Smart Metering Implementation Programme · 2020. 11. 22. · Smart Energy GB to facilitate greater collaboration across industry , with consultees seeking assurances that any activities

November 2020

Smart Metering Implementation Programme Response to the consultation on future coordinated consumer engagement

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Contents Executive Summary _________________________________________________________ 4

Introduction _______________________________________________________________ 7

Section One: Objectives _____________________________________________________ 12

Section Two: Governance ___________________________________________________ 31

Section Three: Funding Threshold _____________________________________________ 48

Section Four: Transition and Legal Text ________________________________________ 51

Summary of Annexes _______________________________________________________ 57

Response to the consultation on future coordinated consumer engagement

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Executive Summary

Introduction

The rollout of smart meters to homes and small businesses across the nation is underpinning our transition to a clean energy system. Data from smart meters is unlocking new approaches to managing demand, helping to lower emissions, and supporting consumers in taking control of their energy use. Innovative products such as smart tariffs are enabling consumers to save money by using energy away from peak times whilst enabling new technologies, such as electric vehicles, to be integrated efficiently with renewable energy sources. This flexibility will be critical to the future of our energy system, reducing the need for costly reinforcement of networks and investment in spare peak generation capacity. Without it, modelling for the Climate Change Committee estimates the costs of delivering net zero emissions by 2050 could be up to £16 billion higher each year.1

The coronavirus (COVID-19) pandemic has also brought the consumer benefits for millions of households with smart meters into sharp focus. Automatic readings mean that meter readers do not need to visit homes and consumers receive accurate bills, avoiding excess debt and credit. Prepayment customers with smart meters can track and top-up credit without leaving home. Energy suppliers can also offer timely support when they are alerted to smart prepayment customers who have gone off-supply, offering emergency credit, or switching meters into credit mode remotely where appropriate. Customers with smart meters can see their energy use and what it is costing in near real-time via an In-Home Display (IHD), helping them to budget effectively, use less and save money.

To raise awareness of smart metering, and support consumers in accessing and realising these benefits, Smart Energy GB2 was established in 2013 as the independent, not-for-profit body responsible for delivering coordinated consumer engagement activity. To date, their national campaign activities have focussed on promoting awareness and understanding of smart metering, giving consumers the confidence to accept smart meters when offered by their energy supplier. These activities, combined with energy suppliers’ communication to their customers and word-of-mouth based on consumers’ own experiences, have driven high levels of awareness and demand for smart metering.

Consultation responses

In order for Smart Energy GB to continue effectively supporting energy suppliers to achieve a market-wide rollout, in June 2020 Government consulted on proposals to strengthen Smart Energy GB’s governance framework, revise its funding threshold, and update its objectives for the next phase of the rollout.3 In August 2020, 25 responses were received to this consultation

1 Committee on Climate Change, Net Zero Technical Report, May 2019. 2 Smart Energy GB’s website. 3 Consultation on future coordinated consumer engagement, June 2020.

https://www.theccc.org.uk/wp-content/uploads/2019/05/Net-Zero-Technical-report-CCC.pdf

https://www.smartenergygb.org/en

https://www.gov.uk/government/consultations/smart-meter-coordinated-consumer-engagement


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from a variety of stakeholders, ranging from energy suppliers and trade associations, to consumer groups and delivery partners. The consultation was well received, with the majority of respondents (89%) either agreeing or agreeing with caveats to the proposals, and only a minority (7%) disagreeing or disagreeing with caveats.

Section One: Objectives

Our proposals to amend Smart Energy GB’s objectives were designed to build consumer acceptance and demand for smart metering, whilst encouraging appropriate behaviour change in the next phase of the Programme. They also recognised the need for Smart Energy GB to continue raising awareness amongst microbusiness consumers, and supporting consumers in vulnerable circumstances. Finally, they aimed to enable Smart Energy GB to facilitate coordination between energy suppliers (where appropriate to support consumer engagement).

Overall, there was agreement that in light of high levels of domestic consumer awareness of smart metering, it is appropriate for Smart Energy GB to increasingly shift towards creating consumer demand, assisting vulnerable audiences and supporting the range of consumer behaviour change enabled by smart metering. Respondents welcomed proposals to enable Smart Energy GB to facilitate greater collaboration across industry, with consultees seeking assurances that any activities would continue to represent value for money and that participation by energy suppliers in any enhanced coordination projects would be voluntary.

Section Two: Governance

The consultation proposals relating to Smart Energy GB’s governance aimed to address a number of complexities identified in the existing arrangements, promote transparency and effective ways of working, as well as empowering the Board to set the strategic direction for the organisation. This included rebalancing the Board, reducing its overall size, and restructuring its membership to ensure an appropriate balance between Directors representing the interests of energy suppliers and those representing consumers. We also proposed requiring the Board to be responsible for establishing and maintaining the Performance Management Framework (PMF), supported by two Advisory Groups.

Consultees broadly supported the proposed new governance arrangements, noting that they will provide clarity in relation to roles and responsibilities. In moving to the new arrangements, a number of respondents sought reassurance that energy suppliers would continue to be able to provide expert insight to inform Smart Energy GB’s activities. Whilst agreeing with the proposals, several respondents also suggested opportunities to strengthen the amendments. We have considered these and made a number of minor changes to our original proposals to further increase transparency, secure an appropriate balance of skills on the Board, and ensure energy suppliers retain appropriate oversight of the organisation, in light of their wider responsibilities.

Section Three: Funding Threshold

Significant changes have taken place in the energy market since Smart Energy GB was established in 2013. To ensure that Smart Energy GB’s funding model remains fair and


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equitable, we proposed reducing the threshold at which domestic energy suppliers would be required to contribute to capital costs from 250,000 to 150,000 gas or electricity (or both) domestic customer accounts. The proposal received widespread support from respondents, who noted that the change was proportionate and would create a more level playing field between energy suppliers, reducing the potential for market distortions.

Section Four: Transition and Legal Text

To support the introduction of Smart Energy GB’s new objectives, governance arrangements, and funding threshold, we considered that an appropriate transition period would be required. The consultation outlined our proposal to set 30 June 2021 as the date on which the new objectives and governance arrangements come into force, with the transition completed by the end of 2021. There was broad support for the proposed approach, with a preference expressed to move to the new arrangements as soon as possible.

Government decision

The final decisions set out in this document reflect the responses received to the consultation, as well as Government’s commitment to ensuring that an effective strategy for consumer engagement is in place.

Government decision

We confirm the consultation proposals to:

• Update Smart Energy GB’s objectives, as set out in energy supply licences. With the introduction of a new smart meter regulatory Framework, the amendments will ensure Smart Energy GB’s objectives remain relevant for the next phase of the rollout.

• Strengthen Smart Energy GB’s governance, subject to minor amendments, to further increase transparency and ensure an appropriate balance of skills on the Board, including affording Citizens Advice / Citizens Advice Scotland the right to attend Board meetings. In addition, to ensure that energy suppliers retain appropriate control, the Advisory Groups - which are tasked with supporting the Board in developing the organisation’s Performance Management Framework - will be chaired by Board Directors representing the interests of energy suppliers.

• Lower the threshold at which energy suppliers fund Smart Energy GB’s domestic capital costs from 250,000 to 150,000 gas or electricity (or both) domestic consumers. This decision will ensure a proportionate funding model is in place, which aligns with the thresholds of other relevant energy policies.

• Set 30 June 2021 as the date on which the new objectives and governance arrangements come into force, with the transition completed by the end of 2021. We consider that this will provide for a timely and efficient transition.


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Introduction

Policy context

1. Smart meters are an essential infrastructure upgrade that will make our energy system cheaper, cleaner and more reliable. They are helping energy suppliers deliver better customer service and are providing households with accurate bills and the information they need to be more engaged in the energy market. Consumers with smart meters are already using this information to get the best energy deals and monitor and reduce their own energy consumption. Smart meters bring practical benefits to households and small businesses right from the point of installation.

2. As at the end of June 2020, there were 21.5 million smart and advanced meters in homes and small businesses in Great Britain,4 but Government wants to ensure that all households and small businesses can realise the benefits of smart meters. In order to drive the momentum needed to deliver a market-wide rollout of smart meters a new four-year policy framework with fixed annual installation targets for energy suppliers applies from July 2021. This follows a six-month extension of the existing ‘all reasonable steps’ obligation, due to the unprecedented circumstances resulting from the coronavirus (COVID-19) pandemic.5

3. Coordinated consumer engagement activities will continue to be necessary to achieve a market-wide rollout and ensure that consumers are fully supported, particularly those who may be in vulnerable circumstances or have particular barriers to engagement. With the decision to introduce a new smart meter regulatory Framework, Government also confirmed that Smart Energy GB6 should continue as the organisation responsible for leading coordinated consumer engagement activities on behalf of energy suppliers.

4. To ensure that Smart Energy GB can continue supporting the next phase of the smart

meter rollout effectively, the Government published a consultation on future coordinated consumer engagement in June 2020.7 This set out proposals to strengthen Smart Energy GB’s governance framework, revise its funding threshold, and update its objectives for the next phase of the rollout. This document outlines the Government response to that consultation.

4 Smart meters in Great Britain, quarterly update June 2020. 5 Government response to the consultation on a Smart Meter Policy Framework post-2020, June 2020. 6 Smart Energy GB (Smart Metering Communications Body Limited) is a company registered in England and Wales under company number 8455995. 7 Consultation on future coordinated consumer engagement, June 2020.

https://www.gov.uk/government/statistics/smart-meters-in-great-britain-quarterly-update-june-2020

https://www.gov.uk/government/consultations/smart-meter-policy-framework-post-2020

https://www.smartenergygb.org/en



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Background to Smart Energy GB

5. Smart Energy GB is the not-for-profit organisation responsible for the national public engagement campaign for the rollout of smart meters in Great Britain. Whilst energy suppliers have the primary responsibility for engaging their customers and encouraging them to upgrade to smart metering, Smart Energy GB complement this with various coordinated campaigns. This creates economies of scale, optimising marketing costs for energy suppliers and ensuring consistent messaging and information is provided to consumers.

6. The focus of Smart Energy GB’s activities has evolved with the rollout. During the early phases of the rollout, Smart Energy GB’s activities concentrated on building awareness and understanding of smart meters and the rollout. As energy suppliers increased their installation activity and awareness levels increased, Smart Energy GB’s activities developed to more actively encourage consumers to request smart meters and accept the offer of an installation from their energy supplier. Smart Energy GB has also played a key role in building and maintaining consumer confidence through their effective PR and media engagement function.

7. More recently, Smart Energy GB has supported energy suppliers as they remobilise

following the disruption caused by the coronavirus (COVID-19) pandemic, whilst also assisting consumers in benefitting from their smart meters. In June 2020, Smart Energy GB worked closely with National Energy Action (NEA)8 to develop a package of advice for consumers who may be concerned about their energy use and bills as they spend more time at home.9 To provide information and reassurance to consumers as smart meter installations scaled up again, Smart Energy GB launched a new digital media campaign, which let people know that installations would take place with new COVID-19 secure safety measures in place. Having paused above the line broadcast activity, and restarting gradually with activity focussed on reassurance, Smart Energy GB launched its new ‘The Quiet Revolution’ campaign in early autumn 2020.10 This campaign highlights the valuable role played by smart meters in supporting our transition to a low-carbon future and sets the foundation for Smart Energy GB to refresh its focus and activity as we enter the next phase of the rollout.

Consultation proposals

8. On 18 June 2020, the Government published a consultation on future coordinated consumer engagement, seeking views on amendments to Smart Energy GB’s objectives, governance, and funding threshold, as set out in energy supply licence conditions.11 The

8 NEA is the national fuel poverty charity, working to ensure everyone in England, Wales and Northern Ireland can live in a warm home. 9 Smart Energy GB and NEA’s energy saving tips and advice during the coronavirus lockdown. 10 Smart Energy GB’s the Quiet Revolution. 11 Consultation on future coordinated consumer engagement, June 2020.

https://www.nea.org.uk/

https://www.smartenergygb.org/en/about-smart-meters/coronavirus-update-smart-meter-rollout/10-energy-saving-tips-during-coronavirus-lockdown

https://www.smartenergygb.org/en/smart-meter-benefits/smart-meters-the-quiet-revolution



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proposals were developed to assist Smart Energy GB in evolving to continue supporting consumers and energy suppliers over the next phase of the smart meter rollout.

9. A summary of the consultation proposals is outlined below:

10. Smart Energy GB’s objectives: In light of the introduction of the new smart meter regulatory Framework, we proposed amendments to Smart Energy GB’s objectives, which are set out in energy supply licence conditions. The changes aimed to enable Smart Energy GB to shift their activities toward driving uptake and overcoming barriers to acceptance, given there are very high levels of domestic consumer awareness of smart metering. In addition, as the rollout progresses, Smart Energy GB will need to increasingly focus on encouraging behaviour change and supporting all consumers in using their smart meters to manage their energy use more effectively and efficiently. We also considered that Smart Energy GB is uniquely placed to support increased coordination between energy suppliers in areas where there are opportunities for efficiencies and increased smart meter uptake. A new objective was therefore proposed, requiring Smart Energy GB to establish appropriate arrangements to enable a greater focus on collaboration across industry.

11. Smart Energy GB’s governance: We proposed changes to Smart Energy GB’s governance arrangements, to address existing complexities and empower Smart Energy GB’s Non-Executive Board. Our proposals included rebalancing the Board, reducing its overall size, and restructuring its membership to ensure an appropriate balance between Directors representing the interests of energy suppliers and those representing consumers. We also proposed requiring the Board to be responsible for establishing and maintaining the Performance Management Framework (PMF), supported by two Advisory Groups.

12. Smart Energy GB’s funding threshold: Reflecting on wider retail energy market

developments, we proposed lowering the threshold for large energy suppliers to fund Smart Energy GB’s domestic campaign activities from 250,000 to 150,000 gas or electricity (or both) domestic consumers. This aimed to ensure a proportionate funding model is in place, which reflected recent threshold changes in wider energy related policies.

13. Transition period: We proposed setting 30 June 2021 as the date on which a new licence condition would come into force, requiring updated governance arrangements and any new objectives to take effect. Following this date, a new Performance Management Framework (PMF), Consumer Engagement Plan and Annual Budget would need to be in place by 31 December 2021. We also asked for comments on the draft legal text published alongside the consultation document.

Post publication consultation engagement

14. During the consultation period between the 18 June 2020 and 13 August 2020, BEIS met with a variety of stakeholders to discuss the consultation proposals. These meetings aimed to help attendees explore and understand the implications of the consultation proposals to


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support their responses, whilst enabling Government to obtain further feedback. These discussions supported the Government’s consideration, but were not treated as formal responses to the consultation for the purposes of this document. All attendees at these meetings were encouraged to submit formal responses to the consultation.

Consultation responses

15. We received 25 responses to the consultation from a range of stakeholders, including: energy suppliers; consumer groups; delivery partners; trade associations; individuals; and energy networks. Table 1 shows a list of respondents by category.

Table 1: Respondents by category

Respondent Category Number of respondents

Percentage of total

British Gas Energy Suppliers

Nine 36%

Drax Group (Haven Power and Opus Energy)

E.ON

EDF

Green Network Energy

OVO

Scottish Power

Shell UK

SSE Business Energy

Citizens Advice Consumer Groups

Three 12%

National Energy Action (NEA)

Ombudsman Services

Alt HAN Co Delivery Partners

Three 12%

Data Communications Company (DCC)

Smart Energy GB

Association for Independent Meter and Data Agents (AIMDA)

Trade Associations

Three 12%

Association of Meter Operators (AMO)

Energy UK

Individual Individuals Three 12%

Individual

Individual


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Respondent Category Number of respondents

Percentage of total

Western Power Distribution (WPD) DNO/GNDs One 4%

IMServ Other Three 12%

Nottingham City Council

Siemens Plc 16. In the following sections, we set out a high-level summary of these consultation responses

and the Government’s conclusion in each of the areas covered by the consultation.

• Section One of this document concerns Smart Energy GB’s objectives (Questions 1.1 – 1.6).

• Section Two relates to the overarching governance structure of Smart Energy GB (Questions 2.1 – 2.5).

• Section Three outlines our decision in relation to Smart Energy GB’s funding threshold (Question 3.1).

• Section Four details our approach to implementing these proposals (Questions 4.1 and 4.2).

17. In this document:

• ‘the Government’ refers to the UK Government.

• ‘we’ refers to the UK Government.

• ‘the Department’ refers to the Department for Business, Energy and Industrial Strategy (BEIS) which has published this consultation on behalf of the UK Government.12

• ‘the Programme’ refers to the Smart Metering Implementation Programme, which includes the Department’s Smart Meter Team and the wider group of partners and stakeholders responsible for delivering the rollout.

• ‘the new smart meter regulatory Framework’ or ‘the new policy Framework’ refers to the new smart meter obligation which takes effect following the expiration of the ‘all reasonable steps’ obligation.13

• ‘the consultation’ refers to the consultation on future coordinated consumer engagement.14

• ‘the post-2020 consultation’ refers to the consultation on a smart meter policy framework post-2020.15

12 Department for Business, Energy and Industrial Strategy (BEIS). 13 Electricity Supply Licence condition 39 and 39A; and Gas Supply Licence Condition 33 and 33A. 14 Consultation on future coordinated consumer engagement, June 2020. 15 Consultation on a Smart Meter Policy Framework post-2020, September 2019.

https://www.gov.uk/government/organisations/department-for-business-energy-and-industrial-strategy




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Section One: Objectives 18. Smart Energy GB has an important role to play in the next phase of the smart meter rollout,

supporting energy suppliers by promoting the uptake of smart meters and ensuring that all consumers are able to realise the benefits of this vital infrastructure upgrade.

19. In light of the introduction of a new smart meter regulatory Framework, we consulted on amendments to Smart Energy GB’s objectives to ensure that the organisation can continue effectively supporting the next phase of the smart meter rollout. We also proposed introducing a new objective, drawing on feedback from the post-2020 consultation which suggested that Smart Energy GB could be well placed to lead a wider range of coordinated engagement activities across industry.

20. Our proposals to amend Smart Energy GB’s objectives were designed to: • Build consumer acceptance and demand through the evolution of Smart Energy GB’s

campaign from a focus on increasing consumer confidence to actively driving smart meter uptake and consumer acceptance.

• Continue raising awareness amongst microbusiness consumers in a way that recognises the value of smart meter data to a range of diverse businesses.

• Encourage appropriate behaviour change by acknowledging the range of consumer benefits enabled by smart metering.

• Continue support for domestic consumers in vulnerable circumstances, including activity that raises awareness amongst consumers who may experience barriers to engaging with smart metering.

• Facilitate coordination between energy suppliers where relevant by requiring Smart Energy GB to establish appropriate governance arrangements.

21. This section summarises and addresses the responses received to Questions 1.1 – 1.6.

Section One: Objectives

1.1 Do you agree that objective (a) should include a specific requirement for Smart Energy GB to deliver activities that generate demand and acceptance for smart metering? Please provide rationale.

1.2 Do you agree that Smart Energy GB should no longer be required to actively build domestic consumer awareness and understanding of smart metering at a national scale? Please provide rationale.

1.3 Do you agree that objective (b) should be amended to require Smart Energy GB to continue to build awareness and understanding of smart meters amongst microbusiness consumers, including the benefits of the data derived through them? Please provide rationale.


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1.4 Do you agree that objective (c) should be amended to widen Smart Energy GB’s behaviour change activities beyond a central focus on energy consumption reduction? Please provide rationale.

1.5 Do you agree that objective (d) should include a requirement for Smart Energy GB to continue building awareness amongst consumers who may experience barriers to obtaining and realising the benefits of smart metering? Please provide rationale.

1.6 Do you agree that Smart Energy GB has a role to play in supporting coordinated activities and that a new objective should be introduced in energy supply licences to establish appropriate arrangements to facilitate this activity? Please provide rationale.

Demand generation

Question 1.1: Do you agree that objective (a) should include a specific requirement for Smart Energy GB to deliver activities that generate demand and acceptance for smart metering? Please provide rationale.

Current objective (a): build consumer confidence in the installation of Smart Metering Systems by gas and electricity suppliers.

Proposed objective (a): increase consumer demand for and acceptance of Smart Metering Systems, including by increasing consumer confidence in their installation by gas and electricity suppliers.

22. Our proposal to amend objective (a) aimed to ensure that alongside a continued focus on building and maintaining consumer confidence in smart metering and the installation process, future engagement campaign activities are also designed to explicitly drive consumer demand and uptake.

Summary of responses

Agree Agree with

caveats Neutral

Disagree with caveats

Disagree Total

responses

20 2 1 0 0 23

23. A total of 23 consultees responded to this question and the majority (96%16) either agreed

or agreed with caveats with the proposal. Overall, respondents agreed that awareness of smart meters amongst domestic consumers was high and that a shift to focus on demand

16 A consistent approach has been taken in calculating percentages, however rounding may mean that some percentages do not add up to 100.


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generation was appropriate. One energy supplier noted that the PMF Forum17 had already encouraged Smart Energy GB to focus on supporting uptake, suggesting that the proposal was consistent with Smart Energy GB’s current strategic focus, which has evolved over time.

24. There was a request from one energy supplier respondent for this objective to be expanded further, to specifically include customers who have already declined the offer of a smart meter or had a failed smart meter installation appointment. It was stated that re-engaging these customers will be vital if energy suppliers are to meet their future smart meter targets. Another energy supplier supportive of the proposals suggested that the evolution of the objectives should be matched by an evolution in Smart Energy GB’s campaign approach. In particular, they considered that it could be appropriate for the organisation to reduce its focus on national advertising in favour of delivering industry-wide consumer offers (e.g. cashback incentives).

25. One energy supplier, who agreed with caveats to the proposal, said they were cautious

about the suggestion in the consultation that Smart Energy GB could play a role in re-engaging customers to support acceptance of smart meters in situations such as change of tenancy events and SMETS1 enrolment (where meters have previously lost and then regained smart functionality).18 The respondent considered that energy suppliers should continue to take the lead in these areas, as they hold the primary relationship with individual customers and are better placed to support them in these circumstances.

26. Turning to microbusinesses, one energy supplier respondent who agreed to the proposal

suggested that Smart Energy GB will need to consider the nuances of the microbusiness rollout when devising strategies for meeting this objective. Another consultee provided a neutral response, agreeing that generating demand and acceptance are important, but highlighting the diversity in customer type and metering arrangements within the microbusiness sector. The respondent noted that this presents messaging challenges and may result in confusion if campaigns are not appropriately tailored. This respondent felt that industry-wide campaigning would be better suited to a mandatory smart metering programme.

27. Finally, two energy suppliers made suggestions regarding how success against this

objective could be measured. This included suggesting that Smart Energy GB’s performance should be more closely linked to the generation of consumer demand, for example through monitoring booking volumes during peak periods of campaign activity. It was also suggested that performance could be aligned with energy suppliers’ installation targets, set by BEIS.

17 The PMF Forum is a group of relevant energy suppliers, responsible for setting and maintaining the PMF of key metrics and targets which Smart Energy GB is tasked to deliver against. This forum operates outside of the formal governance structure, with an independent Chair and separate Secretariat. 18 The programme to enrol SMETS1 meters into the national communications infrastructure provided by the Data Communications Company (DCC) means consumers whose smart meters had been operating in traditional mode following switching should see their smart services restored.


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Government response to Question 1.1

Government decision

Confirm the consultation proposal to update Smart Energy GB’s objective (a).

28. We have considered the responses received to this question and note that the proposed amendment received clear support from respondents. We remain of the view that there is a need for Smart Energy GB to ensure that consumer engagement campaign activities are designed to explicitly drive demand and uptake, whilst continuing to build and maintain consumer confidence in smart metering. We therefore confirm our intention to amend this objective in line with the consultation proposal.

29. As the rollout progresses and projects such as the enrolment of SMETS1 smart meters into the Data Communications Company (DCC) conclude, an increasing number of consumers will move into properties where smart meters are already installed, whilst others will see SMETS1 smart meter functionality restored. It will be important to ensure that these consumers are comfortable using smart meters in their homes and businesses, and can benefit from the opportunities they offer. We agree that energy suppliers have the primary role in supporting these consumers, and note that in relation to SMETS1 enrolment, industry has developed good practice guidance that energy suppliers can choose to follow when communicating with their customers.19 However, we remain of the view that Smart Energy GB can play a role more widely in normalising smart meters and building consumer acceptance and should consider how campaign material may need to be adapted to reflect these scenarios.

30. In delivering this updated objective we expect to see Smart Energy GB continue to monitor consumer confidence in smart meters, including in relation to their installation. We consider that this activity will be particularly important as the rollout continues to respond to the impact of the coronavirus (COVID-19) pandemic. Smart Energy GB has already clearly demonstrated the value of a coordinated approach to maintaining consumer confidence in these circumstances. Its ‘reassurance’ campaign, which ran over summer and autumn 2020, was designed to highlight the safeguards introduced by energy suppliers to protect both consumers and staff. We expect that Smart Energy GB will continue to monitor consumer sentiment, identifying any concerns that they may have in relation to smart metering or the installation process and taking action to provide reassurance or ‘myth-bust’ where appropriate.

31. This objective applies both to domestic and microbusiness consumers. We agree that

Smart Energy GB will need to consider a variety of approaches to drive demand and

19 Industry developed the SMETS1 enrolment communications guide in July 2019. This is a good practice guide for customer communications prior to, during, and following the enrolment of their smart meter into the national smart metering communications network run by the Data Communications Company (DCC). In February 2020 industry also developed the SMETS1 post enrolment communication illustrative text, which energy suppliers could consider using when communicating with smart credit consumers after their meter had been enrolled.


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acceptance amongst microbusinesses, and that any campaign activity should be tailored to the needs of these consumers. The proposed amendments to Smart Energy GB’s objective aim to provide the flexibility necessary to enable their microbusiness campaign activities to evolve. As with the domestic campaign, we would expect the campaign to initially focus on awareness raising and understanding, and as levels increase, it will be necessary to move to a greater focus on supporting demand and behaviour change activities.

32. A number of respondents sought clarity around how this objective could be measured.

Under the proposed new governance framework, responsibility for establishing and maintaining the Performance Management Framework (PMF) sits with Smart Energy GB’s Board. In developing the PMF we would expect the Board to consider how Smart Energy GB’s activities can support increased uptake and set targets accordingly.

33. Whilst Government does not propose to suggest metrics or targets, we note that some

respondents indicated that these should be more closely aligned to smart meter enquiries and customer-led bookings. We would urge a degree of caution in this regard, noting in particular that evidence from Smart Energy GB’s Recontact Survey20 suggests that not all smart meter owners were previously categorised as active ‘seekers’ or even ‘accepters’ of smart. Indeed, many were previously indifferent, or even identified as rejectors, suggesting that many consumers may accept a smart meter when offered one but would not actively enquire about or request a smart meter. Metrics that relate solely to customers actively seeking a smart meter are unlikely to capture the wider impact of Smart Energy GB’s campaign activities, which are designed to improve customer sentiment and increase the likelihood that they accept the offer of a smart meter when this is made by their energy supplier. Considering consumer attitudes towards getting a smart meter alongside smart meter ownership could provide a fuller picture of the consumer demand profile, and understanding more about concerns and reasons for ‘rejecting’ a smart meter may provide relevant insight. In addition, we note that whilst Smart Energy GB’s campaign activity generates interest in smart in the short term it also plays a longer term role in building acceptance and understanding which are vital precursors to a market-wide rollout.

Awareness raising

34. The Government has considered Questions 1.2, 1.3 and 1.5 jointly as they relate to consumer awareness of smart meters.

Question 1.2: Do you agree that Smart Energy GB should no longer be required to actively build domestic consumer awareness and understanding of smart metering at a national scale? Please provide rationale.

35. In light of high levels of domestic consumer awareness of smart metering amongst the GB population, we proposed amending objective (b) so that Smart Energy GB should no longer

20 Smart Energy GB Recontact Survey (Unpublished).


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be required to actively build domestic consumer awareness and understanding at a national scale.


Agree Agree with

caveats Neutral


Disagree Total

responses

12 5 0 0 0 17

36. A total of 17 consultees responded to this question and all (100%) either agreed or agreed

with caveats.

37. Respondents agreed that whilst a focus on awareness raising was appropriate early in the rollout, current near universal levels of awareness mean it is no longer proportionate or cost-effective to focus on campaign activities designed to further raise awareness.

38. One respondent also noted that in addition to awareness, consumers show high levels of

understanding regarding the core attributes of smart meters. This includes knowing that smart meters support accurate billing and that they enable visibility of energy use in pounds and pence. A separate respondent highlighted that they considered that Smart Energy GB could do more to ensure consumers are aware and understand how to get a smart meter, but that this could form part of wider campaigns that drive demand and acceptance.

39. A number of respondents noted that awareness raising would remain appropriate for some

consumer groups, including more vulnerable audiences (see Question 1.5 for further consideration on this point). It was also highlighted that awareness should continue to be monitored, with action taken in the event that levels drop significantly.

Question 1.3: Do you agree that objective (b) should be amended to require Smart Energy GB to continue to build awareness and understanding of smart meters amongst microbusiness consumers, including the benefits of the data derived through them? Please provide rationale.

Current objective (b): build consumer awareness and understanding of the use of Smart Metering Systems (and the information obtained through them).

Proposed objective (b): in respect of Energy Consumers at Relevant Designated Premises, build consumer awareness and understanding of Smart Metering Systems and their benefits including the benefits to be derived from the data that may be obtained through the use of Smart Metering Systems.

40. Given significantly lower levels of awareness of smart meters amongst microbusiness consumers, we proposed limiting objective (b) so that it relate to awareness raising for microbusiness consumers only. We also proposed redrafting the objective to reflect the


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increasing importance of products, services, and tools for small businesses, recognising the fact that the offer of an In-Home Display (IHD) is not mandated for this group.


Agree Agree with

caveats Neutral


Disagree Total

responses

9 9 1 0 0 19

41. A total of 19 consultees responded to this question, with the majority (95%) of respondents

either agreeing or agreeing with caveats. Overall, respondents stated that awareness raising activity was still required in the microbusiness sector, although it was noted that the diversity amongst microbusinesses means that a tailored approach to any campaign activity will need to be taken. Only one consultee provided a neutral response (5%), confirming that awareness in the market is low but offering no view on the proposals.

42. The proposed amendments to this objective include adding a reference to building awareness amongst microbusiness consumers of the uses of smart meter data. In response, consultees highlighted that there is not a consistent offer from suppliers in this area and noted the varied role of third parties in providing data services. They emphasised that Smart Energy GB would need to be mindful of this diversity when designing campaign activities.

43. There were a number of wider points raised by consultees in response to the proposal to amend objective (b): • Three respondents used the consultation as an opportunity to reiterate their position that

advanced meters should be an option for all non-domestic consumers. • One consultee stated that Smart Energy GB’s communications should avoid presenting

smart meters as the default or ‘better’ choice. Related to this, another energy supplier respondent said that a focus on building awareness of smart meters amongst microbusiness consumers would better complement a mandatory rollout.

• One energy supplier suggested that awareness raising amongst microbusinesses should emphasise the longer-term benefits of smart meters and a smart energy system, in particular their role in aiding the transition towards net zero.

44. In addition, whilst agreeing with the proposal, one energy supplier said that the amendment

should clearly define ‘microbusiness’, stating that the lack of this definition has been a key challenge in allowing energy suppliers and Smart Energy GB to correctly identify and target them.


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Question 1.5: Do you agree that objective (d) should include a requirement for Smart Energy GB to continue building awareness amongst consumers who may experience barriers to obtaining and realising the benefits of smart metering? Please provide rationale.

Current objective (d): in respect of Energy Consumers at Domestic Energy Premises only, assist those consumers with low incomes or prepayment meters, or consumers who may encounter additional barriers in being able to realise the benefits of Smart Metering Systems due to their particular circumstances or characteristics, to realise the benefits of Smart Metering Systems while continuing to maintain an adequate level of warmth and to meet their other energy needs.

Proposed objective (d): in respect of Energy Consumers at Domestic Energy Premises, who have low incomes or prepayment meters, or who due to their particular circumstances or characteristics may encounter additional barriers in being able to realise the benefits of Smart Metering Systems:

(i) build their awareness and understanding of Smart Metering Systems; and (ii) assist them to realise the benefits of Smart Metering Systems while continuing to maintain an adequate level of warmth and meet their other energy needs.

45. Whilst levels of consumer awareness are high amongst the general population, Smart Energy GB’s attitudes tracker shows that some consumer groups are more likely not to be aware of smart meters. To ensure that activities designed to raise awareness of smart meters amongst more vulnerable audiences can continue, we proposed extending objective (d) to support raising awareness for these domestic consumers,


Agree Agree with

caveats Neutral


Disagree Total

responses

13 4 0 0 0 17

46. A total of 17 consultees responded to this question and all (100%) either agreed or agreed

with caveats with the consultation proposal, welcoming a continued focus from Smart Energy GB on building awareness for consumers in vulnerable circumstances.

47. It was noted by several respondents that engaging these consumers is particularly relevant in the context of the coronavirus (COVID-19) pandemic as smart metering can offer specific benefits to consumers through automated meter readings, clear visibility of energy use and the availability of alternative top-ups for prepayment customers.

48. Whilst strongly supporting activities in this area, one respondent encouraged Smart Energy

GB to ensure that they focussed on engaging the hardest to reach consumers and


20

suggested that the objective should include a specific reference to ‘vulnerable energy consumers’. The respondent also noted that Smart Energy GB should ensure that support is tailored to the needs of each audience, taking into account their specific circumstances (e.g. through the provision of materials in a range of languages).

49. A number of respondents used their consultation responses to reflect on existing activities

to support the delivery of this objective and highlight that they would welcome increased focus from Smart Energy GB on activities that assist consumers in vulnerable circumstances. In particular, several respondents highlighted the valuable role played by the Smart Energy GB ‘In Communities’ Programme in delivering targeted support for more vulnerable consumers. It was suggested that an expanded role for this Programme would be appropriate, and that this should move beyond awareness raising to supporting uptake and use of smart meters amongst these audiences. Building on this point, one respondent noted that a shift away from large-scale marketing partners to more community-based partnerships that support direct outreach and have more targeted influence would be appropriate. It was suggested that this would ensure that activities are proportionate and delivered as cost effectively as possible.

Government response to Questions 1.2, 1.3 and 1.5

Government decision

Confirm the consultation proposal to update Smart Energy GB’s objectives (b) and (d).

Domestic consumer awareness

50. Levels of domestic consumer awareness of smart metering are currently high, with evidence from Smart Energy GB’s attitudes tracker showing that in November 2019, 95% of domestic consumers claim to be aware of smart meters.21 All respondents to Question 1.2 therefore agreed, or agreed with caveats, that in light of these near-universal levels of awareness Smart Energy GB should no longer be required to actively build domestic consumer awareness and understanding of smart metering at a national scale. We therefore confirm our intention to amend objectives (b) and (d) in line with the consultation proposal.

51. Whilst we are proceeding with the proposed modification to objective (b), removing the requirement for Smart Energy GB to actively raise awareness amongst domestic consumers in general, we agree with respondents that it will remain important to continue monitoring awareness levels. In the event that a significant decline is identified, it would be necessary and appropriate for Smart Energy GB to act. We consider that in such a situation it would be appropriate to raise consumer awareness as part of wider activities focussed on generating consumer acceptance and demand (in line with objective (a)).

21 Smart Energy GB, Smart Energy Outlook, November 2019.

https://www.smartenergygb.org/en/-/media/SmartEnergy/essential-documents/essential-documents/english/Outlook-March-2020.ashx


21

52. In addition, we agree with respondents and confirm that Smart Energy GB will continue to be required to support awareness for two specific customer groups: microbusiness consumers and domestic consumers with additional barriers to engaging with smart metering.

Microbusiness consumer awareness

53. In coming to our decision, we have taken into consideration that the majority of respondents supported the need for Smart Energy GB to continue to build awareness and understanding of smart meters amongst microbusiness consumers, with none disagreeing with the proposal. We therefore confirm our intention to amend objective (b) in line with the consultation proposal.

54. We agree that the microbusiness campaign will need to be adapted to reflect the diversity of businesses operating in this sector. We are pleased to see that Smart Energy GB is already tailoring its approach by targeting microbusinesses in the retail, hospitality, and beauty sectors, and working collaboratively with various trade associations and business networks.22 Looking ahead, we are content that this updated objective provides sufficient flexibility to enable the Board (supported by the microbusiness Advisory Group) to set the direction for the campaign, such that it adequately reaches and influences microbusinesses.

55. Regarding different use cases for data in the non-domestic market, we note that whilst

existing offerings may be varied, this should not prevent Smart Energy GB from raising awareness of the general benefits surrounding smart meter data for businesses – for example how engagement with smart meter data and data-driven tools can support business to reduce their energy consumption and manage operations.23

56. One consultee suggested that objective (b) should clearly define microbusinesses. For the

purposes of any engagement work targeting microbusinesses, Smart Energy GB focusses on businesses with fewer than ten employees. Businesses which are home based are not included in any microbusiness campaigns as, generally, they do not need separate energy meters for their business and as such will be engaged through the campaigns for the domestic smart meter rollout. We agree with Smart Energy GB’s approach to identifying microbusinesses.

57. Turning to the suggestion that Smart Energy GB’s communications should be amended to build awareness of all types of metering systems (including advanced meters). Smart Energy GB’s remit extends to microbusinesses only, on the basis that these dominate the sites which fall under the non-domestic smart metering mandate (around 70%). In addition, as of December 2018 microbusinesses must be offered a SMETS2 meter by their energy supplier as opposed to other metering systems24. Energy suppliers can offer non-

22 Smart Energy GB’s website ‘Request a smart meter for your small business’. 23 Non-Domestic Smart Energy Management Innovation Competition (NDSEMIC). 24 Unless they have taken all reasonable steps to install SMETS2 and it has not been possible.

https://www.smartenergygb.org/en/about-smart-meters/small-businesses

https://www.gov.uk/government/publications/non-domestic-smart-energy-management-innovation-competition-ndsemic-evaluation-findings


22

microbusinesses a choice between an advanced and a smart meter for their sites in scope of the rollout, but the choice must include a SMETS2 meter. In light of this we do not consider it necessary to amend the objective to include awareness raising of other metering systems.

58. Regarding the suggestion that awareness raising would better complement a mandatory rollout in the non-domestic sector, the Government Response to the post-2020 consultation25 confirmed that we do not propose requiring consumers to accept smart meters at this stage in some of the specific circumstances suggested by stakeholders, including in the non-domestic sector.

Vulnerable domestic circumstances awareness

59. Consumer awareness of smart metering remains lower for some audiences, including some consumers who are more likely to be in vulnerable circumstances. Smart Energy GB’s attitudes tracker found that in November 2019, 28% of consumers who did not yet have a smart meter and who had no personal internet access were unaware of smart meters, together with 14% of those on low incomes and 11% of consumers in fuel poverty.26 In light of this, and with clear support from respondents to the consultation, we intend to proceed with amending objective (d) to include a specific reference to raising awareness of smart metering where consumers may have additional barriers to accepting and realising the benefits.

60. Respondents to the consultation supported our view that it is appropriate for Smart Energy GB to review the scale and scope of their wider activities to assist vulnerable consumers to support the next phase of the rollout. Significant progress has been made in resolving technical challenges which may have previously impacted consumer eligibility, including through the ramp-up of SMETS2 installations for prepayment customers in the north of England and Scotland.27 Energy suppliers are also able to offer consumers Accessible In-Home Displays (AIHD), which will particularly benefit consumers with visual and dexterity impairments.28

61. In light of increasing eligibility and the maturity of energy suppliers’ consumer journeys, it is

appropriate for Smart Energy GB to consider an enhanced focus on assisting consumers in vulnerable circumstances in accepting smart meters and using them to manage their energy use more effectively. Objective (d) includes a specific reference to ‘assisting’ consumers who may encounter additional barriers in realising the benefits of smart metering. Activity focussed on supporting this aspect of the objective will become increasingly important in the next phase of the rollout. This position was supported by a number of respondents, including several who suggested that Smart Energy GB’s ‘In

25 Government response to a consultation on smart meter policy framework post-2020. 26 Smart Energy GB, Smart Energy Outlook, November 2019 (Unpublished). 27 SMETS2 meters for prepayment customers are already widely available for consumers in other parts of Great Britain. 28 An Accessible In-Home Display (AIHD) is one specifically for consumers with visual and dexterity impairments. The device features high-contrast, tactile buttons, and speech output.



23

Communities Programme’ be extended to not only focus on awareness raising, but to support both uptake and use of smart meters amongst these audiences.

62. We welcome the recent work being undertaken by Smart Energy GB to develop a new vulnerability strategy, which outlines how the needs of these audiences will be considered across all of Smart Energy GB’s activities. As part of this work, the Board is reflecting on activities to support the delivery of this strategy, including options around moving away from national brand partnerships to increasingly focus on targeted partnership activity.

Promoting behaviour change

Question 1.4: Do you agree that objective (c) should be amended to widen Smart Energy GB’s behaviour change activities beyond a central focus on energy consumption reduction? Please provide rationale.

Current objective (c): increase the willingness of Energy Consumers to use Smart Metering Systems to change their behaviour so as to enable them to reduce their consumption of energy.

Proposed objective (c): increase the willingness of Energy Consumers to use Smart Metering Systems to change their behaviour so as to enable them to more effectively and efficiently manage their use of energy.

63. In recognition that it may be appropriate for Smart Energy GB to highlight the wider benefits offered by smart metering, we proposed amending objective (c) to refer to supporting consumers to manage their energy usage more effectively and efficiently. This proposed amendment also reflects that for some consumers, particularly those in vulnerable circumstances, it may not be appropriate to encourage reductions in energy usage.


Agree Agree with

caveats Neutral


Disagree Total

responses

13 6 0 2 1 22

64. A total of 22 consultees responded to this question and the majority (86%) either agreed or

agreed with caveats with the consultation proposal, noting in particular that whilst energy consumption reduction remains an important benefit of smart metering, this may neither be appropriate nor achievable for all consumers.

65. In supporting the proposal, consultees highlighted that smart metering brings a range of benefits and enables a broad suite of behaviour change activities. In particular, respondents highlighted the role of smart meters and the IHD in supporting consumers by


24

providing visibility of their energy use and enabling greater control through budgeting, time-of-use tariffs and alternative top-up channels for prepayment customers.

66. It was suggested that an updated objective would enable Smart Energy GB to support consumers in managing their energy use more effectively, whilst also contributing to the transition to a smarter energy system. Examples of potential activities provided by respondents included providing generic information to improve understanding of time-of-use tariffs, which may support consumers in making informed decisions regarding participation in schemes requiring load-shifting. It was also suggested that Smart Energy GB could play a role in ensuring consumers understand how they can share their smart meter data with third parties to access smart enabled services.

67. Several respondents also suggested that an increased focus on these wider benefits, alongside energy consumption reduction, may increase consumers’ appetite for smart metering, supporting uptake more generally.

68. Comments received from those who agreed with caveats focussed on a concern that the

proposals sought to widen the scope of behaviour change beyond smart metering and the benefits outlined in the 2019 Cost Benefit Analysis (CBA).29 In particular, respondents were cautious about any attempt to introduce specific behaviour change targets around the delivery of the Government’s net zero commitments. It was noted that doing so could place a significant and costly burden on energy suppliers.

69. In relation to microbusiness behaviour change, one respondent noted that smart meter data

use cases for non-domestic organisations are more varied than for domestic consumers and this will need to be taken into account. One respondent noted that whilst energy consumption reduction is an important driver to achieving carbon and cost savings, other energy management activities may be more attractive to microbusinesses, such as quicker access, visibility and control over energy consumption data.

70. Only a minority of respondents (14%) disagreed or disagreed with caveats. One trade

association said that they did not believe this objective was necessary but did not provide further details to support their position. An individual stated that they were not convinced about the change as the proposed objective lacked clarity compared to the existing wording. One energy supplier disagreed with the consultation proposal as they were concerned that it would result in unachievable targets linked to wider behaviour change being placed on energy suppliers via Smart Energy GB. They noted that they had been reassured by discussions with the Department that the intention was to limit the scope of activity to the benefits outlined in the CBA, but were seeking confirmation of this in the Government Response.

71. Finally, respondents also sought further information on the type of metrics or targets that

could be anticipated in this area, with one energy supplier noting that a focus on ‘claimed

29 Smart meter rollout: cost-benefit analysis 2019.

https://www.gov.uk/government/publications/smart-meter-roll-out-cost-benefit-analysis-2019


25

behaviour’ rather than actual consumption changes would be appropriate. Another energy supplier noted that they would not expect specific targets to be set in relation to wider flexibility, such as consumer load shifting.


Government decision

Confirm the consultation proposal to amend Smart Energy GB’s objective (c).

72. The Government has considered the responses received carefully and noted that the majority of the respondents agreed or agreed with caveats to the proposed amendments to Smart Energy GB’s behaviour change objective. We therefore confirm our intention to amend this objective in line with the consultation proposal.

73. Smart metering is an enabler for a range of consumer-led behaviour change activities, which support more efficient management of energy use and will contribute to wider system benefits. As increasing numbers of consumers have smart meters installed and they become the norm in households and businesses, we expect a greater focus from Smart Energy GB on activities that directly support behaviour change enabled by smart metering. It is therefore appropriate to ensure that this objective is fit for purpose and enables Smart Energy GB to develop activities that support the full range of behaviour change benefits enabled by smart metering.

74. Energy consumption reductions are a significant driver of the consumer benefits of smart

metering, as outlined in the 2019 Cost Benefit Analysis (CBA).30 We therefore expect Smart Energy GB to continue to prioritise activities that support consumers in reducing their energy consumption. However, the updated objective recognises that for certain consumers it may be more appropriate to focus on other benefits, such as promoting the use of alternative top-up channels for prepayment consumers. In addition, highlighting the wider opportunities offered by smart metering may resonate with certain groups and encourage uptake, whilst also supporting the delivery of the Programme’s benefits case. This may be particularly relevant as the rollout progresses and the opportunities to access these wider benefits increase, together with the availability of related products and services.31 The proposal to amend objective (c) therefore provides Smart Energy GB with appropriate flexibility in this area.

75. Crucially, whilst we are confirming that Smart Energy GB should consider a wider range of

behaviour change opportunities when planning activities linked to this objective, we do not expect these to extend beyond those enabled by the smart meter rollout. Smart metering supports wider Government priorities, including achieving net zero emissions of greenhouse gases by 2050, and in certain circumstances it may helpful and appropriate for

30 Smart meter rollout: cost-benefit analysis 2019. 31 Whilst Smart Energy GB may consider raising awareness of generic products and services and associated consumer safeguards, we do not expect particular commercial products to be promoted.

https://www.gov.uk/government/publications/smart-meter-roll-out-cost-benefit-analysis-2019


26

Smart Energy GB to highlight the role of smart metering in supporting this broad agenda. However, we do not consider that Smart Energy GB should be responsible for delivering behaviour change in areas beyond those outlined in the smart metering CBA and expect that this will be reflected in targets set by the Board through the PMF.

76. Related to this, a few respondents raised concerns about how Smart Energy GB’s performance in this area could be measured. As outlined in paragraph 30, under the proposed new governance framework, the Board will be responsible for establishing and maintaining the Performance Management Framework (PMF). However, we consider that an increased focus on activity supporting this objective will be required in the next phase of the rollout.

77. Historically, performance against Smart Energy GB’s behaviour change objective has been

measured through a focus on self-reported usage reductions and we agree with the suggestion by one respondent that a focus on claimed behaviour is likely to remain appropriate. In developing appropriate targets for future PMFs, we would also encourage the Board to consider whether a wider set of metrics that reflect Smart Energy GB’s expanded scope would be appropriate. In setting any metrics and targets it will be important to ensure that they are proportionate and can be achieved through activities led by Smart Energy GB.

Coordinating industry-wide consumer engagement activities

Question 1.6: Do you agree that Smart Energy GB has a role to play in supporting coordinated activities and that a new objective should be introduced in energy supply licences to establish appropriate arrangements to facilitate this activity? Please provide rationale.

Proposed objective (e): establish and maintain an administrative framework for facilitating the coordination of consumer engagement activities in respect of Smart Metering Systems that are carried on (or proposed to be carried on) by individual Energy Suppliers.

78. Responses to the post-2020 consultation indicated that Smart Energy GB should facilitate activities where increased collaboration across industry can drive smart meter uptake. Delivering this would require Smart Energy GB to support joint initiatives and lead coordinated activity. To enable Smart Energy GB to take on this role, we proposed introducing a new objective (e) for it to establish appropriate arrangements to enable active collaboration. This would sit alongside the existing requirement on energy suppliers to cooperate with Smart Energy GB.


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Agree Agree with

caveats Neutral


Disagree Total

responses

13 3 1 0 5 22

79. A total of 22 consultees responded to this question with the majority (73%) either agreeing

or agreeing with caveats to the proposal, stating that collaboration will likely play an important role in achieving a market-wide rollout.

80. It was noted by several respondents that the potential value of collaborative approaches was demonstrated in the design and planning for a Local Consumer Engagement Pilot in Derby and that the evaluation of the activities delivered through this pilot (now planned for 2021) will be useful in considering any future coordinated activities.32 It was suggested that the governance arrangements established for this Pilot could provide a model for future activity, with one respondent in particular noting that it will remain important for energy suppliers to retain overall decision-making control.

81. A few respondents offered views on wider activities that could be undertaken under this

objective. One energy supplier respondent suggested that Smart Energy GB, Ofgem and BEIS could work with wider third parties to test new advertising and promotional campaigns that seek to activate new customer segments or resonate with specific geographical areas. Two consultees suggested that Smart Energy GB could work with the Alt HAN Company to develop initiatives to support uptake in premises requiring Alt HAN solutions. In particular, it was suggested by one respondent that the Alt HAN Company could be repurposed as a ready-made Smart Energy GB ‘delivery partner’, subject to wider regulatory changes concerning the Alt HAN Company’s activities. One energy supplier respondent also noted that whilst supportive of the new objective they were keen to ensure that activities undertaken in this area were proportionate and did not come at the expense of activity supporting Smart Energy GB’s wider priorities.

82. Whilst the proposal received broad support, a number of respondents caveated their agreement and expressed some uncertainty regarding how the proposal for increased coordination would work in practice. In particular, several respondents emphasised the importance of ensuring any coordination is undertaken in a way that is consistent with competition law. In addition to emphasising the importance of ensuring that energy suppliers retain control over any coordinated activities developed through the new provisions, several respondents also sought reassurance that any participation on the part of individual energy suppliers would be voluntary.

32 The Local Consumer Engagement Pilot launched in February 2020 and was designed to run until May 2020. However, in light of the coronavirus (COVID-19) pandemic, energy suppliers and partner organisations took the decision to suspend activity with the intention of resuming trials at an appropriate later date.


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83. A few respondents (23%) disagreed with the proposal. In relation to microbusiness activity, one respondent raised concerns that at present it is not clear that such coordinated approaches are necessary and could risk distorting the market. More widely, two energy supplier respondents disagreed with the proposal expressing concern that it could result in energy suppliers being required to participate in activities that are not appropriate for their businesses and subsequently do not deliver value for money for their customer base. Furthermore, they noted that the effectiveness of coordinated local activities has not been proven and that further work is required to understand the role that this could play in the rollout more widely.


Government decision

Confirm the consultation proposal to introduce a new objective (e) into energy supply licences.

84. We have considered the responses received and consider that where there are opportunities for efficiencies and increased smart meter uptake, Smart Energy GB is well placed to support coordination between energy suppliers. We note that the majority of respondents agreed with the proposed addition of a new objective for Smart Energy GB to facilitate coordinated consumer engagement activities. We therefore confirm our intention to introduce a new objective (e), in line with the consultation proposal.

85. A number of respondents to the consultation referenced the ongoing work by industry to

deliver a Local Consumer Engagement Pilot. They highlighted the potential value of this activity and suggested its governance model should be replicated. Whilst the evaluation of the impact of this pilot has not yet concluded, we agree that the collaborative approach between Smart Energy GB, energy suppliers and industry has worked well to date and encourage Smart Energy GB to consider this model for future activities where appropriate.

86. The extent to which coordinated approaches can deliver efficiencies and value for money

was queried by some respondents, with a few consultees noting that the effectiveness of local coordination has not yet been demonstrated. Several respondents also raised concerns that the inclusion of a new objective could compel energy suppliers to participate in activities that were not appropriate, in light of their particular customer characteristics or the maturity of their rollouts. Whilst energy suppliers are required under licence to take steps to ensure Smart Energy GB achieves its objectives and to cooperate with Smart Energy GB for the purposes of enabling it to undertake its activities, the focus of the new objective is limited to the establishment and maintenance of an administrative framework for facilitating coordination of activities. The nature and scope of any coordinated consumer engagement activity facilitated using the administrative framework would be determined using the governance arrangements under that framework, with the decision to participate in the coordinated activity always resting with individual energy suppliers. Whether participating or not, individual energy suppliers will continue to be under an obligation not to


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act inconsistently with the activities of Smart Energy GB, such as by obstructing or hindering its coordination activities.

87. We expect energy suppliers to support Smart Energy GB in establishing appropriate governance arrangements and expect the Board to play a central role in considering how best to deliver against this new objective, including reviewing and agreeing a strategic approach. Regarding the suggestion that the Alt HAN Company could be repurposed to support the delivery of this objective, we would encourage Smart Energy GB to invite appropriate representatives from across the industry to be involved in any such coordinated activities. However, there are currently no plans for Government to change the regulatory framework which underpins the Alt HAN Company’s activities. In addition, we agree with respondents to the consultation that the governance arrangements established should ensure that energy suppliers retain appropriate decision-making control in relation to the design and delivery of specific activities.

88. We consider that coordinated approaches are likely to provide significant opportunities to

address consumer engagement challenges and the consultation highlighted a number of areas where Smart Energy GB may be able to play a role by leading coordinated engagement. Whilst the Local Consumer Engagement Pilot has been identified as a potential example of this activity, the scope of the new objective is intentionally broad. This reflects our expectation that the needs of energy suppliers and consumers will change over the remainder of the rollout and provides opportunity for a wider range of coordinated activities to be considered. We welcome the suggestions from consultees, outlined above, on wider activities that could be undertaken through this new objective.

89. In particular, we consider that this new objective provides an opportunity to embed the

collaborative way of working that has proved effective in the design of the Local Consumer Engagement Pilot, and which has also been demonstrated in the work to remobilise the smart meter rollout in light of the impacts of the coronavirus (COVID-19) pandemic. We consider that closer alignment between consumer engagement activities led by Smart Energy GB and energy suppliers’ operational fulfilment will improve customer experience and support delivery of a market-wide rollout. As a first step, Smart Energy GB may consider undertaking an engagement exercise with energy suppliers to identify potential activities and develop a clear strategy in relation to the objective.

90. Several respondents felt that coordinated activity may be less appropriate in relation to microbusinesses, particularly if the focus remained on demand generation as is the case for the Local Consumer Engagement Pilot. Concerns were also raised that such activities risked distorting this market. As noted above, the scope of this objective is broad and is intended to allow for coordinated approaches to be developed relating to any or all of Smart Energy GB’s activities, not just those directly supporting uptake. This was acknowledged by one respondent who agreed that coordination is important, but suggested that a sector-based approach, rather than a geographical based approach, may be more suitable for the microbusiness sector. Whilst we consider that there is likely to be scope for activities in relation to this objective to support the microbusiness rollout, we agree that they must be designed appropriately and represent value for money.


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91. Finally, we are conscious of the points raised regarding competition law and agree that it is imperative that in developing and undertaking activities in relation to this objective that Smart Energy GB does so in a way that does not impinge on competition. A broader obligation is already in place which requires Smart Energy GB to ensure that in carrying out its activities is does not restrict, distort or prevent competition.33 In addition, Ofgem’s guidance on cooperation between competitors in relation to the smart meter rollout outlines areas where energy suppliers could usefully work together to share good practice to support consumer experience.34 Some of the areas highlighted relate to the types of activities which have been identified as potential opportunities where Smart Energy GB may facilitate coordination. This includes: identifying vulnerable consumers; supporting behaviour change; and completing difficult installs. Ofgem notes that they consider activities in these areas to be relatively low risk of breaching competition law because they deliver significant consumer benefits and are unlikely to directly generate sales.

33 Electricity Supply Licence Condition 45.13(d) and gas equivalent state that the Consumer Engagement Plan must: be designed to ensure that in carrying out its activities the Central Delivery Body does not restrict, distort or prevent competition in the supply of gas or electricity or in any commercial activities connected with Smart Metering Systems. 34 Guidance note on cooperation between competitors on the smart meter rollout, May 2016.

https://www.ofgem.gov.uk/publications-and-updates/guidance-note-cooperation-between-competitors-smart-meter-roll-out


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Section Two: Governance 92. Smart Energy GB’s governance arrangements are outlined in energy supply licence

conditions, with energy suppliers responsible for ensuring that the organisation acts in a way which is transparent, impartial, cost effective and represents value for money.

93. The organisation is governed by a Non-Executive Board of Directors, the composition of which is designed to ensure an appropriate balance between energy supplier interests and expertise relating to consumer engagement. The Board is responsible for producing and maintaining a Consumer Engagement Plan, developing an Annual Budget, and preparing an annual report.

94. To support the activities of the Board and monitor Smart Energy GB’s performance against

its objectives, the current licence provisions require energy suppliers to collectively develop a Performance Management Framework (PMF), which sets out key indicators and targets. An independently chaired PMF Forum has been established by energy suppliers to support this work.

95. Drawing on both the post-2020 consultation responses and wider stakeholder engagement,

we proposed a number of amendments to Smart Energy GB’s governance arrangements, which were designed to: • Address the complexities that have been identified in the existing governance

arrangements and empower the Board by requiring it to set the PMF, supported by domestic and microbusiness Advisory Groups.

• Promote transparency and effective ways of working by reducing the size of the Board, restructuring its membership, and requiring records of Board meetings to be available on request.

• Ensure that energy suppliers retain appropriate control over Smart Energy GB by requiring consultation on the organisation’s budget and ensuring that Directors representing the interests of energy suppliers hold a majority on the Board.

96. This section summarises and addresses the responses received in relation to Questions 2.1 – 2.5.

Section Two: Governance

2.1 Do you agree with our proposal to reduce the size of Smart Energy GB’s Board and establish a requirement that it is composed of an independent Chair, together with six Directors representing the interests of energy suppliers, four Directors representing the interests of domestic and non-domestic energy consumers and the CEO of Smart Energy GB? Please provide rationale.

2.2 Do you agree that a record of Board meetings, including attendance, should be made available to any party on request? Please provide rationale.

2.3 Do you agree that Board members should be recruited on the basis of skills and experience, with energy suppliers retaining the ability to nominate candidates, but with the


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final decision on appointments made by an Appointments Committee composed of the Chair, CEO and parties with relevant interests? Please provide rationale.

2.4 Do you agree that the Board should have responsibility for developing the Performance Management Framework (with separate domestic and microbusiness standards), supported by two Advisory Groups?

2.5 Do you agree that energy supply licences should be amended to require the Board to consult with energy suppliers and take their views into account when developing the Annual Budget? Please provide rationale.

Board size, membership and recruitment

97. The Government has considered the response to Questions 2.1 and 2.3 jointly as they relate to Board size, membership, and recruitment of Directors.

Question 2.1: Do you agree with our proposal to reduce the size of Smart Energy GB’s Board and establish a requirement that it is composed of an independent Chair, together with six Directors representing the interests of energy suppliers, four Directors representing the interests of domestic and non-domestic energy consumers and the CEO of Smart Energy GB? Please provide rationale.

98. Our proposal to reduce the size of Smart Energy GB’s Board from 14 to 11 voting members aimed to align with wider governance good practice and enable the Board to operate more effectively. In addition, we proposed restructuring the membership of the Board to ensure there is an appropriate balance between Directors representing the interests of energy suppliers and those representing consumers. As part of this restructure, reflecting the evolution of the retail energy market and in order to future-proof the composition of the Board, we suggested removing the requirement for Directors representing the interests of energy suppliers to represent specific supplier groupings (such as ‘large domestic’, ‘small domestic’, ‘non-domestic’ and ‘non-domestic only’).


Agree Agree with

caveats Neutral


Disagree Total

responses

8 8 1 0 1 18


33

99. A total of 18 consultees responded to this question and the majority (89%35) either agreed or agreed with caveats with the proposal to reduce the size of the Board and restructure its membership.

100. Several consultees noted that the current size of the Board can be a barrier to constructive discussion and decision making, and that a smaller Board would be in line with common practice in both the public and private sectors. However, caution was also expressed that reducing the size of the Board, whilst expanding its responsibilities, may increase pressures on individual Directors and the time commitment required to effectively fulfil the role. Respondents highlighted that this could reduce the Board’s effectiveness and Directors’ ability to act as a critical friend. One energy supplier highlighted that due to this reduced size, regular attendance by members will need to be a priority to ensure the balance of parties representing the interests of energy supplier and consumer interests is maintained. A further respondent noted that the suggestion that Directors receive remuneration for their role could help ensure that they are able to dedicate the necessary time and resources. It was also noted by one energy supplier respondent that job descriptions for the roles would help clearly set expectations.

101. Respondents highlighted the importance of ensuring that the Board is able to provide

strategic direction to Smart Energy GB, with an appropriate mix of industry expertise and a strong consumer voice. Whilst broadly supportive of the proposed restructuring of Board membership, several respondents raised concerns regarding removing the requirement for Directors to represent specific energy supplier constituencies. In particular, several respondents noted that there are significant differences in the consumer engagement challenges faced in the non-domestic sector and suggested that dedicated seats for Directors representing these interests should be retained, or some mechanism introduced (e.g. in relation to voting) to ensure consideration of these challenges.

102. The consultation document reiterated that Directors are required to act in an individual

capacity when performing Board duties and should not represent the views of any single organisation. One energy supplier acknowledged that it has proved challenging in the past for Directors to navigate their responsibilities in this area, whilst still meeting the requirement of the licence to represent energy supplier views. Several respondents suggested that a clear mechanism through which Directors can capture energy supplier views and concerns would be required.

103. Under the proposals, Citizens Advice / Citizens Advice Scotland would no longer have

an automatic right to nominate individuals to represent the interests of consumers. The consultation outlined that we considered that individuals from these organisations are likely to have the necessary skills and experience to warrant putting themselves forward to be considered for appointment. In their response to the consultation, Citizens Advice noted that they understood the rationale behind this proposal.36 However, they considered that

35 A consistent approach has been taken in calculating percentages, however rounding may mean that some percentages do not add up to 100. 36 Citizens Advice response to BEIS’ Consultation on Future Coordinated Consumer Engagement.

https://www.citizensadvice.org.uk/cymraeg/amdanom-ni/policy/policy-research-topics/energy-policy-research-and-consultation-responses/energy-consultation-responses/citizens-advice-response-to-beis-smart-metering-implementation-programme-consultation-on-future-coordinated-consumer-engagement/


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the current arrangements have provided a valuable route for them to engage with Smart Energy GB and bring their unique consumer expertise and perspective as the statutory energy watchdog to bear on discussions. They suggested that if the consultation proposal were implemented, Citizens Advice / Citizens Advice Scotland be afforded the ability to continue participating in Board meetings as observers.

Question 2.3: Do you agree that Board members should be recruited on the basis of skills and experience, with energy suppliers retaining the ability to nominate candidates, but with the final decision on appointments made by an Appointments Committee composed of the Chair, CEO and parties with relevant interests? Please provide rationale.

104. To address concerns regarding the current nominations process and to ensure energy suppliers can continue to meet their obligations, we proposed moving towards a hybrid model where energy suppliers will be able to nominate individuals to be considered for appointment as a Director representing the interests of energy suppliers. In addition, Directors representing consumer interests will be recruited through a full, open recruitment process. Decisions on appointments would be made by an Appointments Committee who will be responsible for ensuring that Board members have the right blend of skills, knowledge, and experience necessary to meet Smart Energy GB’s objectives.

105. We consider that by recruiting motivated individuals with relevant expertise to both guide Smart Energy GB and provide appropriate strategic challenge this will strengthen the Board. To support the proposal and incentivise higher levels of engagement, we also indicated that Smart Energy GB should explore providing remuneration to Non-Executive Directors, where appropriate.


Agree Agree with

caveats Neutral


Disagree Total

responses

11 7 0 0 0 18

106. A total of 18 consultees responded to this question and all (100%) either agreed or

agreed with caveats to the proposal to move to a more open, competitive, process for Board recruitment.

107. Respondents agreed that Board members should be recruited based on their skills and expertise, although a few respondents sought clarity over what this would mean in practice and how it could be evaluated through the recruitment process.

108. The ability for energy suppliers to nominate candidates for consideration was welcomed,

with several respondents noting that this would help ensure that they were able to retain


35

appropriate control over Smart Energy GB. It was suggested by two respondents that the proposed requirement for Board members representing the interests of energy suppliers to be current employees of an energy supplier was overly restrictive and that it should be possible for energy suppliers to nominate non-employees to represent their interests. It was noted that this could be particularly beneficial in light of the increased responsibilities of Directors and associated time commitment. It was also suggested that permitting the nomination of non-employees may help ensure that the interests of smaller suppliers – who may not be able to support a current employee taking on the role – continue to be represented.

109. Whilst supporting the proposal, several respondents emphasised that Smart Energy GB

has a responsibility to support all energy suppliers, across both the domestic and non-domestic rollout. In considering candidates, the Appointments Committee must therefore ensure that the final Board has an appropriate balance of Directors. In particular, it was noted that there is significant diversity amongst energy suppliers in relation to their customer base, size and maturity of their smart meter rollout.

Government response to Question 2.1 and 2.3

Government decision

Confirm the consultation proposals to amend Smart Energy GB’s Board size, membership, recruitment, and nominations subject to the following changes (further details are also provided in Table 2 below):

- Citizens Advice / Citizens Advice Scotland, as an organisation, to have the right to attend Board meetings.

- Energy suppliers being able to nominate non-employees, as well as current employees, to be considered for the Board.

Table 2: Government decision regarding Smart Energy GB’s Board size, membership, recruitment, and nominations.

Area Government decision

Board size Reducing the size of the Board from 14 to 11 Directors (excluding the Chair).

Board membership Restructuring Board membership to include:

• one Independent Chair; • six Directors representing the interests of energy suppliers; • four Directors representing the interests of domestic and

microbusiness energy consumers; and • the CEO of Smart Energy GB.


36

• In addition to representatives of the Secretary of State and Network Operators, for Citizens Advice / Citizens Advice Scotland to have the right to attend Board meetings.

Board recruitment and nominations

In relation to the six Directors representing the interests of energy suppliers:

• Any energy supplier can nominate any individual (i.e. employee or non-employee) to be considered for the Board.

• Any individual employed by an energy supplier can put themselves forward to be considered for the Board.

In relation to the four Directors representing the interests of energy consumers:

• Any individual can put themselves forward to be considered for the Board.

Appointments Committee:

• An Appointments Committee (made up of the Chair, the CEO and parties with relevant interests) shall be responsible for appointing Directors to the Board.

Board members must possess suitable skills, knowledge, experience, and personal qualities necessary to perform effectively as a member of the Board.

110. The proposals outlined in the consultation received broad support from consultees, who

agreed that a reduced number of Directors and a shift towards more open recruitment would strengthen the effectiveness of the Board and promote constructive engagement, whilst ensuring the energy suppliers retain appropriate control. We therefore intend to proceed with the proposals outlined in the consultation, subject to two amendments. Further details of these amendments, together with a more detailed response to the points raised by consultees is provided in paragraphs 114 to 118 below.

Ensuring Directors represent the range of energy supplier interests 111. Whilst supporting the wider proposals, a number of respondents expressed concerns

that the new arrangements could create a situation where the Board does not fully reflect the diversity of the smart meter rollout. In particular, it was suggested that dedicated seats be retained for Directors representing the interests of non-domestic energy suppliers. We agree that in order to be effective, Smart Energy GB’s Board needs to consist of Directors who collectively can represent the interests of the wider energy supplier community. As outlined in the consultation document, we are of the view that the evolution of the energy market since Smart Energy GB was established has reduced the relevance of categories such as ‘large’ and ‘small’, which no longer fully capture the diversity of interests and


37

business models represented across the market. In light of this, we do not consider that it is necessary or appropriate to require Directors representing the interests of energy suppliers to represent specific supplier groupings.

112. Under the new arrangements, Board members will be required to possess suitable

skills, knowledge, experience and personal qualities to support Smart Energy GB in meeting its objectives. Directors will be recruited through a competitive process, with the final decision on appointments made by an Appointments Committee.37 It will be the responsibility of this Appointments Committee to determine the suitability of individual candidates, and as part of their consideration we expect them to ensure that the makeup of the Board is balanced and appropriate to support the delivery of all of Smart Energy GB’s objectives. We consider that this approach will ensure a Board composition that represents the full interests of energy suppliers, with the expertise necessary to provide strategic direction to Smart Energy GB. In particular, in light of the fact that one objective relates solely to microbusiness consumers, it will be necessary for the Board to have appropriate expertise in relation to this sector.

113. Recognising that energy suppliers retain responsibility for Smart Energy GB’s

performance, we expect the Chair and CEO to work with the current Board members representing the interest of energy suppliers to develop an appointments process that maintains industry confidence. In the future, when vacancies on the Board arise we would expect the Chair and CEO to work with the relevant Board members to ensure that a clear job description is developed and that the recruitment process considers the wider mix of expertise on the Board, with appropriate individuals invited to join the Appointments Committee.

Director roles and responsibilities 114. We recognise that reducing the size of the Board and increasing its responsibilities will

expand the role of Directors. In order to be effective, it will be important to ensure that capable individuals, with the ability to commit to the role, are successfully recruited. To support this, as part of the consultation we encouraged Smart Energy GB to explore providing reasonable remuneration to Non-Executive Directors, where appropriate. In addition, we agree with a suggestion raised in the responses that job descriptions for Board members should clearly outline roles and responsibilities. We understand that job descriptions already exist for Board Directors and expect these to be reviewed and updated in light of the change in Governance. We consider that this is something that Smart Energy GB should take forward, working with the current Board.

115. Recognising the expanded role of the Board and noting concerns raised by a few respondents that requiring Directors representing the interests of energy suppliers to be current employees may be overly restrictive, we have decided to amend our original proposal and permit energy suppliers to nominate non-employees. We consider that these

37 Whilst a nominations process remains in place for Directors representing the interests of energy suppliers, the final decision on appointments will sit with the Appointments Committee.


38

individuals may be able to offer more time to commit to the Board, whilst also having relevant experience. Widening eligibility in this way may also allow for individuals with diverse experience across the energy industry to be nominated for consideration by the Appointments Committee. We consider that this amendment may be particularly relevant for smaller energy suppliers, who may not be able to nominate a current employee owing to the associated time commitment. This change would therefore further support a diversity of interests being represented on the Board, and is consistent with the approach taken by other industry bodies.

116. We expect the Appointments Committee to consider the overall makeup of the Board

when deciding Director appointments, to ensure an appropriate mix of skills and experience. We consider that current employment within an energy supplier will enable Directors to bring a valuable perspective to discussions. Whilst we consider it appropriate to widen eligibility, we would therefore still anticipate that current employees will occupy most of the seats for Directors representing the interests of energy suppliers.

The role of Citizens Advice / Citizens Advice Scotland 117. In restructuring Smart Energy GB’s Board we have sought to ensure an appropriate

balance between Directors representing the interests of energy suppliers and those recruited to represent the interests of energy consumers (both domestic and non-domestic). In order for the Board to support Smart Energy GB in delivering its objectives, it will be necessary for Directors to draw on a range of skills and expertise.

118. Whilst we consider that individuals employed by Citizens Advice / Citizens Advice Scotland are likely to have relevant experience to put themselves forward for consideration by the Appointments Committee, we also recognise that Directors are required to act as individuals, not as representatives of a particular organisation. To enable the Board, and Smart Energy GB, to continue benefiting from the unique insight and expertise of the statutory consumer watchdog for energy we therefore intend to provide Citizens Advice / Citizens Advice Scotland the right to be able to attend Board meetings. This will enable representatives to participate in discussions and share relevant insight and experience, but not vote on any decisions.

Board meeting records

Question 2.2: Do you agree that a record of Board meetings, including attendance, should be made available to any party on request? Please provide rationale.

119. Our proposals to make Board meeting records available on request aimed to support good governance, promote engagement from Directors and ensure an appropriate level of transparency.


39


Agree Agree with

caveats Neutral


Disagree Total

responses

8 6 2 0 2 18

120. A total of 18 consultees responded to this question, with the majority (78%) either

agreeing or agreeing with caveats to the proposal, stating that it promotes accountability, transparency, and openness around Smart Energy GB’s activities. It was suggested by one energy supplier that Smart Energy GB has already taken steps to increase transparency around Board decision making and this proposal was consistent with further improvements in this area. Another energy supplier endorsed the sharing of papers and minutes, and suggested that the Board should consider how all energy suppliers can ask questions regarding the discussions and decisions made by the Board.

121. Whilst agreeing with the direction of the proposal, several of those who agreed or agreed with caveats noted that they would be comfortable going further and suggested that records of Board meetings should be published on Smart Energy GB’s website.

122. A minority of consultees (11%) disagreed with the proposal, raising concerns that

widespread dissemination could hamper full and frank discussion during Board meetings. As a result, they considered that records should be available only to those energy suppliers who fund Smart Energy GB, through an online portal.

123. Two consultees (11%) provided a neutral response stating that the business of the

Board must be conducted with integrity and transparency appropriate to the task, and whilst they support Board transparency, further clarity over the definitions of ‘record’ and ‘any party’ are required.


Government decision

Amend the consultation proposal and require that Board meeting records be published (further details are provided in Table 3 below).

Table 3: Government decision regarding record of Board meetings.


Board meeting records A record of Board meetings should be published.

124. We have considered the responses received, noting in particular that several

respondents to the consultation argued that publication of this record would further increase


40

transparency and ensure equality of access. In light of this feedback and recognising that publishing Board meeting records is consistent with wider good practice in the industry, we have decided to amend our consultation proposal and require publication of records of Board meetings. We consider that this amendment will further support effective governance and ensure an appropriate level of transparency.

125. We recognise that a few respondents expressed concerns regarding the extent to which publication of Board meeting records could impact the willingness of Board members to engage in frank discussion, which may reduce the effectiveness of the Board. In addition, one respondent sought further information on what constituted a ‘record’ of Board meetings. We agree that an appropriate balance needs to be struck and note that some aspects of Board discussions may include consideration of sensitive information. As outlined in the consultation, a record of Board meetings would be expected to include: the date, time and agenda for the meeting; the name of each member of the Board in attendance; the name of each organisation represented; and, each resolution voted on by the Board. We do not consider that records need to provide a verbatim account of discussions or attribute statements to particular Board members. In addition, the licence would require the removal of any prejudicial information and provides the option for information relating to commercial interests to be removed. We consider that this approach promotes engagement with the activities of the Board, whilst mitigating against the risk of discussion being hampered.

Responsibility for developing and maintaining the PMF

Question 2.4: Do you agree that the Board should have responsibility for developing the Performance Management Framework (with separate domestic and microbusiness standards), supported by two Advisory Groups?

126. Our proposal to bring responsibility for establishing and maintaining the PMF under direct Board control aimed to address complexities in the current governance arrangements and provide clarity on roles and responsibilities. In addition, to support the Board in this area, we proposed introducing a requirement to establish two Advisory Groups – one with a domestic focus and the other with a microbusiness focus – which are subordinate to the Board.


Agree Agree with

caveats Neutral


Disagree Total

responses

11 5 2 1 1 20


41

127. A total of 20 consultees responded to this question and the majority (80%) either agreed or agreed with caveats to the proposals, considering that they would improve the current governance approach and reduce complexity.

128. Several consultees used their responses to highlight the positive contribution of the current PMF Forum. These respondents noted that the PMF Forum had engaged constructively with Smart Energy GB to drive improvements in performance and ensure that industry expertise informed decision-making. It was felt that this has helped deliver consumer engagement activity that is well-directed and cost-effective. Whilst broadly supportive of the proposals, they encouraged Smart Energy GB and the Board to demonstrate an enduring commitment to this collaborative approach by seeking energy supplier views and taking them into account. In particular, one respondent argued that it would be important to enable energy suppliers to scrutinise Smart Energy GB’s performance, whilst noting the benefits associated with minimising layers of governance.

129. Under the current arrangements, no formal relationship exists between Smart Energy

GB’s Board, which is responsible for the organisation’s strategic Consumer Engagement Plan, and the PMF Forum, which sets the metrics and targets through which the organisation’s performance is evaluated. In identifying the consequences of this disconnect, one respondent noted that attempts have been made to embed close working between the two groups but that the governance structures made this inherently difficult.

130. Whilst recognising that the current arrangements may not be ideal, a few respondents

raised concerns regarding the proposal to place responsibility for the PMF onto the Board. One energy supplier who disagreed with the proposals raised concerns that placing responsibility for the PMF onto a smaller Board could result in a less representative view of industry challenges, lower scrutiny and poorer performance. In addition, they noted that energy supply licence conditions place responsibility for ensuring that Smart Energy GB meets its objectives onto energy suppliers. Without a supplier-led mechanism to monitor performance they were concerned that any underperformance which was not appropriately addressed could place energy suppliers in breach of their licence obligations. The complexities of accountability in the current arrangements were also touched on by another respondent, who noted that whilst energy suppliers are responsible for setting targets through the PMF, the Forum has no recourse to take action in the event that they are not met (beyond writing to the Board to suggest that this is taken into account in discussions regarding senior executive remuneration).

131. To support the development of the PMF, we proposed that two Advisory Groups be

established (one domestic and one non-domestic). The proposal to require the creation of Advisory Groups to report to the Board was supported by the majority of respondents. Several consultees sought further information on the role of energy suppliers in relation to this group and shared views on the chairing arrangements.

132. The suggestion that separate Advisory Groups for domestic and non-domestic interests

be established was broadly supported, although one energy supplier respondent suggested


42

that a single Group would be appropriate in light of the likely areas of commonality and to reduce the risk of duplication and cost escalation. In considering the composition and activities of the Advisory Groups, several respondents expressed the view that this was an opportunity to build on the collaboration and industry-wide engagement established by the PMF Forum. It was suggested that it may not necessarily be appropriate to replicate the balance between consumer and energy supplier interests seen on the re-configured Board and that the Advisory Groups may provide a channel through which energy suppliers can engage with the Board. In particular, one energy supplier respondent noted that the current PMF Forum provides an avenue through which Smart Energy GB and the Board can gain insight into operational challenges and developments. One consultee also encouraged consideration of how the Alt HAN Company could contribute its skills, knowledge, and expertise to the development of Smart Energy GB’s work programme, suggesting that they be considered as a member of the Advisory Groups.

133. A few respondents noted that the Advisory Groups may be well placed to take on duties

beyond providing guidance on the PMF. In particular, and drawing on the current role of the PMF Forum, it was suggested that they could play a role as an avenue through which feedback on campaign activity and real-time input and advice on consumer engagement challenges could be provided. One respondent noted that this would complement a broader strategic role for the Board. It was also suggested that deep-dive sessions and workshops could be convened through these Groups to provide input on specific issues.

134. Whilst the consultation indicated that it was expected that the Board would determine

the most appropriate arrangements for Chairing the Advisory Groups, a range of views were expressed by consultees in this area. Several respondents suggested that an Independent Chair(s) should be appointed by energy suppliers, with the authority to convene the Groups and represent their interests to the Board and Smart Energy GB. In contrast, a few respondents suggested that in light of the revised reporting arrangements and the role of the Groups as sub-groups of the Board it was necessary for the Chairs to be Board members in order to preserve this formal linkage.


Government decision

Confirm the consultation proposals to require the Board be responsible for setting the Performance Management Framework, supported by two Advisory Groups, subject to the following change (further details are provided in Table 4 below):

- That Board Directors representing the interests of energy suppliers chair the Advisory Groups.


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Table 4: Government decision regarding responsibility for the PMF.


Responsibility for the PMF

Requiring that the Board be responsible for the development and maintenance of the Performance Management Framework (PMF), which must set out separate standards for domestic and microbusiness areas.

Requiring that two Advisory Groups be established (one Domestic Consumer Advisory Group and one Microbusiness Consumer Advisory Group), which report to the Board, tasked with developing the PMF standards, as well as other duties that the Board sees fit.

Requiring that Directors representing the interest of energy suppliers chair the two Advisory Groups.

135. The Government has considered the responses received carefully and noted that the

majority of the respondents agreed or agreed with caveats to the proposal for the Board to be responsible for developing the PMF, supported by two Advisory Groups. We intend to proceed with the proposals outlined in the consultation, subject to one amendment specifying the arrangements for chairing the Advisory Groups.

Board responsibility for the Performance Management Framework

136. Under current arrangements, the Board is responsible for establishing Smart Energy GB’s strategic direction, whilst energy suppliers through the PMF Forum set specific targets and monitor performance. This division of responsibility introduces significant complexity into Smart Energy GB’s governance. The tasks of these groups are fundamentally linked, but the absence of formal reporting arrangements and clear roles and responsibilities presents challenges and creates inefficiencies.

137. Whilst efforts have been made to improve ways of working and ensure close linkages between the groups, the introduction of a new smart meter regulatory framework provides an opportunity to review and formalise a more effective set of governance arrangements. Placing responsibility for setting the PMF onto the Board complements its wider strategic obligations and establishes a clear feedback loop through which the broader vision for delivering Smart Energy GB’s objectives can be translated into specific activities, against which performance can be measured.

138. We recognise that concerns were raised by respondents through the consultation

regarding the extent to which our proposals were consistent with energy suppliers’ broader responsibility for Smart Energy GB’s activities, as outlined in energy supply licence conditions. We consider that the new governance arrangements provide energy suppliers with appropriate control over the organisation. In particular:

• Directors representing the interests of energy suppliers retain a majority on the Board and will be employed and/or nominated by energy suppliers;


44

• the Board will be required to consult with, and take into account, the view of the Advisory Groups when producing the PMF; and

• ahead of finalising the Annual Budget, the Board must consult with energy suppliers on the draft budget and take into account responses received.

139. These provisions provide clear mechanisms through which energy suppliers can represent their interests and direct the activities of the organisation, both collectively and as individual supplier organisations. To further strengthen this link, we have also decided to amend our original proposals and introduce a requirement for each Advisory Group to be Chaired by a Board member representing energy supplier interests (further details are provided in paragraphs 140 to 143 below).

Arrangements for Advisory Groups

140. Several respondents noted that the PMF Forum has proven effective in holding Smart Energy GB to account and that in updating the governance arrangements these areas of strength should be retained. We agree that the PMF Forum has provided an opportunity for energy supplier representatives to share their expertise and operational insight to inform Smart Energy GB’s activities. In establishing Advisory Groups, we expect the Board to reflect on the strengths within the current arrangements, particularly the extent to which they promote collaborative working and enable energy suppliers to engage directly with Smart Energy GB.

141. Whilst the Board will be responsible for determining the appropriate membership for each Advisory Group, we expect all relevant energy suppliers to have an opportunity to participate. Subject to the specific nature of the tasks delegated to the Advisory Groups, non-energy supplier representatives with relevant skills and expertise should be invited and encouraged to participate as appropriate.

142. Consultees highlighted that it is important for energy suppliers to be able to exercise an

appropriate degree of control over Smart Energy GB. It was suggested by a few respondents that this could be aided by requiring the Advisory Groups to have an independent Chair, appointed by energy suppliers, together with more autonomy to directly challenge Smart Energy GB.

143. The consultation remained largely silent on the arrangements for appointing a Chair for

the Advisory Groups, noting that this would be the responsibility of the Board. We agree that it is important for energy suppliers to retain appropriate oversight over Smart Energy GB and are therefore sympathetic to the intent behind the suggestion that an independent Chair is appointed. However, we are concerned that adopting this approach risks re-establishing the current arrangements and associated complexity, whilst also raising the question of how an independent Chair can be expected to report to the Board. We consider that requiring the Advisory Groups to be chaired by Directors representing the interests of energy suppliers will embed clear lines of reporting, whilst also serving to strengthen the link between energy suppliers and the Board. This arrangement will also help provide a


45

mechanism through which Directors representing the interests of energy suppliers can consult more widely with energy suppliers to understand their views and feed this back directly to the Board.

Budget arrangements

Question 2.5: Do you agree that energy supply licences should be amended to require the Board to consult with energy suppliers and take their views into account when developing the Annual Budget? Please provide rationale.

144. Our proposal to require the Board to consult with energy suppliers on the Annual Budget aimed to ensure energy suppliers retain suitable control over Smart Energy GB given their wider responsibilities.


Agree Agree with

caveats Neutral


Disagree Total

responses

11 4 0 0 2 17

145. A total of 17 consultees responded to this question. The majority (88%) either agreed or agreed with caveats with the proposal to require the Board to consult with energy suppliers when developing the Annual Budget. In particular, consultees noted that this proposal addresses a potential gap in the existing arrangements whereby the licence requires energy suppliers to establish a mechanism for funding, but does not outline a process through which the budget can be agreed.

146. Whilst agreeing with the intent of the proposal, a few respondents sought clarification on the nature and timing of the consultation process, noting that this was not specified in the draft licence obligation. Consultees emphasised that energy supplier views should be fully considered throughout the budget setting process, rather than setting a fixed point for consultation at the end. One energy supplier consultee suggested that a timeline for consultation be specified in the licence.

147. The importance of effective in-year budget control was also raised by consultees. One

energy supplier stressed that once a budget is agreed, mechanisms need to be in place to enable Smart Energy GB to be flexible and responsive to operational realities. It was noted that this may include the potential to reduce expenditure and return funds to energy suppliers during the year, if appropriate.


46

148. Whist supportive of the role Smart Energy GB can play within the next phase of the rollout, two energy suppliers flagged general concerns with overall levels of spend. It was suggested that the level of campaigning, including a focus on large scale national broadcast activity, that was deemed necessary in the early part of the rollout may no longer be required. It was emphasised that every pound spent needs to drive value and positive outcomes.

149. The consultation document outlined that the proposal to require consultation on the

budget helped to ensure that energy suppliers retain suitable control over Smart Energy GB. In response to this, two consultees suggested that in addition to consultation on the budget, there should be a requirement for the Board to consult with energy suppliers and/or relevant interested parties on the PMF.

150. A minority of respondents (12%) disagreed with the proposals stating that if two of the Director seats were reserved for non-domestic suppliers (as per their response to Question 2.1 concerning Board representation), the Board will have sufficient representation to be both effective and responsible in deciding the Annual Budget.


Government decision

Confirm the consultation proposal to require the Board to consult with energy suppliers on the draft Annual Budget and take into account the response received (further details are provided in Table 5 below).

Table 5: Government decision regarding Budget arrangements.


Budget arrangements

Require that the Board consult with energy suppliers and take their views into account when developing the Annual Budget.

151. We have considered the responses to this question and note that the proposal to require consultation on the Annual Budget received strong support from respondents. Introducing this requirement ensures energy suppliers are able to provide input into the budget setting process, alongside the views of the Board. This approach therefore supports an appropriate balance between recognising energy supplier wider responsibilities and empowering the Board to set the strategic direction for Smart Energy GB. The final budget will continue to be submitted to Smart Energy GB’s Members for a formal vote, as outlined in the organisation’s Articles of Association.

152. In carrying out the consultation process we expect to see the Board engage collaboratively with energy suppliers throughout the development of the Annual Budget, taking their views into account as appropriate. We anticipate that early and effective consultation, with clear feedback between relevant parties, will help ensure a clear


47

understanding of respective positions and support consensus-building. Related to this, one respondent suggested that a specific timescale be added into the licence outlining requirements for the budget consultation. Whilst we recognise that this could support a constructive process, we consider that it is prudent to retain flexibility and enable the Board to direct the consultation process.

153. Several respondents to the consultation highlighted the importance of ensuring that

appropriate mechanisms are in place to hold Smart Energy GB to account in relation to performance against their targets. Under the new governance arrangements, we expect the Board to scrutinise Smart Energy GB’s activities to ensure that they represent value for money and are consistent with their objectives. The Board has previously demonstrated its ability to respond to changing circumstances, including approving the return of underspend to energy suppliers where appropriate.38

154. It was suggested by two respondents that the Board be required to consult with energy

suppliers (or relevant interested parties) on the PMF, in addition to the Annual Budget. We consider that introducing an obligation in this area risks disempowering the Board and circumventing the wider arrangements we are introducing through which the Board is responsible for setting the PMF, informed by the views of formal Advisory Groups. We consider that these Advisory Groups provide a clear mechanism through which energy suppliers can share their views, whilst the new requirement for these Groups to be chaired by Board Members representing the interests of energy suppliers will ensure that energy suppliers retain appropriate oversight.

38 Smart Energy GB 2019 Annual Report: Year-end underspend returned to energy suppliers £1.2m in 2019 and £3.1m in 2018.

https://www.smartenergygb.org/en/-/media/SmartEnergy/essential-documents/essential-documents/english/2019-Annual-Report-Final.ashx


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Section Three: Funding Threshold 155. Smart Energy GB’s activities are funded by energy suppliers, with costs split into capital

costs (primarily campaign costs) and fixed operating costs (including staff and office expenses). Separate budgets are set for domestic and microbusiness activities, with energy suppliers contributing based on market share and in line with provisions set out in energy supply licences.

156. Large domestic and large non-domestic energy suppliers contribute to both capital and fixed operating costs, whilst small energy suppliers are responsible only for fixed operating costs. In recognition of the significant changes that have taken place in the energy market and to ensure that the funding model remains fair and equitable, we proposed reducing the threshold at which domestic energy suppliers would be required to contribute to Smart Energy GB’s capital costs from 250,000 to 150,000 gas or electricity (or both) domestic customer accounts.

157. The consultation did not propose amendments to the funding threshold for non-domestic

energy suppliers, whereby large non-domestic energy suppliers who supply gas or electricity (or both) to more than 100,000 metering points contribute to both non-domestic capital and fixed operating costs.

158. This section summarises and addresses the responses received in relation to Question 3.1 as set out in the consultation document published on 18 June 2020.

Lowering the threshold for funding Smart Energy GB’s domestic capital costs

Question 3.1 Do you agree that energy supply licences should be amended so that the threshold for ‘Relevant Suppliers’ to fund Smart Energy GB’s domestic campaign activities is lowered to energy suppliers with 150,000 gas or electric (or both) domestic consumers? Please provide rationale.

159. Our proposal to lower the threshold for large energy suppliers to fund Smart Energy GB’s domestic campaign activities aimed to ensure a proportionate funding model that is in line with wider retail energy market developments.


Agree Agree with

caveats Neutral


Disagree Total

responses

6 4 0 0 1 11


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160. A total of 11 consultees responded to this question, with the overwhelming majority

(91%) either agreeing or agreeing with caveats to the proposal. These respondents agreed that the proposal was proportionate and created a more level playing field between energy suppliers, reducing the potential for market distortions. It was also suggested that a lower threshold may result in greater engagement with Smart Energy GB by smaller energy suppliers, in light of their increased funding responsibilities and broader accountability for Smart Energy GB’s performance.

161. In response to the consultation, two energy suppliers and one consumer group supported further lowering the funding threshold, and two energy suppliers suggested removing it completely. In addition, one energy supplier respondent disagreed with the proposal, arguing that Smart Energy GB should be funded by all energy suppliers. They suggested that if a threshold were considered necessary, it should be set no higher than 50,000, which they noted would be consistent with wider obligations.

162. Whilst supporting the proposal to lower the threshold, one energy supplier did not

support a 31 December 2021 threshold date but gave no suggestion as to an alternative date. One trade association recommended that BEIS ensure the start date for the funding threshold be aligned as closely as possible with the commencement of the new smart meter regulatory Framework on 1 July 2021.


Government decision

Confirm the consultation proposal to lower the threshold for ‘Relevant Suppliers’ to fund Smart Energy GB’s domestic capital costs from 250,000 to 150,000 gas or electric (or both) domestic consumers.

163. Government has considered responses to the proposal to lower Smart Energy GB’s funding threshold. The energy market has evolved significantly since Smart Energy GB was established in 2013 and any change to the threshold needs to balance establishing a fair and equitable system, with the Government’s wider aim to support and improve competition. We intend to proceed with the position outlined in the consultation and note that this proposal was supported by the majority of respondents to the consultation.

164. We note that one respondent to the consultation suggested that the threshold be lowered to no more than 50,000 and several respondents would have been comfortable with the threshold being reduced below 150,000. We have considered the arguments put forward carefully and consider that the original consultation proposal remains proportionate and strikes the right balance between establishing a more level playing field for energy suppliers, whilst continuing to protect new and recent market entrants.


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165. This decision brings Smart Energy GB’s funding in line with thresholds for other relevant supplier obligations such as the Warm Home Discount (WHD) scheme39 for 2020/2021 and the Energy Company Obligation 3 (ECO3) scheme40 from 1 April 2020. The decision also aligns with Ofgem’s minded-to position to lower the threshold by which energy suppliers are required to submit smart meter rollout plans and report on their annual progress under the new smart meter regulatory Framework.41

39 Government Response to Warm Home Discount Scheme 2018 to 2019. 40 Government Response to Energy Company Obligation: ECO3, 2018 to 2022. 41 Ofgem Statutory Consultation on the Post-2020 Smart Meter Rollout Reporting Requirements, October 2019.

https://www.gov.uk/government/consultations/warm-home-discount-scheme-2018-to-2019

https://www.gov.uk/government/consultations/energy-company-obligation-eco3-2018-to-2022

https://www.ofgem.gov.uk/publications-and-updates/statutory-consultation-post-2020-smart-meter-rollout-reporting-requirements


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Section Four: Transition and Legal Text 166. To support the introduction of Smart Energy GB’s new objectives, governance

arrangements and funding threshold we consider that an appropriate transition period will be required. The consultation outlined our proposal to introduce a new licence condition, which would apply with effect from 30 June 2021.

167. This new condition introduces the updated objectives, and requires that a new Board be recruited, and Advisory Groups established, by 30 June 2021. Following the new condition coming into effect, a new PMF (with separate domestic and microbusiness standards), an updated Consumer Engagement Plan and the next Annual Budget will need to be developed. We proposed setting the 31 December 2021 as the date by which these need to be in place, completing the transition. In addition, we proposed requiring that an updated domestic funding mechanism be produced, which would take effect from 31 December 2021.

168. The consultation sought views on the proposed transition arrangements, together with any comments on the draft legal text.

169. This section summarises and addresses the responses received in relation to Questions

4.1 – 4.2 as set out in the consultation document published on 18 June 2020.

Transition period

Question 4.1: Do you agree with the proposed approach to transitioning to the new arrangements proposed in this consultation? Please provide rationale.

170. Our proposal to introduce a new licence condition, which would apply from 30 June 2021, aimed to ensure a timely and efficient transition. We also proposed setting 31 December 2021 as the date by which the full transition would need to be complete, recognising that a new Consumer Engagement Plan, PMF and Annual Budget would need to be developed under the new governance arrangements.


Agree Agree with

caveats Neutral


Disagree Total

responses

3 6 0 0 2 11

171. A total of 11 consultees responded to this question, with the majority (82%) either

agreeing or agreeing with caveats with the proposed transitional arrangements.


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172. Where respondents supported the consultation proposal, several noted that a phased

approach was appropriate and recognised the practical challenges associated with introducing new governance arrangements, including recruiting a new Board. It was also noted by one respondent that requiring the development of a new PMF, Consumer Engagement Plan, Annual Budget, and funding arrangements by 31 December 2021, would be sensible particularly given the current budget’s alignment to the calendar year.

173. Whilst supporting the proposal overall, several respondents noted that they felt that Smart Energy GB should take steps to align their activities with the new arrangements as early as possible. One energy supplier respondent specifically highlighted the potential for Smart Energy GB to consider their updated objectives when developing future consumer engagement activities. Another energy supplier noted that they recognised that some flexibility was needed in relation to the date on which the new licence condition would take effect, in the event that unforeseen circumstances result in the need to delay implementation. However, they urged Government to take steps to mitigate against this and ensure that energy suppliers receive the support they need in the early stages of the next phase of the rollout.

174. A few respondents (18%) disagreed with the proposal, arguing more strongly that all the

new arrangements should be introduced sooner and suggesting that the transition should be concluded ahead of the introduction of the new smart meter regulatory Framework on 1 July 2021. One energy supplier expressed concern that the proposed arrangements could effectively result in a 12-18 month hiatus in consumer engagement support.


Government decision

Confirm the consultation proposal to set 30 June 2021 as the date on which the new governance arrangements come into force, with the transition completed by the end of 2021.

175. Overall, there was broad support from respondents for Smart Energy GB to transition to its new governance arrangements on 30 June 2021, with no consultees suggesting that additional time would be required. There was appetite from several respondents for Smart Energy GB to align their activities with the new objectives as soon as possible, whilst a few called for an earlier conclusion to the transition.

176. As outlined earlier in this document, the proposed updates to Smart Energy GB’s objectives received significant support from stakeholders with respondents highlighting the importance of consumer engagement activities continuing to evolve to support the next phase of the rollout. Whilst the updated objectives will come into place in line with the introduction of the new licence condition on 30 June 2021, we encourage Smart Energy GB to consider how any earlier planned activities could align with the new objectives. In


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addition, it would be appropriate for the Board to be mindful of these forthcoming changes as it finalises its strategic plan for 2021-2025.

177. We consider that the 30 June 2021 provides sufficient time for Smart Energy GB to

recruit a new Board, establish appropriate governance arrangements and prepare for the introduction of its updated objectives. However, in recognition of the potential for unforeseen circumstances we consider it prudent to retain the ability to set a later date, if necessary. We will work closely with Smart Energy GB throughout the transition period, and if required can delay commencement of the licence condition through a direction from the Secretary of State.

178. The new licence condition will require the Board to update the Consumer Engagement

Plan, establish a new PMF, and agree the 2022 Annual Budget by 31 December 2021. In addition, to support the lowering of the funding threshold for domestic campaign activities, energy suppliers must produce an updated domestic funding mechanism, which would take effect from 31 December 2021. We recognise that a few respondents to the consultation were keen to see the transition conclude earlier, suggesting that these provisions could be introduced alongside the new governance arrangements on 30 June 2021. We consider that this approach would significantly reduce the time available to recruit the new Board and Advisory Groups, as these would need to be in place ahead of the Consumer Engagement Plan, PMF, and next budget being developed. It would also place pressure on the development of these important documents and risks sufficient time being available to undertake the necessary work in a fully collaborative and considered manner.

179. In addition, we are mindful that Smart Energy GB’s budget process operates on an

annual cycle and consider that it is important to provide sufficient notice to those energy suppliers who will be liable for increased costs as a consequence of the amendments to the funding threshold. We therefore consider that setting 31 December 2021 as the date on which the transition concludes and a new PMF, Consumer Engagement Plan and Annual Budget must be in place is proportionate and will enable a timely and orderly transition.

180. The principal obligations in relation to establishing and maintaining Smart Energy GB

rest with large domestic energy suppliers (‘Relevant Suppliers’). Our proposal to adjust the domestic capital funding threshold extends these obligations to all energy suppliers with more than 150,000 gas or electricity (or both) domestic customers. As outlined in the consultation document, we consider that this approach remains appropriate and note that in response to Question 3.1 one respondent highlighted that lowering this threshold may prompt increased engagement with Smart Energy GB’s activities from smaller energy suppliers.


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Legal text

Question 4.2: Do you agree that the proposed legal drafting in Annexes One and Two implements the proposals outlined in this consultation? Please provide rationale.


Agree Agree with

caveats Neutral


Disagree Total

responses

5 5 0 0 0 10

181. A total of 10 consultees responded to this question, with all respondents either agreeing

or agreeing with caveats to the proposed legal drafting.

182. Where views were provided on the legal text, one energy supplier sought clarification on the inclusion of the words ‘energy supplier’ in relation to the development of the Consumer Engagement Plan (SLC 45A.25 / 39A.25 (c)(iii)(A)). Another energy supplier was uncomfortable with the reference to members of the Board needing to have appropriate ‘personal qualities’, stating it would be difficult for the Appointment Committee to form an evidence-based view on this point and substantiate this in the event of any challenge.

183. Three energy suppliers and one trade association all suggested that the legal text be

amended in line with their earlier suggested amendments to the governance arrangements, including: • dedicating a seat for a non-domestic energy supplier representative on the Board; • amending the current wording by which the Board ‘may’ consult with relevant interested

parties on the PMF to introduce an obligation for this consultation to take place; and • that the Advisory Groups should have a level of independence, including through the

appointment of an independent Chair.


Government decision

Amend supply licence conditions 45 (electricity) and 39 (gas), as well as introduce new supply licence conditions 45A (electricity) and 39A (gas). Government has laid amending regulations in Parliament in line with the procedure under section 89 of the Energy Act 2008, including consequential changes to licence conditions.

184. We have considered the points raised by respondents regarding the legal text which introduces Smart Energy GB’s new objectives, governance, funding threshold and


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transition period. The final legal text and consequential amendments are attached in full at Annexes One, Two and Three (published separately).

185. One consultee queried an amendment to conditions 45A.25 (c)(iii)(A) and 39A.25 (c)(iii)(A) which relates to the production and maintenance of a Consumer Engagement Plan. The draft new condition included the following text requiring Smart Energy GB to consider and outline how they have taken into account the need to: ‘provide additional assistance and consumer engagement activities that may be required by particular categories of energy suppliers’. One respondent queried the inclusion of the words ‘energy suppliers’ in this clause. The Consumer Engagement Plan must set out how Smart Energy GB has provided additional assistance and consumer engagement activities to energy consumers. In light of the introduction of a new objective (e) which requires Smart Energy GB to facilitate arrangement for coordination between energy suppliers it is appropriate to update the required scope of the Consumer Engagement Plan and include the words ‘energy suppliers’ into this part of the licence.

186. One respondent raised concerns with the requirement for Board members to have

appropriate ‘personal qualities’. This wording is consistent with that used in other licences42 when referring to the appointment of directors and we therefore consider it appropriate to include in this context.

187. Where consultees raised points in their responses that related to our wider proposals

these have been addressed as part of our consideration earlier in this document. Our response to Questions 2.1 and 2.3 outline our decision in relation to the composition of the Board, the arrangements for chairing Advisory Groups are covered in the response to Question 2.4, whilst the response to Question 2.5 confirms our expectations in relation to consultation on the PMF and Annual Budget.

188. In light of the introduction of a new standard licence conditions 45A (electricity) and 39A

(gas), we are also making consequential amendments to: • standard licence conditions 2 (electricity and gas) which relate to ‘Interpretation of

Standard Conditions’; • standard licence conditions 28AD (electricity and gas) which relate to ‘Regulation of

changes for Domestic Customers supplied under certain Domestic Supply Contracts’; • standard licence conditions 43 (electricity) and 37 (gas) which relate to ‘Roll-out

Reporting and Provision of Information to the Secretary of State’; and • smart meter communications licence condition 45 which relates to the ‘Provision of

Market Share Information to the Central Delivery Body’.

189. On assessing whether consequential amendments were required to standard licence conditions 2 (gas and electricity), we identified that this licence condition should include a reference to standard licence conditions 54 (electricity) and 48 (gas) which relate to ‘Enrolment of Smart Metering Systems’. Whilst this change was not part of the current consultation, Government has previously consulted on, and made regulatory changes to introduce powers for the Secretary of State to issue directions under these licence

42 Such as Condition 43A of the Electricity Distribution Licence and Condition 9 of the Smart Meter Communications Licence.

https://epr.ofgem.gov.uk/Content/Documents/Electricity%20Distribution%20Consolidated%20Standard%20Licence%20Conditions%20%20-%20Current%20Version.pdf

https://epr.ofgem.gov.uk/Content/Documents/Smart%20DCC%20Limited%20-%20Smart%20Meter%20Communication%20Consolidated%20Licence%20Conditions%20-%20Current%20Version.pdf

https://epr.ofgem.gov.uk/Content/Documents/Smart%20DCC%20Limited%20-%20Smart%20Meter%20Communication%20Consolidated%20Licence%20Conditions%20-%20Current%20Version.pdf


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conditions. At the time, this consequential change was overlooked, and we consider it appropriate to include here.43

43 See Government response to consultation on maximising interoperability for first generation (SMETS1) smart meters (April 2018) and BEIS government response to consultation on Code and Licence Changes (March 2020).

https://www.gov.uk/government/consultations/maximising-interoperability-for-first-generation-smets1-smart-meters

https://www.gov.uk/government/consultations/maximising-interoperability-for-first-generation-smets1-smart-meters

https://smartenergycodecompany.co.uk/latest-news/beis-government-response-to-consultation-on-code-and-licence-changes/


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Summary of Annexes Annex One: Amendments to standard condition 45 (electricity) and 39 (gas)

Annex Two: Standard condition 45A (electricity) and 39A (gas)

Annex Three: Consequential amendments

This publication is available from: www.gov.uk/government/consultations/smart-meter-coordinated-consumer-engagement

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