By 2020, UK suppliers are expected to install 53 million smart electric and gas meters in each of the countrys homes and small businesses. According to Engage Consulting managing director John Peters, this infrastructure upgrade will result in wide-ranging business challenges such as the need for new systems and processes including updating billing systems allowing for more frequent meter readings and training technicians to install the new equipment.
Another sticking point, Peters believes, is dealing with inheriting other suppliers smart meters. One of the issues to resolve is how the market will work with interoperability and exchangeability with meters. You have a situation in the UK where I think the suppliers need to know that when a meter is installed it will be suitable for the next supplier who takes over should consumers wish to change their energy company. The supplier needs know all the components work.
To that end, Peters says suppliers need to adhere to the testing and interoperability requirements defined by the smart metering implementation program (SMIP) and managed by the Data Communications Company (DCC) and fulfill new supply license conditions relating to smart meters.
He also notes, I think that there is inevitably a quality issue that they are going to have to deal with. The smart meters themselves are good but there are bits of bad data in them that really need to be ironed out before you get to the new smart market. Ive heard of neighbors getting one anothers bills and because they have the same sort of houses nobody noticed. Smart meters will not let you get away with that. It will be obvious quickly. So you have to think about the reputational damage that could happen to smart meters if people get wacky bills or suddenly get their next-door neighbors bill. Any reputational damage could make consumers mistrust smart meters. But if they get the base quality right, and get the basic processes right, then people will trust the smart meters.
Despite some serious glitches in other countries rollouts, such as the fires in Canada ultimately blamed on installation issues, Peters observes, I think all those involved in the UK have taken a well-considered approach. I believe the major retailers in the UK started formulating what they needed over the last couple of years. In the Canadian instance nobody took responsibility and that exacerbated the level of the problem. Im sure the British suppliers are aware of these and other cautionary tales and we have centralized the big chunk of the process, which gives you a bit more control.
Besides giving consumers more access and control over their energy use, smart meters will prompt other evolutions, Peters adds. At the moment retailers treat their customers as a homogenous group. But smart meters tend to differentiate customers. The suppliers themselves cannot ignore the fact that some customers will become more valuable than others and that will change the nature of the business being a retailer, especially if you have all high-value customers in your portfolio.
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