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What’s the difference between Sir Philip Green and the GB Smart Metering Program?

November 28, 2016

By Paul Homewood

 

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http://www.nickhunn.com/whats-the-difference-between-sir-philip-green-and-the-gb-smart-metering-program/

 

Nick Hunn, who has been closely following the government’s smart meter programme, offers his view on the latest assessment of the costs involved.

He writes on his blog, Creative Connectivity:

 

BEIS (the Department for Business, Energy and Industrial Strategy) have just released their long overdue assessment of the cost of the country’s smart metering program.  Hidden among the figures is the amount of money that they have spent.  So far, they have squandered £450 million on the project, despite the fact that not a single compliant smart meter has been installed in any house.  By a strange coincidence, that’s exactly the same amount as the shortfall in BHS’ pension fund which occurred when Philip Green flogged off BHS.

The £450 million hole in the BHS pension fund had MPs baying for Philip Green’s blood, threatening to remove his knighthood and demonising him in the press.  The £450 million expenditure by BEIS on civil servants and consultants, with nothing to show for it, has elicited virtually no reaction from Parliament, yet it will end up costing the taxpayer far more.

Let me reiterate this, as it is truly shocking.  Over the last six years, DECC, BEIS and Smart Energy GB have spent £450 million on consultations, developing specifications, fighting Freedom of Information requests and spinning PR stories, yet we have not had a single smart meter installed which conforms to their specifications.  Isn’t it time that Parliament stops fuming about super yachts and calls BEIS to account?  Not least, because the latest report from BEIS shows they can’t even manage simple arithmetic.

As we have come to expect from BEIS and their predecessors at DECC, the latest Impact Assessment is yet another work of fiction.  Slipped out on the day that Donald Trump was elected in order to ensure minimum press coverage, it showed that merging DECC into BEIS has done nothing to bring any sense of reality to the program.

The Smart Metering saga has been running since 2007, when it was signed off by Charles Hendry and I’ve been documenting its sorry progress in a number of articles.  Essentially, it aims to install 53 million new gas and electricity meters in British homes by 2020.  Half of these were expected to be installed by 2017, when there would be a project review.

In principle, smart meters are a good thing.   They provide information to the grid about real-time usage.  As our mix of energy generation changes and we see much more local and microgeneration that’s a big benefit.  The information on energy use can also be relayed to consumers to help them become more energy efficient – something that will be important as we move towards smart homes, although that won’t be common for the next decade.  One they’ve done that, a useful by-product of smart meters is that they send your energy usage directly to the supplier, removing the cost of meter reading and making it more likely that your bill will be correct.  (The recent fiasco, where it was discovered that 100,000 consumers were mischarged because the energy suppliers confused metric and imperial readings, shows that having an accurate number won’t necessarily protect you from being mischarged.)  The problem with the GB program is that the people designing the smart meters have forgotten most of these priorities.  Instead, they’ve been designed mainly to help energy suppliers develop complicated tariffs and remotely disconnect users who haven’t paid their bills.  Asking energy suppliers to design smart meters is a bad idea, exemplified by a statement I heard from an executive at a Californian utility, who told an industry conference that “the best thing about smart meters is they give us more evidence to blame the customer”.

Nobody involved in this program likes to say it, but in early documents, DECC make clear that the cost of smart meters would result in an increase in electricity and gas prices, estimating an average increase of £8 – £9 in a consumer’s annual energy bill.  That increase meant that there was no rationale for deploying smart meters.  To justify their deployment, DECC decided to calculate potential energy savings which would compensate for the rise in energy costs.  To achieve this, they made the decision to provide every home with an In Home Display, which would inform customers of their real-time usage, arguing that if we knew the actual costs we would consume less energy.  As there was virtually no evidence to draw on, (as no other country in the world had taken this approach), this was largely fictitious.  But the great thing about fiction is that you can make it up, which is what DECC did.  Miraculously, their calculations predicted an overall customer saving of £14 per year, giving the green light for the project to go ahead.  A previous study for DECC by an external consultancy, and a similar review more recently in Germany, suggest the opposite, but DECC has resisted all Freedom of Information requests to determine how they reached their figures.  Instead they’ve poured £192 million into Smart Energy GB – a quango whose sole purpose is to spin this savings mantra to the public, implying that smart meters are the best thing since your last energy bill.

Along the way, the specification for these meters has become more complex, to the point where they are now the most expensive and complex ones in the world.  An initial aim to put the UK at the forefront of smart metering, with expertise that could be sold to the rest of the world has disappeared, as the project has morphed to the point where we are now seen as an also-ran, weighed down with impractical requirements and ballooning costs.  And consumers have still not seen a single compliant meter.

Let me stress that point.  Although Smart Energy GB puts out the message that over 4 million smart meters have been deployed, not a single one of those meters meets the SMETS2 requirements developed by DECC.  This was confirmed in a meeting in July, when a DECC representative categorically stated, in response to an industry question, that the SMETS2 specification was still not complete and that not a single compliant meter had been installed.  What has been deployed so far will either need to be replaced or upgraded, assuming the latter is possible.

 

 

 Nick’s full analysis is here, but he goes on to show that the government’s estimated cost of £10.98bn has been underestimated by at least £1.6bn, because they have forgotten to include the cost of smart gas meters and have over-estimated the savings from reduced safety checks by £380 million because they have failed to notice they’ve moved a decimal place.

They have also have over-estimated the potential consumer savings and linked carbon savings by £4.9 billion because they have taken maximum figures from a range and used them as median figures in their calculations.

In some ways, Nick is overgenerous.

Part of the claimed £16.7bn worth of savings arises from energy companies no longer having to send meter readers out. This may have been valid a decade ago when the scheme was being dreamed up. But technology has now moved on apace, and there is no reason why the vast majority cannot simply email meter readings back to energy suppliers. I certainly do, and it makes for much streamlined administration at the company’s end.

The mooted savings also include £1.29bn for “carbon savings”, resulting from lower energy use. But as we all know, there is no such thing as a cost of carbon.

 

 

 

Nick also touches on plans for reduced safety checks on meters, which have been fed into the calculations in order to make the savings appear greater. (Raising the question – why don’t we do it anyway?)

 

There’s another fudged cost which should be examined, which is the downgrading of safety checks.  Everyone involved with the smart metering program likes to point out how much will be saved by making meter readers redundant.  However, this ignores the fact that part of their job is checking meter safety.  That involves making sure the meter’s not been tampered with, and also that it is in physically good condition.  It has always been a legal requirement to check a meter every two years.  With the advent of smart meters and the imminent demise of the meter reading work force, the utilities have been desperate to remove this requirement.  They’ve been lobbying OFGEM – the industry regulator, to relax safety checks to once every five years, and OFGEM have acquiesced.

It’s probably OK to relax the inspection rate for electricity meters, but I’m less sure about gas meters, especially as all of the smart gas meters are new designs.  The Impact Assessment talks about categorising them as high and low risk meters, but admits that they have no idea how to work out which are high risk.  I’m looking forward to hearing how Sacha Deshmukh and his bevy of cartoon characters at Smart Energy GB are going to persuade consumers of the benefit of less frequent safety checks, as that change means the likelihood of their house exploding has just doubled.  In case it helps Sacha save a few millions, here’s my suggestion:

 

deccyboom

 

 

 

 

That may not be good news for consumers, but it’s good for the Impact Assessment, as it saves a further £690 million.  Except it doesn’t.  Once more, BEIS’s slide rule is on the blink.  On page 23 of their technical annex, they state the cost of reading a high risk meter is £8.80, but by the time they’ve got to Table 1-3 on the following page they’ve lost a decimal point and reduced it to £0.88.  Which means their estimated saving from getting rid of most of their meter readers is high by £380 million

 

Nick reckons that, just based on the errors he has identified and the issue with comms hubs, that he elaborates, the true cost will amount to at least £14.67bn:

If we add up those three costs – the need for replacement comms hubs and the two arithmetical errors, we get an additional cost of £3.69 million, taking the programme cost to £14.67 billion.  These are just the obvious mistakes.  I suspect there’s a few billion more if you dig deeper.

 

This equates to about £560 per household. As I have often pointed out, how many people would be prepared to shell out this sort of money, just to find out that it is not cheap putting the heating on?

 

Nick concludes:

 

All of this highlights the fact that there is no benefit to consumers in continuing the program.  It is time it is stopped.  To put the savings into perspective, BEIS claims that smart metering could save the average home £11 a year on their energy bill.  Compare that with the value of food the average household throws away each year, which is around £470.  Compared to this, the savings from energy conservation are just noise.  The problem is that those involved in smart metering are so blinkered that they’ve lost all perspective.  They miss the fact that there are far more important things in everyone else’s lives.  All they see is the hope that by promoting conservation we can reduce energy consumption enough to stave off the power cuts that are likely to come because we haven’t invested enough in new generation.  But smart meters are not a magic wand.  What we need is a proper, long term energy policy.

Even the energy suppliers are losing their enthusiasm for the project.  British Gas has taken the plunge and installed almost 4 million smart meters.  These don’t meet the SMETS2 specification, and will probably need to be replaced, but it means that British Gas now has a critical mass of customers with smart meters, allowing them to use them as a marketing tool for customer acquisition, offering them the carrot of free electricity on a Saturday or Sunday.  Their competitors now see massive up-front costs as they need to install tens of millions of meters by 2020.  It’s rather ironic that the only effect of the smart metering program so far (other than wasting £450 million) has been to increase the power of our largest utility, potentially setting it up to become a monopoly supplier.  So much for the aims of increasing customer choice.

Before concluding I would like to revisit the issue of security.  I first raised this back in 2012, highlighting the risk of connected products and the ability to hack Internet of Things devices.  The design of smart meters in Britain means that if they are hacked, power could be turned off for large chunks of the country, causing massive damage to the grid.  When I questioned the sense of this design in meetings at DECC I got the reply from utilities of “why would anyone ever do that”.  In general, those of us who have been trying to improve the security of connected devices have the impression that we’re treated as scare mongers.

Last month someone released the Mirai malware, which infected hundreds of thousands of routers and cameras, launching a denial of service attack which took down many major websites.  It was the first indication that this could and will continue to happen.  Recent experiments have shown that Mirai can infect an internet connected device within 98 seconds of it being turned on.  This latest Impact Assessment talks about “streamlining security requirements” to make it more cost effective for small energy suppliers.  There is still nothing to provide confidence that anyone is taking the threat to national infrastructure seriously.

Going back to the lack of Parliamentary concern about the £450 million spent so far with not a single meter being installed, it indicates just how much successive Governments are in thrall to the energy suppliers.  Despite occasional posturing, Ministers have proven to be incapable of influencing energy prices, with the suppliers simply carrying on business as usual.  Smart metering is probably seen as one of the few things that Government can impose on them, hence it’s achieved the status of sacred cow, where lack of progress is covered up by falsified figures, giving MPs the impression that it is one small victory they can claim.  But it’s a completely hollow one which will probably end up costing consumers upwards of £20 billion by the time the final bills come in.

At the end of the day, Parliament would do well to remember the words of Ayn Rand – “We can evade reality, but we cannot evade the consequences of evading reality”.  We’ve already wasted £450 million.  Let’s not waste a further £14 billion or more.  It really is time to stop pouring money and effort into a smart metering deployment that is already obsolete and will deliver no benefit to energy suppliers, the grid or customers.

http://www.nickhunn.com/whats-the-difference-between-sir-philip-green-and-the-gb-smart-metering-program/

27 Comments leave one →
  1. Joe Public permalink
    November 28, 2016 6:57 pm

    “One they’ve done that, a useful by-product of smart meters is that they send your energy usage directly to the supplier, removing the cost of meter reading and making it more likely that your bill will be correct. ”

    1. An over- or under-estimated meter reading will *always* self-correct when an ‘actual’ reading is provided.

    On the basis that it’s a 50/50 chance for either, if commodity prices change between readings, it’s a 50/50 chance the consumer will benefit.

    2. Meter readers not only read meter indexes, they’re the first line of defence against meter tampering and by-passing, and theft of fuel/energy. The costs to honest consumers can be ~£14pa

    https://www.theguardian.com/money/2013/jul/03/ofgem-action-electricity-theft

  2. Joe Public permalink
    November 28, 2016 7:09 pm

    “British Gas now has a critical mass of customers with smart meters, allowing them to use them as a marketing tool for customer acquisition, offering them the carrot of free electricity on a Saturday or Sunday.”

    Before readers equate that to be worth 1/7th / 15% of their annual power bill, the ‘free’ leccy is available only between 9am-5pm.

  3. Gerry, England permalink
    November 28, 2016 7:17 pm

    It just underlines how incompetent government, ministers, civil servants and MPs are at running anything. And yet some people think putting the railways back under government control would improve them.

  4. Graeme No.3 permalink
    November 28, 2016 8:44 pm

    If these meters are so smart can they calculate when the user would be better off buying a generator?

  5. November 28, 2016 10:46 pm

    They can install one here any time. They’ll have to break the door down first, of course.

  6. November 29, 2016 12:28 am

    By Coincidence “GB Energy” is the name of the first of the small providers to collapse
    (Martyn Lewis predicts more soon)

    • November 29, 2016 10:42 am

      I know Stew – I am one of their customers!!!!!

      • November 30, 2016 2:06 pm

        Paul :Good News
        CO-OP Energy is taking over GB Energy
        and bad news
        CO-OP Energy was fined £1.8m last month for bad mangement

  7. November 29, 2016 12:37 am

    Today a BHer got a reply from the ASA about his complaint about “Smart and Leccy help you get control” the smartmeter advert.
    His complaint was clear , but the ASA palmed him off. I’ll write more tmw.
    – Basically imagine if you only use your car to drive 2 miles /day then it doesn’t matter if your fuel gauge is bust, there is no big need to spend money replacing it.
    When you buy petrol every Friday you still know how much you spend cos the petrol pump has a reading on it. Just the same way you know how much your electric is cos you get a bill every month.

  8. November 29, 2016 12:53 am

    Can a smart meter soften peak demand by TOU pricing? Sure. Can it further cut peaks by forcible rationing? Sure, but not without consumer pushback. Can it fundamentally solve the renewable intermittency capacity problem? No. Can it help with the grid inertia problem that took down SA when capacity became sketchy? Not at all. An expensive UK solution in search of a problem. For the real UK grid problems, at best a bandaid. People will die when the UK grid inevitably goes blackout poof in winter.

  9. tom0mason permalink
    November 29, 2016 8:35 am

    Another very expensive government inspired ‘nudge’ campaign failure.

  10. Tim Hammond permalink
    November 29, 2016 9:34 am

    I rent, so every year my landlord has to get my gas boiler safety checked. They also check the gas stove and….. the gas metre.

    So what “saving” is possible there then, and is this sort of fictitious saving included in the estimates?

  11. A C Osborn permalink
    November 29, 2016 11:00 am

    I get “offered” a smart meter every couple of weeks, in fact one offer came through the letter box this morning.
    All being paid for by Us.
    That £14Billion would be far better spent actually building some Generation capability and useless damned Windmills either.

    • A C Osborn permalink
      November 29, 2016 11:01 am

      Sorry NOT useless damned Windmills either.

  12. richard verney permalink
    November 29, 2016 11:11 am

    One of the big problems that we have in our so called democracy is the lack of accountability in public office.

    The law needs to change to hold those in public office accountable for their actions. That would cause them to think carefully and would greatly reduce the law of unintended consequence that blights so many projects but which is really that the overseers were careless and did not think things through properly.

    • November 29, 2016 12:31 pm

      As my late father used to say: “The purpose of a bureaucracy is to perpetuate and grow itself.” Actually doing what they are purposed to do is not on the radar screen for them.

  13. Harry Passfield permalink
    November 29, 2016 12:25 pm

    I complained to the ASA about the smart meter ads saying they were untruthful etc inasmuch that they said ‘no-one knows’ and ‘no-one is in control’. This is their reply:

    We have reviewed this ad in light of your complaint but I’m afraid that we do not have grounds for further action under our Code.

    While we acknowledge that the ad makes reference to getting “Gaz and Leccy under control” we note that this is in the context of providing a product that enables consumers to view their energy usage in a way that is more accessible than it currently is and the suggestion that they may be able to achieve a level of control over their individual usage. We appreciate your concerns regarding the claim that ‘no one knows’ how much energy they’re using, and appreciate that some consumers may very well take the necessary steps to ensure that they are aware of the amount of electricity and gas that they’re using, however this will not be the case with all consumers. We consider that the ad is likely to be seen by listeners generally as an indication as to how the product aims to make the process of keeping tabs on energy use easier than it currently is and that it’s unlikely to suggest that the smart meter will actively control energy usage. We consider that the ad is unlikely to materially mislead consumers into making a transactional decision they otherwise would not have made and consequently, there does not seem to be a case to answer under the Code on this occasion.

    And this is my follow-up:

    Thank you for taking the time to assess my complaint to the ASA and for replying so comprehensively.

    My original complaint was based on the rule that adverts, as your agency says, should be ‘Legal, decent, honest and truthful’. The Smart Meter advert is not honest, and probably not truthful. It is deceptive.

    You tell me that the ASA accept “that some consumers may very well take the necessary steps to ensure that they are aware of the amount of electricity and gas that they’re using”, which seems to support my complaint and contradict the nub of the advert: that ‘no-one knows’ or is ‘in control’. The point is, many consumers know what they are using because they have to submit meter readings online, as I do, and their bills are, by law, obliged to show the context of current bills and the trend of usage that a consumer is experiencing. So, although not all consumers will track their usage, not all will NOT. The advert is therefore misleading and untruthful.

    Finally, all electrical equipment has, by law, to display the power rating of the device that will give many consumers a guide to their potential bills. Otherwise, what is the point of showing consumers the power rating on the equipment they purchase?

    The advert for Gaz and Leccy is misleading. It sets out the premise that the consumer is thick and hasn’t a clue what they are paying for. It is not unlike SHELL hiding the price per litre of fuel at the pumps and expecting car-drivers to pay for an extra fuel gauge in their car because they are too stupid to read the petrol pump display.

    I am most disappointed by your judgement and urge you to rethink it.

    • November 29, 2016 4:17 pm

      It’s @ASA on Twitter
      Someone could screenshot Harry’s reply to the complaint
      …..and then Tweet it to them.
      Then we could all RE-TWEET and LIKE it ..as a kind of petition

      • November 29, 2016 4:39 pm

        oops link was right but name is @ASA_UK

      • November 29, 2016 4:44 pm

        @HP there is another angle
        \\ So @ASA_UK bans baked beans ad showing adults playing cans
        but not Gaz & Leccy trying to kill each other shown on kids TV?!
        *slow handclap* /

        beware there were also a couple of tweets from the ‘mad smartmeters emit brain damaging radiowaves’ crowd

  14. John189 permalink
    November 29, 2016 1:43 pm

    I recently had two communications from my supplier. One was an offer to fit a smartmeter and teh other thanked me for supplying readings but said that my meters still needed to be checked. As far as smartmeters are concerned, I know how much energy I use becuase I get bills; I don’t waste energy; meals have to be prepared when they are required; the house needs heating when it is cold. Or is it that Sunday lunch must now be on the table at 10am, supper after work at 1am, take showers/baths only on every other Tuesday providing there is an “R” in the month, otherwise only on Saturdays between 3pm and 4pm?

  15. November 29, 2016 2:21 pm

    I recently won a 2-year battle, including involvement of the ombudsman, just to get Scottish Power to correctly communicate the manual readings of digital meters it had fitted in my house to its own billing department. This total cock-up was blamed on a new IT system.

    I have no great expectations of smart meters being a success.

    The Germans were sensible enough not to go ahead with a SM programme on cost grounds. Achieved savings from the Dutch programme did not match forecasts and make DECC’s mysteriously concocted figures look like sheer fantasy.

  16. Athelstan permalink
    November 29, 2016 3:00 pm

    ‘Green’ civil servants, green in all things and when the greens are in, the country shudders unless you belong to Goldman Sachs ala the corporate blob. God help you, if you had a notion – that, Theresa the terrible wuz gonna make fings betta.

    When I questioned the sense of this design in meetings at DECC I got the reply from utilities of “why would anyone ever do that”

    !!??

    Well then, there’s bureaucrats and bureaucrats, and thick naive bureaucrats and those who have no functional knowledge of engineering………….nor even a sprinkling of science, and in some cases these days, diversity quotas ‘n’ all – red tape merchants do not even require to demonstrate that they command a decent comprehension of the language. Coming up the rear and after all that, there are then, the well ejukated, silver spoon fed, green evangelists in female form………

    “why would anyone do that”

    oh please someone help them for they know not of what they spout…………..

    COZ “we’re helping to save the poley bears, then the world and make secure a rosy future for our dynasty’s – yer know!” xxxs

    “why would they do that”??”

    It’s that sort of blind but tedious naivety, but then think, in their willingness to protect and save the riparian dwelling creepy crawlies, dredgers and dredging was disappeared and all of a sudden the nation was being flooded – quelle surprise?! and – that’s what they’re dedicated to do – BEIS designed to f**k the nation based only on their naive beliefs – taught at skool.

  17. AlecM permalink
    November 29, 2016 3:40 pm

    They’re both cheating assoles?

  18. November 29, 2016 4:28 pm

    @Harry Passfield Your petrol gauge analogy set me on to understanding the bureaucrat’s thinking.
    Cos you can actually get an app/dashboard tool that helps you drive efficiently re accelerating and braking etc. It monitors them and makes a display red amber green of how efficiently you are driving , so can then tune your driving to brake a little earlier and shorter etc.
    I can see how that style of driving could save a truck firm money.
    ..I’m guessing that they want to transfer that idea to home energy
    …. which is ridiculous cos you don’t drive your energy use.
    …however for a factory say rolling mill, energy monitoring might well help you adjust operating style to help you save say 1-20% of energy.

    My bug bear is that Media always talk of household benefits of tech, when it’s the commercial world that benefits more
    eg Self Driving vehicles are more important for delivery corps than for domestic cars
    eg2 most energy use is NOT in the home but in the other sectors of the economy eg Industrial, government buildings etc.

    Greens will still have all their Christmas lights on, just as they are always starting bonfires and smoking joints at every opportunity, whilst talking about clean air.

  19. November 29, 2016 8:07 pm

    The headline question has a variety of answers according to your mood at the time, as both are *****s. However, my answer is that the former was useful but is now useless, the latter is useless and will remain useless.

  20. November 29, 2016 8:08 pm

    ps are there any prizes for best answers?

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