Smart Metering is FCUKED

Having delayed the Fiendishly Complicated United Kingdom Enduring Deployment** of smart meters earlier this year because of technical delays, you might expect that the British Government would have spent some time reviewing the technology they had mandated.  If they had done so, it would have become clear that the program was out of control.  Under the surface, too many cooks have ratcheted up the technical complexity to the point where it is no longer fit for purpose. However, it appears that no-one wants to point out that the Smart Metering Emperor is stark naked.  That’s largely because those overseeing the programme don’t have the depth of technical knowledge to understand the implications of what is going on.

As always with big Government driven IT programs, whilst there’s money to be made by the metering industry and consultants, momentum rules.  It seems perfectly justifiable to carry on and saddle consumers with a £12 billion white elephant which will further inflate domestic energy bills.  As a result of this lack of due diligence, smart metering is firmly on course to be the next big UK Government IT disaster.

It’s not that there’s a fundamental problem with smart metering, but there are massive mistakes in the way that the UK has decided to do it.  When the programme started, it was seen as world-leading.  It should have set a global standard for smart metering, giving UK plc a commanding lead in exporting expertise to the rest of the world and creating long term employment opportunities.  Instead it has resulted in an out-dated, over-complicated system which will be incompatible with any other solution in the world, cost more than any other, fail to deliver the promised customer benefits, add risk to our energy security, threaten jobs, further alienate customers and make the UK energy industry a laughing stock.

If we look at the issues, the GB smart metering program appears to have a unique capacity not just to duplicate major errors from previous Government disasters, but to combine many of them into one overarching Government- destroying fiasco.

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Fifty Shades of Tariff

There’s nothing that better illustrates the sado-masochistic relationship between energy suppliers and their customers than Tariffs.  They’ve evolved to be the whip that utilities deploy to beat their users into “correcting” their behaviour.  That form of correction may be trying to limit the total amount of energy you use, or changing when you use it.  But there’s a clear message coming through – energy suppliers want to be in control of the relationship. 

It’s a concept that consumers have a problem with.  Survey after survey reports the message that consumers don’t understand tariffs.  They don’t even understand the word.  And regulators are often less than happy with multiple or complex tariffs, because they’re aware how much they confuse people.  That was highlighted in the UK earlier this year when the regulator OFGEM took the paddle to the utilities to persuade them to reduce the hundreds of tariffs in the UK to a few simple ones.  But that doesn’t stop utilities fantasising about a future where they can run riot with tariffs.  The most extreme example is now being constructed in the UK as part of the British smart metering specifications.  These allow a level of complexity that makes the most diabolic tortures devised by the Inquisition look simple.  Fighting the consumer interest corner is our Energy regulator – OFGEM, which is about to give up on persuasion and start meting out some punishment itself.

There are some valid reasons for considering complex tariffs, but these need to include consumer engagement as a fundamental feature of their development.  What is happening instead, particularly in theUK, is that tariffing structures are being developed as a technical exercise.  They are now so complex that they threaten the interoperability, cost and usability of the British smart metering roll-out, setting smart metering up to be the next major UK Government IT disaster. 

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Switching and the Smart Energy Market

Back in 1776 Adam Smith made the observation that England is a Nation of Shopkeepers (although Napoleon usually gets the credit for the phrase).  If either were alive today they’d probably reconsider and point out that we’re now a nation of Switchers.  Nowhere is that more true than our attitude towards energy suppliers.  According to OFGEM, over 76% of us have switched our energy supplier in the last ten years.  Around 26% of us do it every year.

For some reason, we love switching.  Our favourite TV adverts are for comparison sites.  One – the advert for Compare the Market uses a family of animated meerkats which have become so popular they’ve spawned a range of merchandise.  Whether it’s insurance, energy, mobile phone plans, broadband or saving plans, we’re addicted.  And nowhere more so than with switching energy provider.

It’s not just the websites urging us to do that.  Government ministers keep on telling us that to get the best energy price we should switch suppliers.  Their message is not to use less energy – just change supplier.  And part of their plan for smart metering is to make it even easier to switch – as often as once a day.  It’s creating a very interesting dynamic for the industry, but one that is about to change.

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