DPA. In the majority of
circumstances, this will mean that your personal data will not be disclosed to third
parties.

44

Appendices

Consumer Protection

27 July 2010

1.8. Any questions on this document should, in the first instance, be directed to:

Margaret Coaster
Smart Metering Team, Ofgem E-Serve
9 Millbank, London SW1P 3GE
020 7901 7000

[email protected]

You may make copies of this document without seeking permission. Further printed
copies of the consultation document can be obtained from the contact above. An
electronic version can be found on the Ofgem website at: www.ofgem.gov.uk. Other
versions of the document in Braille, other languages or audio-cassette are available
on request.

CHAPTER 2
Question 1: Do you have any views on our proposed approach for addressing
potential tariff confusion? What specific steps can be taken to safeguard the
consumer from tariff confusion while maintaining the benefit of tariff choices?
Question 2: Do you agree with our proposed approach for addressing unwelcome
sales activities during visits for meter installation?
Question 3: What do you consider as acceptable and unacceptable uses of the
installation visit and why?
Question 4: Do you agree with our proposed approach to ensuring that the IHD is
not used to transmit unwelcome marketing messages?
Question 5: Do you agree that consumers should be able to obtain consumption
information free of charge at a useful level of detail and format? How could this be
achieved in practice?

CHAPTER 3
Question 6: Do you consider that existing protections in the licence are sufficient to
ensure that consumers are not remotely switched to prepayment mode
inappropriately?
Question 7: Could provision of an appropriate IHD help overcome meter accessibility
issues to facilitate prepayment usage?
Question 8: What notification should suppliers be required to provide before
switching a customer to prepayment mode?

45

Appendices

Consumer Protection

27 July 2010

Question 9: Do you believe that suppliers should be required to provide emergency

credit and friendly credit periods to prepayment customers or whether, as now, this
can be left to suppliers?
Question 10: Do you consider that an obligation similar to Prepayment Meter
Infrastructure Provision (PPMIP) may be required?
Question 11: Is the obligation which Ofgem is proposing to introduce on suppliers to
take all reasonable steps to check whether the customer is vulnerable ahead of
disconnection sufficient? If not, what else is needed?
Question 12: What notification should suppliers be required to provide before
disconnecting a customer?
Question 13: Do you have any views on the acceptability of new approaches to
partial disconnection and how they might be used as an incentive to pay bills?
Question 14: Do you agree with our approach for addressing issues related to remote
disconnection and switching to prepayment?
Question 15: Have we identified the full range of consumer protection issues
associated with the capability to conduct remote disconnection or switching from
credit to prepayment terms? If not, please identify any additional such issues.

CHAPTER 4
Question 16: What information, advice and support might be provided for vulnerable
consumers (e.g. a dedicated help scheme)? Who should it be provided to?

CHAPTER: Five
Question 17: Do you have any comments on our proposals to prevent upfront
charging for the basic model of smart meters and IHDs?

46

Appendices

Consumer Protection

27 July 2010

Appendix 2 Definition of vulnerable consumers and

existing protections
1.1. In meeting its statutory duty to protect the interests of consumers, Ofgem has
particular responsibility towards those who are disabled or chronically sick, of
pensionable age, on low incomes or residing in rural areas. Ofgem recognises that a
number of other groups may also be classed as vulnerable, including those:

With low levels of literacy and numeracy or without a good command of English,
which makes it difficult for them to engage with suppliers;
Without a bank account and hence very restricted in their payment method and
unable to access many of the more competitive tariffs;
Without easy internet access and so less able to take advantage of some of the
technology, such as top-up over the internet, which smart metering could allow;
and
Living in poor housing that is hard to heat.

1.2. There are also a great many people with physical or mental disabilities, or
conditions covered by the disabled or chronically sick category, who have very
different needs. Some have no vulnerability in terms of the energy market whilst
others are particularly reliant on an energy supply; have high energy bills because
they are largely housebound or suffer from a condition which requires them to heat
their home more than average; or need specific services from their energy supplier
such as bills and correspondence in Braille or large font.
1.3. We also recognise that many of those who may fall into the groups referred to
explicitly in Ofgems duties are not in fact vulnerable, or are only so in particular
circumstances. For example, many of those of pensionable age are physically fit
and/or well off and those living in rural areas may be vulnerable in certain
circumstances because of lack of access to services such as gas or broadband
networks but may otherwise not be particularly vulnerable.
1.4. It is also important to note that while there is an overlap between vulnerable
consumers and the fuel poor, the two are not synonymous. Some vulnerable
consumers are not fuel poor but face barriers to participating in the energy retail
market that others do not. Similarly, many fuel poor consumers are fuel poor for
reasons unrelated to the functioning of the energy market, such as low incomes or
poor housing.
1.5. Similarly PPM customers are sometimes assumed to be fuel poor and/or
vulnerable. However, whilst the proportion of consumers on PPM tariffs is high
among some categories of the vulnerable (such as those on income-related
benefits), for other groups, particularly pensioners, it is below average. Standard
credit is the most common payment method among the fuel poor.
1.6. Many of the issues facing vulnerable consumers have been well understood for
some time. Given the importance of energy to health and basic quality of life,
47

Appendices

Consumer Protection

27 July 2010

vulnerable consumers require additional help and protection that the market might
not otherwise provide.
1.7. In the supply licence, there are a number of conditions which provide specific
protections for the vulnerable including those in payment difficulties, pensioners, the
blind, visually impaired and deaf. Standard Licence Condition (SLC) 27 includes a
requirement that when a customer is in payment difficulty the supplier must offer to
deduct payments direct from social security benefits, set up a regular payment plan
or install a prepayment meter. SLC 27 also prohibits suppliers from knowingly
disconnecting customers of pensionable age during winter (October to March) and
requires suppliers to take all reasonable steps to avoid disconnecting, again during
winter, households where the customer or occupants are disabled, chronically sick or
of pensionable age. Under SLC 26 each supplier must establish and maintain a
Priority Services Register (PSR) which lists all the suppliers customers who are of
Pensionable Age, disabled or chronically sick and who have requested to be
registered. Suppliers must provide a range of services to PSR customers and provide
information on these services, free of charge, to all registered customers.
1.8. Services to be provided by suppliers include, where requested by the customer,
quarterly meter readings where the customer is unable to read the meter, relocation
of a PPM if the customer cannot access the meter and provision of bills and billing /
complaints information in an accessible format for blind or partially sighted and deaf
or hearing impaired customers. Suppliers must, at least once a year, take all
reasonable steps to inform each of their domestic customers that the PSR exists and
how eligible customers can be registered.

48

Appendices

Consumer Protection

27 July 2010

Appendix 3 Glossary
C
Catalogue
The functional requirements of the smart metering system are brought together in
our proposed Smart Metering System Functional Requirements Catalogue (the
"Catalogue"). This covers the smart metering system for both domestic and smaller
non-domestic sectors.
Codes
Industry codes establish detailed rules that govern market operation, the terms for
connection and access to energy networks. The supply and network licences require
the establishment of a number of industry codes that underpin the gas and electricity
markets. The electricity codes are: Balancing and Settlement Code (BSC),
Connection and Use of System Code (CUSC), Distribution Code, Grid Code, Master
Registration Agreement (MRA), System Operator-Transmission Owner Code (STC),
Distribution Connection and Use of System Agreement (DCUSA). The gas codes are
the Uniform Network Code (UNC), Independent Gas Transporter (IGT) Network
Codes, Supply Point Administration Agreement (SPAA).
Commercial interoperability
The terms on which a new supplier can use the meter and related equipment when a
customer changes supplier.
Consumer
Person or organisation using electricity or gas at a meter point.
Consumer Advisory Group (CAG)
The Consumer Advisory Group consists of members from groups representing a
broad range of domestic consumers. It was set up to help inform the programme and
to promote understanding of key consumer issues, particularly more complex issues
that cannot be fully explored through primary consumer research.
Customer
Any person supplied or entitled to be supplied with electricity or gas by a supplier.
Customer premises equipment
All smart metering equipment in a customers home or business.

49

Appendices

Consumer Protection

27 July 2010

D
DataCommsCo (DCC)
New proposed entity which would be created and licensed to deliver central data and
communications activities. DCC would be responsible for managing the procurement
and contract management of data and communications services that will underpin
the smart metering system.
Department of Energy and Climate Change (DECC)
The Department of Energy and Climate Change (DECC) was created in October 2008,
to bring together: energy policy and climate change mitigation policy.
Disability Advisory Forum
A group hosted by Ofgem that is attended by a range of organisations representing
the interests of people with disabilities.
Dual fuel
A type of energy contract where a customer takes gas and electricity from the same
supplier.
E
Emergency credit
Credit applied by a supplier when a meter is out of credit to avoid interruptions
during defined time periods such as overnight.
Energy suppliers
A company licensed by Ofgem to sell energy to, and to bill, customers in Great
Britain.
F
Fuel poverty
Households are considered as being in fuel poverty if they would have to spend
more than 10 per cent of their household income on fuel to keep their home
adequately heated.

50

Appendices

Consumer Protection

27 July 2010

Functional requirements
The minimum functions that must be supported by the different elements of the
smart metering system to ensure the delivery of the benefits of smart metering.
Describes what the smart metering system must do (not how it must do so).
G
Gas and Electricity Markets Authority (GEMA)
The Authority is Ofgems governing body. It consists of non-executive and executive
members and a non-executive chair. The Authority determines strategy, sets policy
priorities and takes decisions on a range of matters, including price controls and
enforcement. The Authoritys principal objective is to protect the interests of existing
and future consumers in relation to gas conveyed through pipes and electricity
conveyed by distribution or transmission systems. The interests of such consumers
are their interests taken as a whole, including their interests in the reduction of
greenhouse gases and in the security of the supply of gas and electricity to them.
The Authority's powers are provided for under the Gas Act 1986, the Electricity Act
1989, the Utilities Act 2000, the Competition Act 1998 and the Enterprise Act 2002.
Gas valve
A gas valve may be incorporated into a gas meter to regulate the flow of gas into the
consumer premise. It is distinct from the isolation valve.
H
Home Area Network (HAN)
The smart metering HAN will be used for communication between smart meters,
IHDs and other devices in consumers premises.
I
In-home display (IHD)
An in-home display is an electronic device, linked to a smart meter, which provides
information on a customers energy consumption.
Interoperability
The ability of diverse systems, devices or organisations to work together
(interoperate). See also commercial interoperability and technical interoperability.

51

Appendices

Consumer Protection

27 July 2010

L
Licence
Transporting, shipping and supplying gas; and generating, transmitting, distributing
and supplying electricity are all licensable activities. Ofgem grants licences that
permit parties to carry out these activities in the GB market. The licenses require the
establishment of a number of multilateral industry codes that underpin the gas and
electricity markets. Licensees need to be signed up as parties to codes in order to
operate in the gas and electricity markets (see codes).
M
Microgeneration
Microgeneration is the on-site generation of lower carbon heat and power by
individuals, small businesses and communities at a small scale.
O
Ofgem
The Office of the Gas and Electricity Markets (Ofgem) is responsible for protecting
gas and electricity consumers in Great Britain. We do this by promoting competition,
wherever appropriate, and regulating the monopoly companies that run the gas and
electricity networks.
Ofgem E-Serve
Ofgem E-Serve is responsible for Ofgems support and delivery functions. It focuses
on administering environmental programmes and the delivery of sustainability
projects such as the Smart Metering Implementation Programme.
P
Prepayment meter (PPM)
These are meters that require payment for energy to be made in advance of use or
else they will prevent the supply of gas or electricity. A PPM customer pays for
energy by inserting electronic tokens, keys or cards into the meter.
Prepayment mode
Smart meters will be capable of switching between prepayment and credit mode.
When operating in prepayment mode customers will have to pay for their energy
before using it.

52

Appendices

Consumer Protection

27 July 2010

Price control
Ofgem sets the price controls for all energy transportation businesses. A price control
sets the maximum amount of revenue which the parties subject to the control can
recover from the users of their networks/services. This aims to balance the need to
allow the companies appropriate resources with the need to protect customers
interests.
Privacy by design
A system that has been designed with privacy in mind from the outset.
Programme
The Smart Metering Implementation Programme.
S
Security by design
Security by design is defined as ensuring that the security of a system is designed
from the ground up to be secure. It is an established concept where security risks
and issues are identified early in the system's development lifecycle.
Smart appliances
An appliance that can alter the way in which it uses energy (consumption level or
time of use) in response to changes in the balance between supply and demand,
usually in response to a price signal.
Smart grids
Smart grids, as part of an electricity power system, can intelligently integrate the
actions of all users connected to it - generators, consumers and those that do both in order to efficiently deliver sustainable, economic and secure electricity supplies.
Smart meter
In addition to traditional metering functionality (measuring and registering the
amount of energy which passes through it), smart meters are capable of two-way
communication allowing them to transmit meter reads and receive data remotely.
Standard credit
A payment method where customers pay on receipt of the bill. This typically covers a
wide range of payment mechanisms, including cash, cheque, credit card and
standing order.

53

Appendices

Consumer Protection

27 July 2010

T
Technical interoperability
The capability of systems or devices to provide and receive services and information
between each other, and to use these services and information exchange to operate
effectively together in predictable ways without significant user intervention. Within
the context of the smart metering system, this means the seamless, end-to-end
connectivity of hardware and software from customer premises equipment through
to DCC, suppliers, network operators and other authorised parties.
Technical specifications
The technical specifications for the smart metering system will be an explicit set of
solutions and guidelines as to how the smart metering system will fulfil the functional
requirements
Time-of-use tariff
Under a time-of-use tariff, a supplier varies its charges based on when energy is
used (e.g. day/night; peak/off-peak; or by season). Such tariffs can be dynamic
(changes in real time) or static (changes at predictable times).
Trickle disconnection
Restriction of the flow of energy to a home, allowing the consumer to use limited
levels of electricity to cover basic needs such as lighting and the fridge/freezer. It is
used by suppliers as an alternative to full disconnection in cases of non payment by
electricity or gas customers.
V
Value-added services
Services beyond the core services necessary for the functioning of the smart
metering system, which will be enabled by the smart metering infrastructure.
W
Wide area network (WAN)
The smart metering WAN will be used for two-way communication between smart
meters and DCC (via the WAN communications module in the customers premises).
Winter fuel payment
The winter fuel payment is an annual tax-free payment made by the government to
eligible people aged 60 or over to help towards their winter heating costs.

54

Appendices

Consumer Protection

27 July 2010

Appendix 4 The Authoritys Powers and Duties

Ofgem is the Office of Gas and Electricity Markets which supports the Gas and
Electricity Markets Authority (the Authority), the regulator of the gas and electricity
industries in Great Britain. This Appendix summarises the primary powers and duties
of the Authority. It is not comprehensive and is not a substitute to reference to the
relevant legal instruments (including, but not limited to, those referred to below).
The Authority's powers and duties are largely provided for in statute, principally the
Gas Act 1986, the Electricity Act 1989, the Utilities Act 2000, the Competition Act
1998, the Enterprise Act 2002 and the Energy Act 2004, as well as arising from
directly effective European Community legislation. References to the Gas Act and the
Electricity Act in this Appendix are to Part 1 of each of those Acts.15
Duties and functions relating to gas are set out in the Gas Act and those relating to
electricity are set out in the Electricity Act. This Appendix must be read accordingly16.
The Authoritys principal objective when carrying out certain of its functions under
each of the Gas Act and the Electricity Act is to protect the interests of existing and
future consumers, wherever appropriate by promoting effective competition between
persons engaged in, or in commercial activities connected with, the shipping,
transportation or supply of gas conveyed through pipes, and the generation,
transmission, distribution or supply of electricity or the provision or use of electricity
interconnectors.
The Authority must when carrying out those functions have regard to:

the need to secure that, so far as it is economical to meet them, all reasonable
demands in Great Britain for gas conveyed through pipes are met;
the need to secure that all reasonable demands for electricity are met;
the need to secure that licence holders are able to finance the activities which are
the subject of obligations on them17;
the need to contribute to the achievement of sustainable development; and
the interests of individuals who are disabled or chronically sick, of pensionable
age, with low incomes, or residing in rural areas.18

Subject to the above, the Authority is required to carry out the functions referred to
in the manner which it considers is best calculated to:

15

Entitled Gas Supply and Electricity Supply respectively.

However, in exercising a function under the Electricity Act the Authority may have regard to
the interests of consumers in relation to gas conveyed through pipes and vice versa in the
case of it exercising a function under the Gas Act.
17
Under the Gas Act and the Utilities Act, in the case of Gas Act functions, or the Electricity
Act, the Utilities Act and certain parts of the Energy Act in the case of Electricity Act functions.
18
The Authority may have regard to other descriptions of consumers.
16

55

Appendices

Consumer Protection

27 July 2010

promote efficiency and economy on the part of those licensed19 under the
relevant Act and the efficient use of gas conveyed through pipes and electricity
conveyed by distribution systems or transmission systems;
protect the public from dangers arising from the conveyance of gas through pipes
or the use of gas conveyed through pipes and from the generation, transmission,
distribution or supply of electricity; and
secure a diverse and viable long-term energy supply.

In carrying out the functions referred to, the Authority must also have regard, to:

the effect on the environment of activities connected with the conveyance of gas
through pipes or with the generation, transmission, distribution or supply of
electricity;
the principles under which regulatory activities should be transparent,
accountable, proportionate, consistent and targeted only at cases in which action
is needed and any other principles that appear to it to represent the best
regulatory practice; and
certain statutory guidance on social and environmental matters issued by the
Secretary of State.

The Authority has powers under the Competition Act to investigate suspected anticompetitive activity and take action for breaches of the prohibitions in the legislation
in respect of the gas and electricity sectors in Great Britain and is a designated
National Competition Authority under the EC Modernisation Regulation20 and
therefore part of the European Competition Network. The Authority also has
concurrent powers with the Office of Fair Trading in respect of market investigation
references to the Competition Commission.

19
20

Or persons authorised by exemptions to carry on any activity.

Council Regulation (EC) 1/2003
56