Citizens Advice response to DESNZ’s Non-domestic Smart Meter Rollout Post-2025 Consultation

Citizens Advice response to DESNZ’s Non-domestic Smart Meter Rollout Post-2025 Consultation 257 KB

Citizens Advice welcomes the opportunity to respond to DESNZ’s consultation on the post-2025 non-domestic smart meter rollout. Smart meter uptake in the non-domestic market is crucial in enabling the government to meet 2030 Clean Power goals, as well as unlocking the benefits of smart technology for small and microbusiness consumers. They have the potential to result in cost savings for small businesses and enable them to find more innovative and efficient ways of using energy (e.g. battery storage). 

For these reasons, the government’s proposal to introduce a universal commitment to smart-contingent fixed contracts is comprehensible in theory, but we have concerns about the practicality of these proposals and associated consequences for consumers. Implementing this policy package could ensure a more joined-up approach on the part of all suppliers of small and microbusinesses towards smart metering. We also know that consumers who do not have smart meters will miss out on the benefits of smart products and services, and concomitant cost savings. More broadly, a lower take up of smart meters will also reduce the benefits of Market-Wide Half Hourly Settlement, driving up energy system costs for everyone. 

However, while we agree that many non-domestic objectors are not objectors on the grounds of ideology so much as they are limited in time and resource, we think that this mandate also poses some risks to consumers, particularly with regard to their engagement with the smart transition, which the Government must take action to mitigate. In the domestic sector, consumers feeling that they were forced to have a smart meter installed is the second most often cited reason for dissatisfaction with a smart meter. The process of getting a smart meter installed impacts how consumers feel about their smart meter, and how likely they are to engage with further products and services, including more flexible energy services. In addition to this, the current non-mandatory design of the smart meter rollout puts more onus on suppliers to sell the benefits of smart meters to consumers. We are concerned that mandating smart meters for all small businesses could generate a backlash against smart meters in the non-domestic market, and lead to consumers failing to make the most of what smart tariffs can offer. 

If the government determines to move forward with these proposals, regulatory changes will be required to support this. A universal communication requirement is necessary to ensure awareness of changes amongst commercial landlords and tenants is high. Introducing a consumer protection code enshrined in the Supply Licence Conditions (SLCs) is also a necessity. There is currently a gap in provisions related to ensuring smart meters are functioning and communicating appropriately, and we would encourage the government to consider how monitoring and enforcement of proposed SLCs could oversee this. We also do not think that such governance should sit with the REC, but with Ofgem in order to reduce complexity. 

In addition, we feel that the guidance to assist both tenants and landlords with the process of getting a smart meter installed is appropriate, though likely to have limited impact due to the practical difficulties of raising awareness about the existence of these resources, and the lack of obligations upon landlords to comply with requests. The proposals at present do not empower consumers appropriately to request a smart meter from their landlord, which may lead to consumers being locked out of cheaper deals offered on smart-contingent contracts if their landlord objects. DESNZ should work closely with the Ministry of Housing, Communities and Local Government (MHCLG) to introduce obligations upon landlords to engage with smart metering. Similar obligations placed on landlords, such as those introduced with the Minimum Energy Efficiency Standards have seen more engagement from landlords than voluntary standards.

We would also reiterate the importance of collaboration and joined-up thinking amongst various industry stakeholders, and ensuring that other ongoing workstreams which impact the non-domestic or smart retail markets (such as load controller regulation, TPI regulation, Ofgem’s Consumer Outcomes framework) work alongside and feed into this stream of work.