Review of UK metering arrangements - 04 Jan 2011

The results of a recent review by UK regulator Ofgem of metering arrangements in the transition to smart metering in the UK, have revealed that a change of policy is required in several areas such as commercial interoperability, vertical integration and network companies’ obligations, as well as gas metering price controls. 

The Ofgem review indicates that although it would not be appropriate to intervene in the market in the areas of consumer protection and metering agents, the commercial interoperability of the current arrangements has led to a multiplicity of contract forms and charges. While the metering market therefore would benefit from decreased transactional costs and increased and more transparent information flows, it is uncertain that the evidence is sufficient to warrant intervention in regard to dumb meters. 

In relation to vertical integration and the obligations of network companies, Ofgem considers that a package of remedies will ensure that dumb meters are available, and protect small and out-of-area suppliers during the transition to smart metering and beyond. It is proposed that Ofgem will facilitate this by introducing a non-discriminatory obligation on certain suppliers to offer smart metering services on cost-reflective terms to other suppliers. 

Ofgem also proposes to retain metering price controls on all (dumb) gas meters. A review of the tariff cap for new and replacement meters would be appropriate for credit meters, and may possibly also be appropriate for replacement prepayment meters. The publication of the smart metering prospectus decision document in early 2011 should enable a more considered decision on tariff caps for prepayment meters to be made. 

Paul Budde

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