Angela Love has taken over as chair of the Smart Energy Code – the rulebook that will take customers into a smart energy future. She wants to use it to improve services, but there are some fundamental decisions to be taken over the SEC itself.
The Smart Energy Code (SEC) is fundamental to a new energy industry that can get the best from our future decarbonised, decentralised and demand-led and deliver better energy services for consumers. But when I meet Angela Love over zoom to talk about her aims as its new chair, the first question has to be “what is the SEC?”. It and other so-called ‘codes’ are at the heart of how the industry works but they are seldom visible.
She says that for each part of the energy system (such as users of the energy networks, or participants in the market) there is a code that is “the rules of the game in terms of all the different players in the market and how they need to operate and act with one another to make sure that the arrangements work.” The SEC is “the governance arrangements around the smart metering programme, how smart meters interoperate with one another and how the suppliers work with each other and the network companies in terms of smart technologies.”
What attracted Love to the SEC? She is a veteran who has had many roles in the industry, from commercial analysis to consumer support bodies such as the Gas Industry Safety Group as well as within some of the bodies that underpin the industry. (She also chairs ScottishPower Energy Networks’ Independent Net Zero Advisory Council, of which I am a member.)
She says, “I have not been overly involved in metering and it is one of the things I think is really interesting, because of the opportunities in respect of new products for consumers and what supply and distribution companies will be able to do with the smart meters that customers have on the wall. The Smart Energy Code facilitates those arrangements.
“Smart meters are going to give suppliers the opportunity to introduce new products and services to consumers – for example ‘time of day’ tariffs or behind the meter services like smart appliances or electric vehicles.
“It is the future of the energy sector: opening up new ways of working and new ways of engaging with consumers and letting them use their energy in a different way and use it more intelligently. So to me it was something of the future.” Love adds, “Consumers have obviously paid for smart metering services and the SEC makes sure that the distribution and supply companies and the data companies do what they are obliged to do”.
“Consumers have obviously paid for smart metering services and the SEC makes sure that the distribution and supply companies and the data companies do what they are obliged to do”
Although smart meters simply take readings of domestic usage, when aggregated that data is a tool for improving the system management and lowering costs. Love gives an example: “One of the things that we have suffered from in the UK is that we have an [electricity] network that has just expanded and expanded to try to meet the needs of consumers, whenever they want to use their energy. So we don’t use it particularly efficiently. The networks are geared towards peak loads. We can try to smooth out the way customers use their energy by giving them price signals and if we can do that it makes the network more efficient.” There are a number of benefits. One is controlling energy leaking from the network (referred to as ’losses’): “The more energy you put across the network at any one time the more are the losses, so if you can smooth out when people are using it the losses will be less.” In addition, by reducing peak loads “you will get more from less. In effect we won’t need to invest as much in the network but we will still be able to facilitate what customers need.” This will work by smart meters giving price signals to customers, such as cheaper charging overnight.
Love notes that , “The opportunity to do more with less is really important at this point given that bills are so expensive”.
Love also wants to improve the consumer experience: “One of the things that the Smart Energy Code is looking at is to introduce performance assurance – what are the obligations that are in the Code? Are they being met – and if they are not being met, how can we address the companies who are not meeting their obligations?”
She explains that some of the other codes, like the Uniform Network Code (for gas network users) and Balancing Code, have performance assurance within them so they can be sure that the parties meet their obligations – and if not there are ways to incentivise the companies to do so. She thinks that will help groups who are badly served, such as small and micro businesses who are metered as if they were domestic customers but have different needs. (Bigger companies have other metering arrangements and often other types of supply contracts.) Love says, “The performance assurance arrangements is something that could be used to make sure they get the type of service they are entitled to.”
She also wants to use feedback to improve service. “Within the industry we do not seem to square the circle – complaints are made to the Ombudsman and the Ombudsman will look to see what has happened and whether the customer is entitled to compensation. But they never really look at the root cause.” She wants to “try to join up the performance assurance and the customer complaints and try to sort out the systemic things that are in the market that cause detriment to customers.”
She was involved in creating service benchmarks in the UNC and the basic framework is to look at the risks and see how people are performing against those risks “and is there something that we need to set as a benchmark to see how people are performing”. At the moment data is not fed back from the Ombudsman “but that is one of the things that as an industry we could look to do… and there is maybe something we could do in terms of looking at controls overall within the market to address those things.”
A frequent complaint about all the codes is that they are unwieldy and all different in form and governance. Reform is planned. Love wants to take the best from each of the different codes to find the optimal way to deliver code services and in particular to look at the newest code – the Retail Energy Code (REC) – to see whether it is working better than the others.
A day to day complaint is that most codes date back to the era of hard-copy text. A digital version could be ‘smart’ – making changes faster and reducing potential errors. Love says she is, “Still getting my head round that. Digital codes are much easier to search. There are visions of how these digital codes could be operated in future in terms of creating legal texts, so you have less of a call on individual people to create new legal text – you can do it through the process. But I don’t think any of the codes have got to that stage yet.”
I suggest that the SEC should be the first code with smart digital governance, given its members will include data and digital companies alongside the traditional industry groups like suppliers and networks. She agrees that: “there is a lot of interest in terms of the information that is coming out and offering new services to customers. Probably more so than any of the other codes.” She says there is a cohort of people who are interested to see what smart is going to bring in terms of information, for example around electric vehicles, and options for control through the smart meter. The latter might include automatically shifting household loads to help manage the system in exchange for lower bills – an automated option for the demand response events that consumers have joined this winter.
Is it likely that codes will be consolidated? There are over a dozen and companies may have to be parties to several – an administration task that presents a barrier to new entrants.
“At the moment there is no enduring governance for the SEC because the rollout of smart meters is not complete“
Love said she previously wanted to investigate mergers but “I had not appreciated the role that government still has in the SEC, because of the smart metering programme. At the moment there is no enduring governance for the SEC because the rollout of smart meters is not complete.”
Currently, Love says aspects of the SEC – metering equipment, the communications network, data services – are very large and complex. The Retail Energy Code includes codes of practice on metering and switching, so “They are related but they are both quite substantial in their own right. To bring them together would be quite difficult.”
Gaps loom in the framework
Love has some key issues to grapple with in her discussions with government. The smart energy code has to move to an enduring governance framework. Also, the price control period for the DCC, the smart meter data clearing house, is coming to an end in 2025 and its price control framework may change, “because it is treated quite differently from all the other network companies.” That might mean changing from ex-post to ex-ante charging but more fundamentally “does it look like a network business or a retail business? There are obviously retail aspects to the smart energy code.”
Another issue on the agenda is the communications infrastructure – a ‘communication transition’ group is considering how the smart meter network should manage the loss of 2G and 3G wireless networks, which is expected in 2033, and whether it should move to 4G. Love says the group is considering “when we do that and how we engage customers on that to make sure we get the correct infrastructure on place” so there is no risk to continuity of service. “We need to decide what to do as an industry”.
“what is the stable base to manage going forwards?”
These fundamental changes are not being managed in concert – there is not even a timetable for setting up enduring governance yet.
That is all on Love’s agenda in conversations with the new Department for Energy Security and Net Zero (where the smart meter programmes remains, although its communications aspects also concern the enlarged DCMS) . “It is my intention to speak to them about the enduring regime because I am sure they don’t want to be involved in the smart metering arrangements any longer than they have to be.”
She says, “there has been a lot of work that has gone into the setup and all the teething problems in the last nine or 10 years. Now the question is what is the stable base to manage going forwards?”