Utility companies want industry reorganisation

Power companies are calling for a radical restructuring of the utilities industry if government goals for smart meters are to be accomplished within the next two decades.

The government is expected to mandate a 10-year rollout of real-time networked meters next year as part of plans to boost consumer awareness of energy use.

But that target will not be achieved without replacing the existing supplier market with regional franchises, according to utility firms, and may even take twice as long.

“Working under the current industry structure we will not meet the ambition to roll out smart meters within 10 years,” said NPower commercial metering manager Jane Franklin.

“The regional franchise model is the least-cost, least-disruption option.”

The problem is that at the moment upgraded meters can only be installed by individual utilities on a piecemeal, customer-by-customer basis ­making the time, cost and risk associated with the plan disproportionately high.

Regional franchises would allow consortia of metering providers, systems developers and infrastructure groups to be responsible for all premises within a geographical area, say the scheme’s proponents.

According to British Gas owner Centrica, the model would enable the rollout of “dual fuel” smart meters for electricity and gas in as little as seven years, saving UK households £3.5bn.

But under the current structure, the upgrade will take 20 years, said the company.
“We have the opportunity to transform the metering industry which, if done properly, could give the UK billions of pounds of benefits through cuts in energy use and better customer service, said a spokesman.

“The industry can replace the UK’s 45 million ‘dumb’ meters with smart ones in seven years, but we need regional franchises to deliver the rollout street by street.”
The government is due to respond to the open consultation on the metering and billing aspects of its Energy White Paper by the end of January.

Energy Retail Association head of communications Nicky Bowles said: “A competitive regional franchise system would create the least customer disruption and the best likelihood of delivery while encouraging the greatest level of competition, innovation and customer choice.”