- Publication date
- 9th November 2015
- Information type
- Policy area
- E.ON delivered advanced meters to less than 65% of its relevant electricity business customers by April 2014 deadline.
- E.ON to pay £7 million now to the Carbon Trust and agrees to pay a further £7 million in redress if it fails to meet new interim target.
- This case sends a strong signal to all suppliers about the importance of complying with deadlines.
Ofgem has today secured £7 million from E.ON as the supplier failed in its duty to supply relevant business customers through advanced electricity meters by the April 2014 deadline. The roll-out is part of a national project to modernise the energy sector and provide better service by introducing next-generation, smarter meters to help customers control their usage and bills.
The government’s advanced meter roll-out scheme for businesses began in 2009. Under this, E.ON had five years to fit around 20,000 customers with, and supply electricity through advanced meters. E.ON only completed 64.4% of its roll-out, meaning over 7,000 customers did not get a meter on time. E.ON was unable to demonstrate that it took all reasonable steps to fulfil its required meter rollout. The supplier failed to plan and monitor its roll-out and its senior management didn’t do enough to ensure it complied. E.ON has also gained financially by avoiding the costs of installing and operating the new meters.
Suppliers who failed to deliver on time are nonetheless still required to roll out advanced meters. Since April 2014, E.ON has made some further progress. However, the supplier has accepted it needs to do more and has agreed that unless it meets an interim target within the next year, it will pay a further £7 million in redress. If E.ON is still not compliant with its obligations after a further six months, we are ready to consider imposing a sales ban preventing them from taking on new business customers until it is able to supply them through an advanced meter.
Anthony Pygram, Ofgem senior partner with responsibility for enforcement said: “It’s unacceptable that E.ON failed to roll out advanced meters to these business customers on time. Customers have lost out on receiving better information about their energy consumption and the opportunity to control costs. Unless E.ON improves their poor record, they will have to pay out even more and may face a sales ban.
“The roll-out of advanced meters has the potential to transform the energy market. We expect all suppliers to learn the lessons from this ahead of the domestic smart-meter roll-out, in particular the need to start the process in good time and ensure senior managers are committed to delivering on time.”
Notes to editors
The £7 million redress payment today will go to the Carbon Trust. This will fund delivery of energy saving audits, energy savings advice, and installation of energy efficiency measures to help small and medium sized businesses across Great Britain save energy.
2. Medium and larger business advanced meter roll-out
In April 2009, the government introduced a new licence condition requiring suppliers to roll out advanced gas and electricity meters to their medium-sized non-domestic customers by 6 April 2014. The specific obligation was to install “advanced” meters; a particular type of smart meter which allows for one-way communication between customers’ premises and suppliers’ IT systems.
The advanced meter obligation required that all larger non-domestic premises be supplied by advanced meters unless the supplier was unable to complete installation, despite taking all reasonable steps to do so. Ofgem considered “all reasonable steps‟ to be a high threshold for compliance.
Suppliers had a five-year period in which to prepare to supply gas and electricity through advanced meters. This obligation required around 28,000 gas meters and 155,000 electricity meters to be upgraded or replaced.
Based on our assessments, the roll-out was only 75% complete in electricity by April 2014, compared to 86% complete in gas.
Suppliers’ progress on the advanced meter roll-out to medium and larger businesses was monitored by Ofgem throughout the process and it repeatedly reinforced the need to deliver on time.
Investigations continue into British Gas’ and npower’s roll-out performance.
Ofgem is also keeping under review the actions we may take against other suppliers who are yet to have installed advanced meters for all their medium and larger business customers.
3. Domestic smart meter roll-out
As part of the government-mandated national infrastructure project to modernise the energy sector, suppliers are also required roll out smart meters to all domestic and smaller non-domestic customers by the end of 2020. Domestic smart meters operate to a higher specification (including two-way communication) reflecting the needs of these consumers.
They bring a wide range of benefits. For example:
- Giving near real time information on energy use.
- Allowing consumers to better manage their energy use, save money and reduce emissions.
- Bringing an end to estimated billing – consumers will only be billed for the energy they actually use, so they can budget better.
- Easier switching – smoother and faster to switch suppliers to get the best deals.
Ofgem is the independent energy regulator for Great Britain. Its priority is to make a positive difference for consumers by promoting competition in the energy markets and regulating networks.
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