Proving the Business Case for the Internet of Things

E.On made to pay £7m over UK smart meter delays

Steve Rogerson
November 17, 2015
 
UK energy regulator Ofgem has made energy supplier E.On pay £7m to the Carbon Trust for its failure to supply enough smart meters to business users.
 
Ofgem secured the £7m as the supplier failed in its duty to supply relevant business customers through advanced electricity meters by the April 2014 deadline. The roll-out is part of a national project to modernise the energy sector and provide better service by introducing next-generation, smarter meters to help customers control their usage and bills.
 
E.On has apologised for missing the deadline and will provide the £7m to fund a two-year programme of energy saving help for small and medium businesses, to be delivered by the Carbon Trust, by way of settlement.
 
A spokesman for E.On said: “Installing advanced meters to tens of thousands of business customers across the country was always going to be a significant challenge and one that threw up a variety of hurdles for suppliers to overcome. That said, we cannot, and will not, overlook the fact that we did not do enough in time to meet the deadline and in that regard failed to provide the efficient service our business customers demand and deserve. In the last 18 months we have made some further progress and we have invested heavily in increasing our capability and we are taking all reasonable steps to get these meters installed.”
 
The UK government’s advanced meter roll-out scheme for businesses began in 2009. Under this, E.On had five years to fit around 20,000 customers with, and supply electricity through, advanced meters. E.On only completed 64.4 per cent of its roll-out, meaning more than 7000 customers did not get a meter on time. Ofgem said E.On was unable to demonstrate that it took all reasonable steps to fulfil its required meter rollout. The supplier failed to plan and monitor its roll-out and its senior management didn’t do enough to ensure it complied. E.On has also gained financially by avoiding the costs of installing and operating the new meters, said Ofgem.
 
Suppliers who failed to deliver on time are nonetheless still required to roll out advanced meters. Since April 2014, E.On has made some further progress. However, the supplier has accepted it needs to do more and has agreed that unless it meets an interim target within the next year, it will pay a further £7m in redress. If E.On is still not compliant with its obligations after a further six months, Ofgem is ready to consider imposing a sales ban preventing the company from taking on new business customers until it is able to supply them through an advanced meter.
 
“It’s unacceptable that E.On failed to roll out advanced meters to these business customers on time,” said Anthony Pygram, Ofgem senior partner with responsibility for enforcement. “Customers have lost out on receiving better information about their energy consumption and the opportunity to control costs. Unless E.On improves their poor record, they will have to pay out even more and may face a sales ban. The roll out of advanced meters has the potential to transform the energy market. We expect all suppliers to learn the lessons from this ahead of the domestic smart-meter roll-out, in particular the need to start the process in good time and ensure senior managers are committed to delivering on time.”
 
In April 2009, the UK government introduced a licence condition requiring suppliers to roll out advanced gas and electricity meters to their medium-sized non-domestic customers by 6 April 2014. The specific obligation was to install smart meters that allow for one-way communications between customers’ premises and suppliers’ IT systems.
 
Suppliers’ progress on the advanced meter roll out to medium and larger businesses was monitored by Ofgem throughout the process and it repeatedly reinforced the need to deliver on time. Investigations continue into British Gas’ and NPower’s roll-out performances.
 
As part of the UK government-mandated national infrastructure project to modernise the energy sector, suppliers are also required roll out smart meters to all domestic and smaller non-domestic customers by the end of 2020. Domestic smart meters operate to a higher specification – including two-way communications – reflecting the needs of these consumers.