It’s been a quiet summer in Brexitland. After a vicious few weeks of back-stabbing and in-fighting, our politicians departed to calmer climes. While they holidayed, our glorious successes in Rio have provided ample news coverage to fill the gap, meaning that it’s been a great time for the Whitehall mandarins to bury any unfortunate information about the state of the GB Smart Metering project.
On the assumption that no news is good news, you could claim it’s been a particularly successful summer for the newly responsible Department of Business, Energy and Industrial Strategy, (I use “responsible” in the broadest sense), as they have taken the opportunity to fail to release a promised, updated impact assessment for the GB Smart Meter rollout. Earlier this year, the House of Commons’ Science and Technology Committee confidently reported that it would be published “in the first half of 2016.” Needless to say, there’s still no sign of it.
Since 2010 the smart metering specification has changed significantly. Not only have the meters become far more complex (and hence expensive), but an additional element has been added to the specification. That’s a separate communications hub, which sits on top of the electricity meter and provides the wide area connection back to the DCC, as well as a secure(ish) Home Area Network. Each comms hub is estimated to cost around £31, resulting in an additional hardware cost for the project of just under £900 million for 28 million homes. That’s based on 2014 estimates. It looks as if they will eventually be required to support both 2.4GHz as well as a new 868MHz communications standard, which will probably move that figure to the wrong side of £1 billion.
Another item which needs to be factored into the numbers is replacement costs for the communications hubs. When the first impact assessments were performed, they assumed that there would be no need to replace any part of the smart metering system within the first ten years. That’s no longer the case. With SMETS2 still not finalised, the smart meter life will extend past 2025, by which point the GPRS network connecting the majority of communications hubs is likely to be turned off. That will mean around 20 million comms hubs will have to be replaced between 2022 and 2025 (the Northern area uses a different system which is as yet largely untested and unknown, so I’ve given it the benefit of the doubt and excluded it), at a further cost of £600 million for new hubs, and around a £1 billion of installation costs in changing them over. Put that all together and the current projections are around £2.5 billion out.
Hence the reason we need a new Impact Assessment, because the current figures look fictional. The table below shows how the overall project cost estimates have changed over the years
|Jul 2010||Aug 2011||Apr 2012||Jan 2013||Jan 2014||Apr 2015||Aug 2016|
|£10.05 bn||£10.91 bn||£10.85 bn||£11.47 bn||£10.93 bn||?||?|
For the last 30 months, we’ve seen nothing, although we know the introduction of the comms hub should have added an extra billion pounds to the costs, and the need to replace them with a 4G or 5G variant will take that up to £2.5 billion. Even without that missing addition, this would be a remarkable Government IT project, because there has been no cost increase over its duration. It’s the sort of achievement which would herald knighthoods all round. But we know that doesn’t happen in Government IT projects – just read Richard Bacon and Christopher Hope’s Conundrum.
It all screams “fudge”. The only conclusion you can make is that officials know how far away from reality the current public numbers are, but are trying to conceal that in the hope that if enough money gets misspent on the project, no-one will have the balls to stop the program.
That’s the no news bit, after which we can move on to the real news.
As we were racking up our record tally of medals, BEIS slipped out the news that the communications network, which was meant to be switched on in August, has been delayed until September. The August date was already a delay. The system was meant to be operational in April 2015, but that was delayed to April 2016, which in turn was delayed until August 2016, at which point the latest delay was slipped out in the hope no-one would notice. According to one report, Capita has only managed to complete the design and build phase of the project, and is only now starting to test the system, which implies we’re not at the end of the delay saga. Because the underlying SMETS2 standard is still incomplete, we’re likely to see more delays, along with demands from Capita for more money to cope with changes in the specification.
Far more worrying was the news story about billing mistakes by the UK’s energy suppliers. According to an article from the Financial Times, thousands of consumers have been overcharged or undercharged because energy suppliers have been failed to work out whether their meters were reading in cubic feet or cubic metres. More recent coverage suggests this could affect up to a hundred thousand customers, with some being incorrectly billed for up to fifteen years.
These are good, old fashioned analogue meters, not smart meters, but this mistake raises two important points:
- These energy companies, who can’t work out the difference between metric and imperial units, are the same companies who have been responsible for designing the most complicated smart metering system in the world. When it emerges that they don’t even know how long their ruler is, you have to conclude that they are woefully incompetent to do that design. My personal experience, sitting in technical meetings, is that they are totally out of their depth and the SMETS2 specification is a farce.
- Secondly, any vaguely competent billing system should have spotted the anomalous readings and alerted them to the potential error. This isn’t a little discrepancy – 1 cubic metre is over 35 cubic feet, so using the wrong units is obvious. But, as commentators have been pointing out for years, the back-end systems and data analytics used by the energy companies are archaic. If they cannot spot major errors in a single reading each year, then there is not a snowflake’s chance in hell that they will be able to benefit from the vast amount of extra data they will receive from smart meters. It will be wasted. However, all of DECC’s impact assessments allocate a large cost saving to the project as a result of improved efficiencies in energy companies when they have access to half hourly meter readings. This debacle proves that that saving is illusory. If you discount that saving and then add in the additional costs I’ve noted above, the GB smart metering programme is not financially viable, and should therefore be stopped.
In the light of this latest exposure of their incompetence, I call on the Government and Theresa May to start an urgent review of the smart metering programme. On this evidence, the energy suppliers are not fit to run it or use the data, so all we will see is tens of billions of pounds added needlessly to consumer’s bills. It is high time that Government started to insist on an evidence base for our energy policy. Otherwise the only thing we can be sure of is that the lights will start to go out.
You can read my previous articles about GB energy policy and the smart metering programme here.