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New licence obligations for smart meters

Ofgem has published new licence obligations for energy firms that install smart meters, or Advanced Domestic Meters (ADMs), in domestic properties throughout the UK.

Regulating the energy industry in Great Britain, Ofgem has a commitment to ensure a fair, competitive market. Although powerless to prevent certain decisions made by energy firms, the regulator is able to impose some conditions on suppliers to protect the public interest.

The British Government is committed to installing smart meters in all UK homes, but until recently the smart meter market had been poorly regulated. Whilst the roll-out of ADMs is still in its infancy, Ofgem has published a report that outlines the obligations of energy suppliers.

There are seven new licence obligations imposed on suppliers by Ofgem, which also set out a number of other conditions in its report published on the 28th August 2012.

The first two licence obligations state when switching suppliers and before entering into a new contract, customers must be informed of any services or ADM functionality that may be lost as a result of the change.

The third licence obligation states: “Before a customer switches supplier, the existing supplier must delete and cease to flow any misleading information on the meter and (where installed) the home electronic display relating to that supplier’s charges”.

Domestic customers who switch suppliers ought not to be charged for a meter exchange, whilst installing suppliers must share information with new suppliers to ensure a smooth transition of service and to maintain functionality.

Ofgem has sought to codify the licence obligations in order to harmonise smart meter technology in Great Britain.

The regulator’s report states: “The Smart Metering Programme is introducing new industry arrangements to support smart metering… Smart meters operated under these arrangements in accordance with the Smart Energy Code will be fully interoperable; the new supplier will be able to take over the operation [of] a smart meter with no loss of the core functionality and maintenance of services for customers”.

Smart meters are designed in part to educate households on electricity usage. Energy consumers will be able to see how electricity is being used in the home. The Government hopes this will encourage a new attitude on energy conservation, not just for electricity usage but also gas central heating.

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