- Ofgem fines npower £2.4 million for failing to install advanced meters by deadline
- Electricity business customers lost out on benefits of advanced meters at nearly 4000 meter points and npower installed around 200 traditional meters when it should have installed advanced meters
- Ofgem warns that suppliers must make sure mistakes are not repeated in smart meter roll-out
Npower will pay a fine after it failed to install advanced meters for some electricity business customers by the April 2014 deadline.
These customers missed out on the opportunity to receive better information about their energy consumption and control costs.
Ofgem requires npower to pay a penalty of £2.4 million. The fine relates to npower missing its deadline to supply business customers through advanced electricity meters at nearly 4,000 meter points and because it installed around 200 traditional meters when it was required to install advanced meters.
The Government’s scheme to roll-out advanced meters to businesses began in 2009, as part of a national project to modernise the energy sector.
Npower had five years to take all reasonable steps to install advanced meters for its larger non-domestic customers. Npower had approximately 22,400 meter points at which it needed to install advanced meters by April 2014. Npower installed advanced meters at 15,200 of these meter points.
Ofgem found that the supplier did not take all reasonable steps to install advanced meters at 4,000 of these meter points. This meant that the supplier did not meet its legal requirements for the roll-out as set out in its licence conditions. Customers at these premises were left without an advanced meter and being supplied electricity through other means on the deadline for the roll-out period.
Ofgem also found that, between October 2009 and November 2015, npower replaced almost 200 electricity meters at relevant business premises with non-advanced meters, in breach of one of their licence conditions.
Ofgem found that npower did not take all reasonable steps because:
- it left it too late in the roll-out period for its efforts to install advanced meters to be effective;
- it didn’t make sufficient efforts to engage with customers to resolve installation difficulties in many cases; and
- it didn’t make sufficient efforts to ensure the meters were able to send meter readings
Rob Salter-Church, Ofgem interim executive director for consumers and markets said:
“Npower is paying the price for failing to meet its obligations and letting down its business customers.
“The Government set a clear deadline for suppliers to ensure no business customers unnecessarily missed out on the benefits of advanced meters, including the opportunity to save money on their bills. The fine reflects that there were systemic failings by npower which led to the serious failure of not meeting the deadline.
“Suppliers must learn their lesson to make sure mistakes like this are not repeated in the roll-out of smart meters."
Notes to Editors
- This related to an investigation by Ofgem into npower’s compliance with two aspects of Supply Licence requirements relating to advanced meters (electricity meters). It was found that npower breached two Supply Licence Conditions: SLC 12.18, which requires suppliers to install advanced meters at relevant premises on or after 6 April 2009 and SLC 12.21 which prohibits suppliers from supplying electricity to relevant premises other than through advanced meters as from 6 April 2014 unless they have taken all reasonable steps to install advanced meters
- Ofgem sought a financial penalty of £3.7 million from npower for its breach of its licence conditions. Npower contested Ofgem’s case and the decision was referred to a separate panel made up of members of the Enforcement Decision Panel (EDP), set up to make decisions in disputed cases. The panel, has determined the fine of £2.4 million, which will be paid to HM Treasury.
- When Ofgem and a supplier are not able reach an agreement on payment for a supplier’s breach of its licence conditions, the penalty determined by the external panel is applied as a fine rather than a redress payment. The last time Ofgem fined a supplier following a contested case was when SSE paid a £10.5 million fine in 2013.
- In April 2009, the Government introduced a new licence requirement 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 remote communication between customers’ premises and suppliers’ IT systems. The advanced meter obligation prohibits the supply of electricity to all larger non-domestic premises other than through an advanced meter unless the supplier has taken all reasonable steps to install such a meter.
- The Enforcement Decision Panel (EDP) was established in June 2014 to take important decisions in contested and settlement enforcement cases on behalf of the Gas and Electricity Markets Authority. The Enforcement Decision Panel are Ofgem employees that are independent of the Ofgem case team that investigates compliance with Supply Licence requirements. Panel members are selected for each individual case. The panel for this case was made up of John Swift QC, Professor Amelia Fletcher and Andrew Long.
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