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Preservation of a competitive market for metering and data collection services to non-domestic customers

IMServ Europe Ltd

Scorpio Rockingham Drive,

Linford Wood

Milton Keynes

MK14 6LY

2nd June 2017

Office of the Secretary of State for Business,

Energy and Industrial Strategy Department for Business,

Energy and Industrial Strategy
1 Victoria Street,
Westminster

London

SW1H 0ET

 

Dear Sir/Madam,

We are sending this letter collectively to express our concerns about the preservation of a competitive market for metering and data collection services to non-domestic customers. The ability of non-domestic customers to exercise choice in this market has been fundamental to its successful operation.

During the 1990s, successive regulatory decisions enabled non-domestic customers to be able to select their metering and data collection agents in the electricity and gas markets. A thriving and dynamic market resulted with multiple competing independent metering and data collection agents, as well as competitive offerings from energy suppliers and network operating companies.

Today, a non-domestic customer can routinely and easily run competitive procurement processes to select its metering and data collection agents. Transferring services between the losing and winning parties is also a routine task. This effective and competitive market has been successful in driving costs down and increasing the development of innovative added-value services. Advanced metering interoperability has created a market place enabling thousands of non-domestic customers to exercise their right to choose.

Recent, and soon to be introduced, regulatory changes will affect competition in the non-domestic sector and it is our belief that intervention is urgently required to preserve the benefits of this competition.

These concerns can be summarised as

1)  Confusion around the use of advanced metering solutions going forwards;

2)  Lack of access to SMETS2 meters for independent agents;

3)  The centralisation of metering and data collection services undermining competition and choice.

Future Use of Advanced Metering

Currently, multi-site non-domestic customers who wish to have consistent remote data collection across their portfolio of sites install advanced metering, normally using one agent. Advanced metering is mandatory in the half-hourly market, optional in the non-half-hourly market, and it can be used across market segments at different sizes of sites. This enables a non-domestic customer to obtain a consistent service provision irrespective of their site portfolio composition. Interoperability also means that these customers can transfer these installed meter systems from one agent to another as they wish.

Whilst it is clear to careful scrutineers of the regulations that non-domestic customers have the choice to maintain their advanced metering portfolios into the future, it is not easy to find this information and there is information pointing to the contrary, such as the Advanced Metering Exception End Date and the New and Replacement Obligations, that suggests that advanced metering is not permitted in the future (for profile class 3 and 4 in electricity, and u6 gas), and should, when required, be replaced by SMETS2 metering.

We believe that it would greatly help remove this confusion if BEIS made a simple clarifying statement that endorsed the view the non-domestic customers are able to continue with their existing arrangements and that this includes installation of new Advanced meters.

 

Lack of Access to SMETS2 Meters for Independent Agents

Whether a non-domestic customer has installed advanced metering fully across its portfolio or not, SMETS2 metering will enter the portfolio, either through new installations or by that customer acquiring sites where SMETS2 meters have already been installed. Many non-domestic customers will not wish to have a mixed portfolio of technology consisting of some advanced meters and some SMETS2 meters for the simple reason that they may not be able to continue with their existing arrangements for metering and data collection services.

This is because independent metering and data collection agents are unable to access the SMETS2 meters on a like-for-like basis with advanced metering. Rather, the operating model for SMETS2 has restricted the access to the energy supplier for many of the key functional aspects of SMETS2 metering (such as commissioning, configuration, diagnostics and data retrieval of register reads).

This limits the choice that a non-domestic customer has. Their choice becomes either to work with an energy supplier who has the capability to fully support both advanced metering and SMETS2 metering (of which there are very few), or accept that the metering portfolio is split, with advanced metering sites and SMETS2 sites being managed under separate arrangements, or requires the meter agent to have contractual responsibility for the energy suppliers performance of its metering / data services.

A non-domestic customer with a mix of advanced and SMETS2 meters will no longer be able to select an independent agent to have total responsibility for their entire metering portfolio, placing independent agents, and those energy suppliers who use independent agents, at a significant competitive disadvantage.

This is against the best interests of non-domestic customers. As a remedy, it is entirely possible to open up access to SMETS2 meters to independent agents on the same basis as energy suppliers, specifically for metering and data collection services, thus preserving a competitive market with its consequential benefits.

Centralising Services

As above, it is already clear that decisions made in the design of the operating model for the SMETS2 metering solution are having a negative impact on choice and competition. We believe that lessons should be learned from the decision to centralise aspects of the SMETS2 delivery, such as the DCC, with its subsequent delays and additional costs. The option to compete against the DCC in the future in the delivery of communications services to smart meters should be left open. This could be achieved by retaining he DCC opt out and by allowing Advanced meters to continue to be installed.

Additionally, we believe that steps should be taken to prevent future regulatory changes reducing competition further.

The upcoming significant code review on mandatory half-hourly settlement is an opportunity to reinforce competition by continuing with the current market design that both functions well and delivers choice to non-domestic customers. Mandated half hourly settlement across all sectors in itself will deliver the benefits of greater pricing transparency and market efficiency, but it is the competitive market which will drive down the costs of delivery and increase innovation.

We would welcome a meeting as soon as practical to further illustrate both our concerns and our proposed solutions to preserve competition and customer choice in the non-domestic customer metering and data collection market. We look forward to your response.

 

Yours sincerely,

Steve Brown, Managing Director, IMServ Europe Ltd

Joel Stark, Managing Director, Stark Energy
Andrew Bray, Head of Plan, Siemens Managed Services

Chris Mawer, Business Development Director, SMS PLC

David Sing, Managing Director, Energy Assets Ltd