Metering and Billing & the Energy End Use and Energy Services DirectiveJackie JanesSustainable Energy Policy Division

Ofgem Seminar2 March 2006

Overview

•Policy Framework

•Possible benefits and risks of smart metering

•Overview of Energy End Use and Energy Services Directive

•Key Issues

•Next Steps

Policy Framework (1)

• Energy Efficiency is at the heart of Government’s energy policy

• It is the cheapest, cleanest and safest way of addressing our energy objectives of:• reducing carbon emissions• maintaining reliability of energy supplies• promoting competitive markets• ensuring every home is adequately and affordably

heated

Policy Framework (2)

• 2004 Energy Efficiency Action Plan – Targets and Instruments

• Key challenge is to influence consumer behaviour

• Smart metering and better billing may help

Possible benefits of smart metering and better billing

• Energy saving with carbon and air quality benefits

• Improved energy security• More accurate bills• More competition due to innovative tariffs• Resources saved in reading meters• Less fraud• Load shifting leading to reduced network costs

Possible risks of smart metering and better billing

• No effect on consumer behaviour

• Industry pursues policies that save money but not energy

• Lifestyle tariffs result in consumer confusion

• Smart meters could consume energy, thereby mitigating benefits

Directive: Timetable

• Directive adopted on 13 December 2005

• Likely to be published in OJEU in April/May 2006

• Needs to be transposed into national law within 2 years of publication in OJEU

• Defra leads on transposition

Directive: Main elements• Targets: national 9% indicative over 9 years

• Public sector to play an exemplary role in meeting 9% target

• Member States required to place certain obligations on suppliers and distributors of energy to promote energy efficiency

• Requirements on metering and billing

Directive: Article 13 - Metering

• Where possible consumers should be provided with meters that “reflect the final customer’s actual energy consumption and that provide information on actual time of use.”

• Replacement of existing meter: unless technically impossible or not cost-effective

• New connection: shall always be provided

Directive: Article 13 - BillingWhere appropriate bills should contain:

a) current actual prices and actual consumption of energy

b) comparisons of the final customer’s current energy consumption with consumption for the same period in the previous year

c) comparison with typical user

d) contact details for information on energy efficiency improvement measures

Directive: Interpretation of Article 13

• Range of interpretations, including mandatory smart metering and improved billing

• Looking for input from stakeholders

• Ofgem consultation on Domestic Metering Innovation will be important input – closing date 15 March 2006

Key Issues (1)We need to know the value of:

• Better bill information• Real-time display information• Time-of-use and real-time tariffs

And extent to which these measures can:• Reduce energy demand through behavioural changes,

including how long the energy savings persist• Increase demand for energy efficiency measures• Switch demand from peak times to off-peak times

Key Issues (2)• For each of the above further considerations will be

needed, including:

• What sort of bill information is optimal for suppliers and consumers

• What sort of real-time information has the greatest impact

• What the costs of smart metering will be to consumers

Can then consider the costs and benefits to the countryof different policy options

Next Steps

• Currently developing detailed transposition plan

• Will be setting up stakeholder advisory groups

• Will consult on our plans for transposition

• Timetable challenging

Contact:

Peter Barton-WoodSustainable Energy PolicyDefrapeter.barton-wood@defra.gsi.gov.ukTel: 020 7082 8715