The Role of Smart Meters in Tackling Fuel Poverty Cathy Mannion, Director, Retail & Electricity Networks Commission for Energy Regulation Energy Action.

The Role of Smart Meters in Tackling Fuel Poverty

Cathy Mannion,Director, Retail & Electricity Networks

Commission for Energy Regulation

Energy Action Conference 2012Dublin Castle,

7th February 2012

Introduction

CER regulates Ireland’s natural gas & electricity sectors in the interests of customers

– the wholesale electricity market with NI – SEM– the gas market: all-island CAG– energy networks - set access terms, revenues and

prices– licences and monitors market players– customer protection and complaints resolution– on-shore and new upstream safety functions

Complex issue, multiple contributing factors including;-– energy prices – low income– individual consumption levels– energy efficiency awareness of the consumer– energy efficiency of housing stock

Energy Customers & Fuel Poverty

• Energy Prices– Cost of energy is the key factor in end user prices– Competitive market puts pressure on retail prices

• One of highest switching rates in world - over 40% in electricity since early ’09

• Gas starting to catch up - 20% since early ‘09

• Strong competition & de-regulation is delivering customer choice and price discounts

• More competition can mean more complexity for consumers

• Market monitoring and customer protection an increasing focus for CER - difficult economic circumstances has left consumers finding it hard to make payments

Energy Prices & Retail Competition

Energy Prices & Retail Competition

• Irish Electricity Retail Prices more competitive with EU than in past

Energy Prices & Retail Competition

Note: above and following retail price charts are from SEAI, using Eurostat data

Energy Customer Debt & Disconnection

• Customer Arrears– Some suppliers indicate that ~12% of their customers are in arrears

– If debt is not addressed can lead to service disconnection

– Regulatory rules in place to ensure that disconnection is the last resort Prepayment meters help customers manage their energy bills Supplier’s Code of Practice on Disconnection Debt Flagging 50% of the cost of disconnection is borne by the supplier

Energy Customer Debt & Disconnection

Domestic electricity customer disconnections in 2010 & 2011 (~30% vacant premises)

What is a Smart Meter?

• ‘Not so Smart’ Meter– Electromechanical– No communications– Manual Reading (4

actuals / 2 estimates)

‘Smart’ Meter(ing System)– Electronic– 2-way Communications– Remote Interval Reading– New consumer services

EI ServerMeter

Management,Data

ManagementData Storage

Elster AS230 Smart meter with GPRS

Module

GPRS over Vodafone

Mobile network

Smarter!

• Improved customer services

– Better Information to support energy efficiency

» No estimated bills» In home display

– Reduce consumption leading to lower bills» New Pricing options» Time of Use Tariffs

– Prepayment expansion » Reduces cost of PPMs» the ability to switch between prepay and debit options» range of prepay options & remote crediting of account to clear any

outstanding debt.

How can Smart Meters be used to tackle Fuel Poverty?

Smart meters could be used to target a range of services to vulnerable and fuel poor households:-

– Send warnings if consumption patterns drastically changes or consumption ceases altogether

– Ensure room temperatures not fall below a healthy level

– Tailor the use of extended credit to help specific groups

– Accelerate implementation of low-cost and discounted tariffs

– Low credit warnings

– Could end disconnections

How can Smart Meters be used to tackle Fuel Poverty?

National Smart Meter PlanPhase 1 2008 – 2012

• Customer Behaviour Trials:– c.6,000 electricity & c.2,000 gas consumers participated– Tested impact on overall & peak energy consumption of:

• Enhanced energy information (IHD, energy statements & Web)• Energy efficient price signals – Time of Use (ToU) electricity tariffs

– Positive results (statistically robust): • Average electricity usage reduced by 2.5% overall & 8.8% at peak; • Average gas usage reduced by 2.9% overall

• Technology Trials– c.4,000 participants (PLC/RF)

• Cost-Benefit Analyses (with ESRI):– c.€229m NPV benefit estimated from combined national

electricity & gas rollout (Consumer, Network & Generation benefits)– c.€800m - €1bn investment cost

National Smart Meter Plan Rollout

• Consultation Paper on Rollout:– Proposal to proceed with national smart metering rollout

• High level design: requirements, functionality, procurement & timelines;– Mandate rollout to all residential and majority of business consumers – Gas metering will leverage electricity communications infrastructure– Mandate rollout of in-home displays (IHDs)– Mandate provision of energy usage statements with bills– Mandate time of use electricity tariffs– Consideration of water metering

• Justification: Positive Trial & CBA findings; EU Legislation• Nov – Dec 2011 consultation ; 35 responses - broadly positive feedback

• Decision Paper:– Decision on rollout will be issued in the coming weeks

– Phase 2 to elaborate design & requirements

National Smart Meter Plan Programme Overview

Phased approach & high level timelines:

Smart Meter System Design & Requirements

• Phase 2 of the smart metering project will elaborate on the smart metering system design and requirements.

• The CER will engage with all relevant stakeholders to ensure that in designing the consumer protection protocols for smart meters the needs of vulnerable customers and the fuel poor are taken into account

• Consumer protection issues such as remote disconnection, data-protection, protocols for remote switching between tariffs, disability friendly smart meters, monitoring under-heating and self disconnection will be considered.

• The large-scale roll out of smart meters will be accompanied by a national consumer education programme & support services.

Conclusions

• CER committed to implementing appropriate regulatory structures to assist those in fuel poverty

• Smart Meters have the potential to be a significant tool in the fight against fuel poverty.

• The design phase of the rollout project will consider how improved services for vulnerable and fuel poor customers can be provided with smart meters.

Q&A

Cathy MannionDirector, Retail & Electricity Networks

Commission for Energy RegulationThe Exchange, Belgard Square North

Tallaght, Dublin 24

PH: +353 1 4000800 Email: [email protected]