Utility Business Winter 2013 by Energy and Utilities Alliance (EUA)

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UTILITY BUSINESS WINTER 2013

I S S U E

THE DIVISIONAL MAGAZINE FROM EUA UTILITY NETWORKS

F E A T U R E :

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY

IN THIS ISSUE n Machine-to-Machine: Transforming lives and

businesses for the better n Smarter Innovation through collaboration â&#x20AC;&#x201C;

delivering for customers in the water sector

n Market Transformation: Defining customer experiences

Utility Business Winter 2013 Your New Look Utility Business Magazine is here…

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Energy & Utilities Alliance Utility Networks Division Director: David Jones davidjones@eua.org.uk Administrator: Ana Ray ana@eua.org.uk

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Welcome

from your editor Welcome to the Winter edition of Utility Business. This issue considers the consumers changing relationship with energy as we move into a smart world – extremely topical in light of the high level media and political attention around energy currently.

Manager - Events, GSOG: Vanessa Webster vanessa@eua.org.uk 01926 513763

With much progress being made over the last twelve months towards the Smart Metering rollout goals, focus moves to engaging the consumer in the programme. With the launch of the Central Delivery Body - the organisation which will be specifically responsible for engaging consumers with smart meters and building awareness and understanding – we are expecting to see a step change in activity in the press, social media, digital media etc. A consumer engagement strategy is expected before the end of the year which will outline this in greater detail. As the first of the ‘Big Six’ to launch a consumer TV advertising and press campaign around smart meters, British Gas share how they intend to transform their customers relationship with energy see page 13.

Manager: Gary Cottrell gary@eua.org.uk

With the number of smart metering workgroups slimmed down as various elements of the smart programme conclude or await outcome from Europe, EUA is still actively participating in most of the ongoing work streams – see the update in the UN News pages for more on this.

Marketing & Communications: Caroline Taylor caroline@eua.org.uk 01926 513762

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=================================== Chairmen Utility Networks Board: Vic Tuffen (Tuffentech Services Ltd) Network Engineering & Equipment Group Andy Vine (Crane Building Services & Utilities)

Of interest to readers will no doubt be National Grid’s Winter Outlook. The report demonstrates that the UK’s demand for energy is getting closer to the amount we can produce or buy in. There is enough but the report shows that investment is urgently needed to ensure we continue to do so. We ran two key events through the Autumn period and coverage of the Utility Metering Seminar and Utility Asset Management can be found in this issue. Our viewpoint piece comes from Mark Smith of WRc. He looks at a different approach for improving innovation in the water sector through a customer driven, rather than regulatory focus. I really hope you enjoy this issue. If you have any news to share regarding developments in your own company for the next issue, please do drop me a line.

Metering Services Group Dave Gregson (Calvin Asset Management) Metering Technology Jeff Cooper (Elster Metering) Gas Storage Operators Group Roddy Monroe (Centrica Storage)

Caroline Taylor, Editor caroline@eua.org.uk

In this issue…

Features

Data & Communications Management Group Mike Buss (Sensus Conservation Solutions)

Smart Meter Update

Utility Asset Management

National Grid Winter Outlook

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Issue feature: Transforming the way customers engage with energy

Editor/Enquiries Caroline Taylor caroline@eua.org.uk 01926 513762 ISSN Number 1359-9836 Energy and Utilities Alliance Camden House, Warwick Road, Kenilworth, Warwickshire CV8 1TH Tel: 01926 513765 Fax: 01926 857474 www.eua.org.uk

Visit the blog at www.utility-business.org

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THE DIVISIONAL MAGAZINE FROM EUA UTILITY NETWORKS

WELCOME FROM YOUR EDITOR // CONTENTS

UTILITY BUSINESS

Utility Metering Seminar Smart roll-out delay – a window of opportunity 18 Smarter Innovation through collaboration – Delivering for customers in the water sector

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Regulars Utility Networks News

Members News

New Members

Viewpoint

Nick Eyre Column

20 3

Utility Business Winter 2013

Utility Networks News Changes to the EUA events team EUA bid farewell to long standing member of staff Claire Pitt at the end of August. After 15 years with the organisation Claire retired to take up various family plans, charity work, hobbies and holidays. Claire made a fantastic contribution to the organisation with her exemplary event organisation and consistently delivered the Dinner Dance and Gas Industry Awards lunch, as well as the many other events she was involved with. Taking the reins of the EUA Dinner Dance and the EUA/IGEM Awards Lunch is Natalie Flay, Events & Projects Manager. Natalie has worked for the organisation for four years and will continue to support the HHIC team as well as head up these events. Natalie will work closely with Vanessa Webster who manages the Utility Networks Division’s event programme > Claire Pitt (left) and Natalie Flay, Events & Project Manager

Natalie’s contact details are: natalie@eua.org.uk 01926 513741

National Grid RIIO Meeting In September the Network Engineering and Equipment Group ran its second in a series of planned meetings focusing on how RIIO is working in practice in the Gas Distribution Networks. Following the success of the summer meeting with Wales & West Utilities, this meeting was led by National Grid. The comprehensive review included contribution from senior National Grid staff Richard Court, Steve Murray, Duncan Willey and Steven Vallender. Delegates were reminded of National Grid Gas Distributions business plan, given a detailed review of how RIIO is working – the day to day experience on the ground, a look at the challenges, difficulties, issues and new practices RIIO presents, comment on the effect on emergency and replacement works and an overview of how National Grid interact with suppliers and manufacturers. The session concluded with a highly useful presentation on innovation, highlighting the changes to National Grid’s framework and the challenges and opportunities this presents. Feedback from members who attended was extremely positive. The next meeting features Scotia Gas Networks and takes place on 10 December at Camden House, Kenilworth. If you wish to attend please confirm to Ana Ray ana@eua.org.uk.

Busy times for the Gas Storage Operators Group This group is particularly active, meeting every six weeks for general group meetings and now supporting five off shoot working groups tackling specific gas storage issues. With gas storage and security of supply hot political topics, some considerable effort has been invested in lobbying activity with meetings between EUA (Mike Foster, EUA Chief Executive and Roddy Monroe, Chair of the Gas Storage Operators Group) and the Energy Minister, Michael Fallon on August 12th and Shadow Energy Minister, Tom Greatrex, on 17 July . To many proponents in the industry, Government’s announcement that it would not support intervention in the market to incentivise additional gas storage in the UK was met with disappointment. EUA’s position is broadly: •

I ncreasing gas storage within the UK will help provide insurance against rising energy bills for consumers helping to avoid the price spikes experienced during recent cold weather. Government must make it easier for suppliers to invest in more gas storage capacity if interruptions in gas supply are to be avoided

•

t a time when our economy needs investment; when there is the need to create A jobs and secure long-term employment intervening in the gas storage market would have been good for UK industry, UK workers and the UK consumer

•

he UK stores less gas than other European countries and this needs to be T addressed particularly with falling North Sea gas production. Currently Britain relies on imported natural gas which creates significant short term vulnerabilities. Gas storage capacity needs to double in the UK to minimise risks to the British economy

Partly in response to the Government announcement, Centrica dropped its plans for additional gas storage capacity in the UK. They will not proceed with the new-build gas storage project at Baird in the Southern North Sea and has put its project at Caythorpe in East Yorkshire on hold indefinitely. Some positive news though, the Islandmagee gas storage project in Northern Ireland has secured Government funding guarantees. It was one of 15 infrastructure projects where Government will act as guarantor for a proportion of the capital value of a project.

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SMART METERING UPDATE - AUTUMN 2013

Where are we now – and how did we get here? Arrangements have been completed and contracts signed to establish and operate the smart metering Data and Communications Company (DCC) which will manage the smart metering service on behalf of its users and will contract with, and manage, the data and communications service providers. Smart DCC Ltd, a part of Capita PLC, has been granted the DCC Licence. CGI IT UK Limited has been appointed the Data Service Provider (DSP) contract to operate and develop the system controlling the movement of messages to and from smart meters. Arqiva Smart Metering Limited will be the Communications Service Provider (CSP) for the North region (north of England and Scotland) providing wide area communications to and from the smart meters.

Industry has established the Central Delivery Body, which will be specifically responsible for engaging consumers with smart meters, build consumer confidence in the installation of smart meters; and build consumer willingness, awareness and understanding of how to use smart meters to manage energy consumption. The body will organise a centralised programme of activity to support the energy suppliers via the press, social media, digital media etc. They will publish a Consumer Engagement Plan in December 2013 which will set out the activities it will undertake in 2014.

Current Working Groups The working groups operating during the transition phase are as follows:

Telefónica UK Limited is the CSP for the Centre (Midlands, East Anglia and Wales) and South (south of England) regions.

Ministerial Rollout Group (MRG)

Gemserv has been appointed as the Smart Energy Code (SEC) Administration Service (SECAS)

Smart Metering Delivery Group (SMDG)

To reach this stage has taken a significant number of years’ debate and discussion by key stakeholders in the industry – Ofgem, DECC, Suppliers, Networks, Consumer Organisations and Trade Organisations. The debates have lasted so long that we have seen several key participants reach retirement age without seeing the programme reach fruition. EUA has been a key influence throughout the programme workstreams and continues to play a significant role during transition and beyond.

Next Steps The next two years up to mandated rollout in Autumn 2015 are possibly the most critical part of the programme. Industry will take the current programme output so far and bring it all together. The Smart Metering Equipment Specification (SMETS), the GB Companion Specification, Security Architecture and Accreditation criteria, Interoperability, Interchangeability and Intercompatibility have to be considered, regulated and governed by the appropriate stakeholders. Again EUA and its members are influencing these processes at every opportunity and working constructively with other parties to help ensure a worthwhile and positive outcome from the Smart Metering Implementation Programme. This outcome must be right for everybody – Suppliers, Networks, Meter Manufacturers, Meter Asset Providers and Meter Asset Managers but, most importantly the consumer. Without consumer understanding and full acceptance of Smart Meters the programme will ultimately fail.

Supporting the Consumer In June the Smart Metering Installation Code of Practice came into force to ensure consumers experience a good service, are given the information they need to understand how to use their new meter and in-home display; and understand how this can help them to use their energy more efficiently. Government has also published a Consumer Engagement Strategy, which sets out initial steps to ensure consumers reap the full benefits from their smart meter. Customer protection and a good experience for consumers at installation visits are crucial.

UTILITY NETWORKS NEWS

The UK Smart Meter Programme is currently in the Transition Phase – the period where the programme moves from Foundation to Implementation Phase.

Smart Metering Steering Group (SMSG)

Implementation Managers Forum (IMF) Technical and Business Design Group (TBDG) Testing Development Group (TDG) EUA is engaged with the Benefits Monitoring & Review Group (BMRG) - main representative Jeff Cooper – set up to oversee how the implementation proceeds and what benefits the consumer sees and the Testing and Development Group – which has not commenced yet. Gary Cottrell, EUA, also sits on the overarching Operational Delivery Group (ODG). EUA also has some representation on the Smart Metering Delivery Group and Implementation Managers Forum. We are also engaged in the wider All Parliamentary Group on Energy Costs and one of its subgroups directly looking at Smart Meters. These are designed to ensure that proper importance is given to the consumer benefits from smart and the overall effect on Energy Costs.

Beyond Rollout Assuming that the industry stakeholders continue the progress towards the completion of SMETS version 2 and the GBCS coupled with the security architecture and accreditation criteria the suppliers will begin their mandated rollout in late 2015. There will also be many SMETS V1 meters installed prior to that date as part of Foundation, Transition and Integration Testing and these will eventually be enrolled into DCC to ensure that consumers who are early recipients of smart meters gain the same advantages as those who are later in the programme. The DCC, DSP and CSP will be live and SMETS V2 meters will begin to be installed and directly enrolled on to DCC at installation and commissioning. The standardised training for meter installers (both single fuel and duel fuel) that has been developed by the National Skills Academy and several of the suppliers will be in place and many new installers will be in the field rolling out the new meters, comms hubs and In Home Displays (IHD). The requirement for new meter installers will continue to rise to a peak in 2019 and then gradually tail off until the stabilisation of teams required for the on-going maintenance and exchange of meters as part of business as usual. 5

Utility Business Winter 2013

The Nick Eyre Column SMART METERS – ARE WE GOING TO USE THEM?

“

…in principle, everyone can be a winner.

In many ways the prospects for smart meters look good. After some delays to ensure that the specification is fit for purpose, the smart meter roll out looks set to begin in 2015. And they potentially offer multiple benefits. Energy users should get more accurate bills and better information with which to manage their energy. So suppliers should get happier customers as well as lower operating costs. And network companies should gain new ways to manage the complex problems they face, as more solar panels, wind turbines, heat pumps and electric vehicles are connected to their networks. So, in principle, everyone can be a winner. But will these benefits of smart meters actually come to pass? Many of them will rely on energy consumers being more active in managing their energy use, switching demand away from those critical periods when total demand is at its highest or wind generation is low. Most plans for how this will work envisage consumers responding to price signals that encourage this type of behaviour. This might be in real time, responding to messages about high price periods by rescheduling activities like clothes washing, or it could be automated, with lower prices for agreeing to allow a freezer to be switched off briefly at times of high demand. Different types of consumer may want, and need, different types of tariff. So, however it works in detail, ‘the smart metering revolution’ will require more complex tariffs than those we have for households now. And therein lies the problem. Almost all the current trends are in exactly

the opposite direction. Energy prices are a hot topic and energy suppliers’ profits hugely unpopular, and it is widely perceived that tariffs are too numerous and difficult to understand. Ofgem’s Retail Market Review has concluded that tariff structures need to be simpler and more transparent, and from January each supplier will only be able to offer four different household tariffs. And there is pressure to go further. This year we have heard political calls from different quarters for ‘everyone to be on the cheapest tariff’ and for ‘prices to be frozen’, without any apparent thought about the implications for a world with smart meters and active consumers. Most recently we have been promised cuts in the ‘green levies’ that are needed to deliver the technologies on which most assumptions about the need for smart metering are based. So there is a real risk that smart meters may get rolled out, but not used properly, in which case consumers pay for them but get limited benefits. This contradiction in current debates about energy needs to be resolved; sound bites are easy, but our politicians have to decide the direction for our energy system quickly.

Dr Nick Eyre is Programme Leader of the Lower Carbon Futures group in the Environmental Change Institute at the University of Oxford, and a Jackson Senior Research Fellow at Oriel College, Oxford. He is a Co-Director of the UK Energy Research Centre, leading its work on energy demand. Nick previously worked at the Energy Saving Trust as Director of Strategy and, on secondment, in Cabinet Office, where he was a co-author of the Government’s 2002 Review of Energy Policy. Nick has worked on energy, environment and climate issues for 25 years. He has published extensively and is a lead author on the Fifth Assessment Report of the IPCC.

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Member News

THE NICK EYRE COLUMN INDUSTRY // MEMBER NEWS NEWS

Murphy ranks at twelfth place in the Top Track 250 league table The ninth annual Top Track 250 league table supplement recently published in The Sunday Times saw J. Murphy & Sons Limited in 12th position, up 39 places from last year. Top Track 250, the sister publication of Top Track 100, ranks Britain’s leading mid-market private companies. The improved ranking from its previous 51st position was based on its healthy 2012 performance which saw rapid growth and development across the group, not least an increase in turnover from £500 million to £650 million, and the introduction of Land & Marine into the Murphy portfolio of businesses.

New Trades and Energy Skills Centre opens its doors Develop Training has launched its first Trades and Energy Skills Centre in Derby, to meet training and development needs of gas, plumbing and electrical engineers. The new Centre, which has multi-skilling at its core, will provide people with a one-stop venue where they can continuously develop their basic to advanced professional qualifications for working with water, gas and electrics in domestic and industrial environments.

Radius Systems acquires AEON Radius Systems has strengthened its portfolio after acquiring Aeon Group Holdings Ltd. Aeon a global manufacturer and supplier of valves to the fire protection, gas, water and oil exploration and transportation sectors, operates from three facilities in the United Arab Emirates (Dubai), Poland and the UK. Radius Systems was purchased by the POLYPLASTIC Group in February this year and this is the second acquisition – it acquired the Subterra brand in June.

Morrison Utility Services invests in energy metering services Morrison Utility Services is positioning itself to capitalise on the UK smart metering rollout programme, due to commence in 2015, having successfully attained Industry Meter Operator (MOP) accreditation which supplements the existing Meter Asset Manager (MAM) accreditation attained in December 2012. The new accreditation means that Morrison Utility Services’ smart metering division is now able to provide meter installation and maintenance services.

Balfour Beatty launches customer service scheme

Siemens and geo enable Smart Metering in Multi-Dwelling Buildings

To coincide with National Customer Service Week – 7-13 October, Balfour Beatty is launching a new programme designed to recognise outstanding customer service in its gas and water operations.

Siemens in partnership with Green Energy Options (geo) has launched a pioneering solution for the deployment of Smart Meters in Multi-Dwelling Buildings.

The WOW! Awards allow members of the public, residents, business owners and other stakeholders to nominate a Balfour Beatty employee they believe is deserving of recognition for excellent customer service.

They have solved the problem with a unique ‘shared infrastructure’ solution, utilising a Broadband-over-Powerline (BPL) backbone integrated with wireless radio technology that enables standard smart meters to be installed, commissioned and connected to a Wide Area Network (WAN) gateway. The solution is scheduled to go into field trials in the UK in early 2014.

DNV GL merger approved by competition authorities The merger between DNV and GL is now approved. The new company - DNV GL - will be the world’s largest ship and offshore classification society to the maritime industry, a leading provider of technical assurance and risk management services to the oil & gas industry and a leading expert in wind and power transmission and distribution. DNV GL also takes the position as one of the top three management system certification bodies in the world.

Fulcrum completes sale of domestic gas connection assets to ES Pipelines Fulcrum Utility Services has announced the sale of 31,000 domestic and mixed-use customer gas connection pipeline assets managed by their subsidiary, Fulcrum Pipelines Limited, for a seven figure sum in cash to ES Pipelines Limited. Fulcrum Utility Services will retain its industrial and commercial customer gas assets together with its independent gas transporter licence. 7

Utility Business Winter 2013

Utility Asset Management It is interesting times in utility asset management as the first regulatory settlements for energy transmission and gas distribution bed down under RIIO, and the industry heads towards new price settlements for water and electricity distribution in 2014 and 2015 respectively. Outcomes-based regulation, customer challenge, stakeholder consultation, smart networks, sustainability, totex are just some of the common regulatory themes shaping the future of utility asset management practice across the sector. EUA’s 5th annual industry event examined the role that changing economic, safety and environmental regulation is playing in setting asset strategy. The seminar looked at the investment plans of network companies amidst the shifting balance between capex and opex solutions and reviewed whether the required data, knowledge and decision support systems being developed will deliver the customer outcomes required. Also this year a special ‘decommissioning feature’ focused on how asset managers learn from this often overlooked phase of the asset management lifecycle. A top line up of industry speakers from Ofgem, Electricity North West, Balfour Beatty, National Grid plc, PwC, Wales & West Utilities, Nuclear Decommissioning Authority, EA Technology, Enzen Global Ltd, UK Power Networks and the Institute of Asset Management attracted around 90 delegates. Very kindly hosted by PwC, at their fantastic London office location at More London Riverside, the event included a supply chain exhibition and excellent networking. Speakers Left to right: Martin Grey

Nuclear Decommissioning Authority Paul Branston Ofgem Dave A Roberts EA Technology Phil McFarlane Electricity North West Paul McKeon Enzen Global Ltd Jonathan Chapman Balfour Beatty Richard Wakelen UK Power Networks David McKeown Institute of Asset Management Jon Butterworth National Grid plc Jonathan Grant PwC Chris Clarke Wales & West Utilities Duncan Page UK Power Networks Antony Cook PwC 8

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UTIILITY ASSET MANAGEMENT //INDUSTRY WINTER OUTLOOK NEWS

Winter Outlook 2013/14 By Chris Train, Market Operation Director This article highlights the annual Winter Outlook process undertaken by National Grid. This annual publication, published in October 2013, provides a detailed analysis of the supply demand position for the coming winter for both gas and electricity. Electricity Our peak weather corrected electricity demand forecast for this winter is 54.8 GW; this is our demand forecast should the weather be the same as long term average weather conditions. In any winter, however, there are milder spells and colder spells which drive fluctuations in demand around the weather corrected demand forecast. We forecast the peak Average Cold Spell (ACS) electricity demand to be 56.3 GW this winter. There is 3.8 GW of interconnector capacity available this winter. Interconnector flows are largely driven by price spreads, therefore the market dictates which way the interconnectors flow. Current price spreads indicate flows in from the continent and out to Ireland over the winter. Our central forecast assumes that we have 750 MW exports to Ireland and 750 MW imports from the continent at peak demand. Actual flows over the winter may well vary widely from this central forecast depending on British and interconnected market conditions.

Electricity Margins For this winter, taking the latest data into account, our central forecast of electricity margin against peak (ACS) demand is 5%, broadly in line with the level published in Ofgem’s Capacity Adequacy analysis in June. If, however, we have average weather throughout the winter, our central forecast of margin is 8%.

Electricity margins have decreased from historically high levels over the last few years. This has been driven by the effects of the Large Combustion Plant Directive legislation and economic pressure on older gas fired power stations (which has caused them to close or mothball). This has been partially offset by the fall in peak demands, increasing wind generation and construction of new gas fired power stations.

supplies and a diverse range of import capacity, combined with a mixture of storage types has performed well over the last eight years.

Whilst our central forecast of margin is 5% against ACS demand, actual margins will depend on actual demand, actual generator availability and actual interconnector flows in real time.

We also have facilities to receive liquefied natural gas (LNG) shipments, as well as gas storage. Gas storage makes up about 10% of the overall gas supply mix over the winter period (October to March).

Gas In the UK, we have significant diversity of gas supplies and capacity well in excess of maximum demand. For winter 2013/14, we forecast peak gas demand at 511mcm/d. This takes into account predicted high gas demand for power generation (82mcm/d) as well as 1 in 20 cold weather conditions. The maximum supply forecast to the UK is 594mcm/d - over 100mcm/d more than the highest demand we’ve experienced on the network (465mcm/d in January 2010).

We receive less than half of our total gas supplies from the UK Continental Shelf (UKCS) or North Sea. We receive supplies via pipelines from Norway, and continental gas through the IUK interconnector and BBL pipelines.

This winter, the maximum amount of gas in storage that can be delivered into the network each day is forecast to be 135mcm/d. This has increased slightly compared to the amount available last year owing to the Holford and Aldbrough gas storage sites increasing the amount they can deliver into the network on any given day.

While it is very difficult to forecast what the makeup of supplies will be for the coming winter, with each year having its own unique supply patterns, it is clear that the combination of UK

Further Information • The 2013/14 Winter Outlook Report is available at: http://www.nationalgrid.com/uk/Gas/TYS/outlook/ • For a detailed view of the daily margins, visit: http://www.nationalgrid.com/uk/Gas/Data/MNReport/ Chris Train, Director, Market Operation states that ‘National Grid sits at the heart of the UK energy landscape, as both the transporter and operator of the gas and electricity transmission networks. Whilst there is always uncertainty as we enter a winter – be that the make up of gas supplies; the severity of the winter weather; or the likely electricity generation mix – I believe the UK’s energy market has the capability to deliver. Additionally, I am confident National Grid has the right mix of physical assets, operational and commercial tools and people to ensure that consumers will continue to receive the energy they need reliably, efficiently and safely’. 9

Utility Business Winter 2013

UTILITY BUSINESS

I S S U E

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY

F E A T U R E :

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY The smart meter roll-out in 2015 offers energy companies a huge opportunity to win new customers and build trust. John Peters, Managing Director of Engage Consulting, discusses why consumer engagement is at heart of this programme and why that is needed to take advantage of this opportunity. The move to smart meters is being billed as the single biggest revolution in energy use since the natural gas conversion in the 1970s. It will empower consumers to improve how they manage their energy and help energy providers address the 21st century power supply challenges. Energy suppliers have been tasked by Government to install 53 million smart meters in 30 million homes and business by 2020, with the roll out starting in autumn 2015. However, the majority of people in the UK are unaware this is happening and don’t yet understand the implications and benefits of smart metering. Research earlier this year by uSwitch found that 55% of UK consumers are in the dark about smart meters and what they do, and just 13% (down from 19% just last year) are happy with their current level of knowledge. Whilst the energy companies have been busy working out the logistics of implementing such a huge programme, until recently how consumers are informed of the change has not been an urgent priority. The delay in starting the £11.7bn project, originally planned to start in summer 2014, gives the industry more time to get the important things right, including consumer engagement.

Improved communication of key benefits Although consumers won’t have a legal obligation to have a smart meter fitted, the consumer benefits will need to be communicated effectively. These include near real time information about energy use, allowing people to better manage their energy use and potentially save money and reduce emissions, and more accurate bills.

The task of getting consumers engaged with and informed about smart meters is the job of the recently established “Central Delivery Body” an independent entity which came into existence this summer, whose role is to deliver consumer engagement during the smart meter roll-out. The group aims to build consumer confidence in smart meters. It will run a major communications campaign to inform people about the benefits of smart metering and how people can have greater involvement with and control over their own energy consumption.

projected financial benefits of undertaking the smart meter roll-out.

In July Ofgem rolled out a new Smart Metering Installation Code of Practice which sets out the minimum standards to which energy suppliers have to comply with when installing smart meters in customer’s homes. This will help protect consumers and give them choices about factors including how much data the supplier collects from the smart meter and whether they share the data with other organisations. The code is designed to protect consumers throughout the process.

New report ‘Smart Grid, a great consumer opportunity

Both with that in mind, and if we look at smart meter deployments around the world, it seems that customer engagement has been a critical ingredient in the recipe for successful rollouts. Effective engagement can allay consumer fears and it is likely to increase take up particularly in countries like the UK where consumers are not legally required to accept the installation of a smart meter.

Why does the consumer matter?

We recently produced a report into consumer engagement and the smart grid for SmartGrid GB. The report, ‘Smart Grid, a great consumer opportunity’, highlights the importance of consumers in ensuring the success of smart grid in the UK. Although this is the next phase after the introduction of smart meters; some of the recommendations could be taken on board now by the energy companies to help guide their consumer engagement strategies.

Does consumer engagement really matter though? After all unless there is a major backlash against smart metering, it is reasonable to assume most consumers will accept the meters, and naysayers, seeing the benefits enjoyed by others, will most likely make the switch. Energy providers need to consider what the right balance is between active consumer engagement and less active consumer education, focussed on avoiding negative reaction from consumers. Smart meter benefits such as reduced demand and the collection of more data are premised on consumer engagement – if the industry is willing to forego these benefits then roll out could be undertaken with lower levels of engagement – but that would be to the detriment of some of the

Smart grid has the potential to help protect Britain’s energy supply, make electricity systems more efficient and contribute to decarbonisation. But of all its potential benefits, by far the most exciting are the ones it could deliver to consumers. This is also one of the biggest challenges the industry faces as elements of smart grid development will require new types of engagement from the industry with their end users, and making sure it delivers for consumers is crucial. The report is intended to provide those taking the big decisions with helpful insights and recommendations on how smart grid consumer education and engagement can be achieved successfully. There is an urgent need to get this engagement right with consistent and simple

The consumer at the heart of Smart Grid By putting the consumer at the heart of smart grid, the energy industry can design interventions and engagement strategies with them in mind. That means thinking about how people buy services – whether personally or on behalf of an employer, about the kind of behaviour change needed for smart grid schemes like ToU (timeof-use) and DSR (demand side response) to be a success and how people are motivated to engage with issues and purchasing decisions. For consumers to make the most of opportunities like ‘time of use tariffs’ and demand side response, they need to be provided with information that gives them both the confidence and understanding to use them to their advantage. The industry also needs to help people become more ‘energy aware’ so they understand more about their energy use and its impact on the system and also the potential savings they might make through using their energy at times when it is cheaper. There are three main conclusions to emerge from the report: •

onsumer awareness of their energy C use and the wider impact they have on the energy system needs to be address in parallel with developing sophisticated approaches to communication of specific smart grid schemes.

•

he benefits, whether financial or T otherwise, have to be set out clearly to consumers. The actions they need to take to realise particular benefits have to be succinctly described and, crucially, the benefit must be delivered to build continued trust. astly, effective schemes don’t focus on L educating the consumer about the smart grid per se, but rather on the specific action consumers need to take.

SmartGrid GB makes a number of recommendations in the report about the next steps that need to be taken to ensure effective consumer engagement on smart grid development. The three main recommendations are:

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•

To conclude When the digital switch over happened between October 2007 and October 2012, early scepticism was overcome by highly effective consumer engagement and great delivery. The energy companies must develop the same level of effective communication to get consumer buy in to smart meters first, and then smart grid technologies for the UK to truly benefit from this revolutionary way of consuming and delivering energy, and in the words of SmartGrid GB ‘ensure Britain keeps the lights on’.

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY

messages because smart grid development has already started in some parts of the country and it will only gain more attention when the smart metering rollout begins. The report stresses that getting the consumer to engage with smart grid is paramount in areas where consumers need to participate, such as signing up to a dynamic tariff, installing something in their home and changing their energy use behaviour perhaps in response to an alert from their energy provider.

1 Further research needs to be conducted on the relative value of smart grid schemes that need consumer action and those that do not in order to further support the business case for consumer engagement campaigns on smart grid. 2 Current smart grid projects are too focused on Britain’s energy networks. Britain needs a whole energy system demonstrator project/s with full representation from across the value chain to better understand smart grid consumer benefits. 3 Public awareness of the issues facing the energy system and the policies and schemes that are trying to address it such as smart metering/grid, Green Deal and the Energy Companies Obligation (ECO), etc is currently too low. Messaging in all areas of energy policy needs to be coordinated via a general nationwide education programme to build awareness of the challenges facing the energy system and to avoid confusing the consumer.

Utility Business Winter 2013

UTILITY BUSINESS

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY

Machine-to-Machine: transforming lives and business for the better By Wayne Flanagan, Client Managing Director, Vodafone What is M2M? Machine-to-machine (M2M) communication is an innovative technology that is enabling everything to become connected. M2M is often talked about as part of the ‘Internet of Things’ or ‘Internet of Everything’ revolution and it is transforming people’s lives and businesses for the better. Using a combination of embedded SIM cards, secure global mobile networks and fixed line connections data can be wirelessly transmitted anywhere in the world. Today M2M technology can be found inside cars, white goods, shipping containers, security cameras, TVs, industrial machinery, drinks coolers and much more. Almost anything can be connected. These previously ‘dumb’ assets are now able to communicate with each other over wired or wireless connections. As well as ‘talking’ to each other they are also able to send data and receive commands from a central management system, autonomously and often in real time. For businesses, this opens up a whole new world of opportunities to increase business agility and efficiency. By automating certain processes like checking energy meters in people’s homes, reporting machine faults or operating status, employees are free to focus on what humans do best: thinking creatively, innovating and growing their businesses.

How does M2M benefit businesses? Used intelligently, M2M can offer a number of benefits for the energy and utilities industry and beyond. Data gained from M2M enables managers and engineers to observe and influence every part of their business down to the smallest detail. They can then refine processes and optimise supply chains, cutting out unnecessary costs and providing a better service to their customers. The use of M2M technology has already had a significant impact in several key industries. Automotive, healthcare, consumer goods and energy and utilities are all adopting M2M for a wide range of uses. 12

Machina Research forecast that the market for M2M healthcare applications will be around $69 billion worldwide by 2020. Increasingly the industry will see M2M health, or mHealth, applications emerging that are hugely beneficial to patients. This includes remote care services and the delivery of more accurate real-time information from medical devices. MHealth applications are already used to monitor patient’s adherence to prescription medication in the treatment of long-term illnesses. In the consumer goods and retail sectors many businesses are already using M2M to monitor stock levels as well as the temperature and location of connected chilled cabinets. Large retailers are also able to fit their delivery vehicles with an M2M tracker, which enables them to gain greater insight into their supply chains. The automotive industry in particular has seen strong uptake of M2M. A recent study conducted by Vodafone found that 88% of automotive companies are currently developing an M2M strategy. Adoption of M2M in the automotive industry is being driven by the trend towards connected cars and also legislation. By 2015 all new cars in Europe will be required to be equipped with a SIM card that will enable the car to automatically call the nearest emergency centre should the need arise.

M2M in utilities Energy and utilities is one of the industries poised to benefit the most from M2M services. There has already been a lot said about the benefits of smart meters in terms of changing consumer behaviour and reducing carbon emissions. But smart metering is just one example of how M2M can benefit organisations in the utility industry. As well as changing customer energy use M2M has the potential to transform how the energy and utilities businesses operate. With the installation of smart meters and the creation of a ‘smart grid’ utility companies are able to gain a lot more intelligence about the state of the electricity, water or gas network. This has a number of benefits; firstly with M2M utility companies will be able to manage their workforce much more effectively. Automatic detection of faults in the network will cut repair times and help engineers to manage their travelling time more efficiently.

Currently electricity companies have very little visibility of their low voltage network. This means that they are not able to accurately detect faults or issues in the 240V grid that powers the majority of homes. With the advent of the smart grid these low-visibility areas of the network can now be monitored and managed more effectively. The intelligence gained from the grid will also benefit customer services. For example, if a street loses power, an energy company will be able to proactively contact the customers to explain the fault and let them know an engineer is on their way. This means that customers do not have to call the energy company to notify them of a disruption to the service, which increases customer satisfaction and avoids the company receiving penalties from regulators. It enables call centre staff to be deployed more efficiently too.

Connected home Smart meters have taken us a big step forward in realising the concept of the connected home. With a device fitted in the home capable of sending and receiving data customers can take more control of their utilities and appliances .This can include using a smartphone app to remotely control the lights in the house, set the washing machine or charge an electric car. Adding a data connection to the home also helps enable appliances and utilities to operate more intelligently. M2M can be deployed in heating systems that automatically react to environmental factors. M2M can also help to create personalised consumer experiences by supporting innovations such as smart fridges and connected TVs. As the ‘owners’ of the smart meter connection, energy and utilities companies are uniquely placed to enable these additional services. Smart meters are just the beginning in what will be a technology revolution. As the examples have shown, M2M has the power to change the way all businesses operate. Machine-to-Machine is bound to touch almost all aspects of our lives and will come to shape the homes, businesses and cities of the future. The opportunity to work more intelligently, more efficiently and more responsibly is there for those businesses willing to take it.

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TACKLINGRELATIONSHIP DISRUPTION ON OURENERGY ROADS MACHINE-TO-MACHINE: TRANSFORMING LIVES AND BUSINESS // SMART METERS: TRANSFORMING PEOPLE’S WITH

Smart meters: transforming people’s relationship with energy By Paul Nickson MBE, Commercial Director, British Gas Smart Metering The smart meter revolution is set to bring about one of the biggest changes to our homes, in terms of energy, since the installation of gas mains. Smart meters can transform people’s relationship with energy and help them to make more informed decisions regarding their energy use. They also put an end to estimated bills and allow customers to see their energy as they use it, and its cost in pounds and pence. At British Gas, we see them as a game-changer for our industry, enabling us to provide more personalised energy advice and services tailored to customers’ needs. At British Gas, we’re at the heart of this process as one of the energy providers currently upgrading 53 million gas and electricity meters to smart meters in homes and businesses nationwide. Having learned from other metering programmes and national roll-outs across the globe, we believe consumer engagement is essential to the programme’s success. For example, Digital UK showed us that engagement activities should ideally start more than 30 months ahead of the roll-out to get people engaged. This is particularly important when talking about the savings made possible through smart meters. A joint report we launched with Oxford Economics last year found that, due to the greater understanding and control over energy use that smart metering can enable, smart meters can help consumers save 5% on their annual energy bills, which is equivalent to a saving of around £65 a year on the average bill. However, to make these savings, customers must engage with smart meters and understand how the information the meters record can help them to identify opportunities to save.

You, or someone you know, may have noticed the smart meter roll-out already. You or they may have seen a TV advertisement, read a newspaper article, been offered or even had a smart meter installed. Smart meters are due to be fitted by 2020 as standard, so you’ll be hearing more and more about them over the coming months. At British Gas, we’ve already installed over one million smart meters in households and businesses across the country and trained over 1,200 Smart Energy Experts to deliver the smart meter roll-out. We chose to offer smart meters early to our customers, so they could benefit from the technology as soon as possible and so we could develop and refine our smart metering capability ahead of the formal Government mandate commencing and allow our customers to have the best possible experience. But, importantly, we’re going beyond just installing smart meters and are offering insights that help customers to change their behaviours and manage their energy use. Through our Smart Energy Reports™ we offer personalised advice and comparisons to similar households, so it’s easy to see if a household is using more energy than others like them, and spot potential opportunities to be more energy efficient. Having rolled out more smart meters than any other energy supplier in Britain, we’re keen to continue to raise awareness of smart meters and what they provide for customers. British Gas has a dedicated team to educate the public on the rollout, raise awareness of the benefits and maintain

an engaging customer experience at installation and beyond. We believe the best place to start is with customer insight. We interviewed over 40,000 customers who have had smart meters installed to help us develop and improve our installation offering. We use these findings to continually review the practical information we provide, for instance in our Smart Energy Reports™. We have combined that with a multi-channel marketing campaign that raises awareness of the smart meter rollout, to inform, reassure and educate the public. We were the first energy company to run a TV campaign dedicated to smart meters which aired earlier this year. As a board member of the Central Delivery Body (CDB), I’m also conscious of the important role it has to play in raising awareness and increasing consumer confidence in smart meters on behalf of the whole industry. Details of how this will be done are yet to be finalised, but the CDB is working quickly to make best use of time so the Government’s target of having smart meters as standard in homes and businesses by 2020 can be met. Smart meters and the opportunities they bring are the beginning of a major transformation for our industry and customers. It’s an exciting time, but it’s essential we bring customers with us on the journey, clearly signpost the route map and explain the benefits smart meters bring. I look forward to being a part of that journey.

Utility Business Winter 2013

UTILITY BUSINESS

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY

Smart Street Lights The Fast Track to Smart City Value By Brian McGuigan, UK & Ireland Smart Cities Lead, Silver Spring Networks UK & Ireland Cities have recently become a focal point for sustainable economic growth. More than half the world’s population now lives in cities and generates more than 80% of global GDP. Such high stakes have driven investment in smart city initiatives to fuel development as well as build the competitive advantages necessary to attract business and retain skilled workers. A recent Arup report highlights the UK’s leadership position in this market, with the potential to represent 10% of $400B global smart city market by 2020. (Global Market Opportunities and UK Capabilities for future smart cities). Street lights are forming an increasingly important role within smart city development. As a standalone application the upgrade and networking of street lighting is now a proven and popular component of many city programs. With all cities looking for energy savings lighting has moved to the top of the priority list - largely due to the 80% drop in LED pricing over the last 5 years which has slashed the payback period and transformed the business case. In addition to these core savings however many cities are recognizing that this infrastructure upgrade presents a longer term opportunity to deploy a new multi-application network across the city to support a huge gambit of current and future smart city and smart grid applications.

Street Lights Today Cities typically allocate up to 40% of their energy budget on street lights with little cost leverage. Community perception is often negative when damaged or failed lights go without repair. Identification of failed lights requires costly scouting teams throughout the city and reports from citizens. Current operational processes result in error prone management of assets. As a result, operational spending lacks predictably and contributes to budget overruns. Networked street lights represent a high impact starting point for building smart city value. Cities from across the world including those in UK are already deploying energy-efficient LEDs or HID lamps to replace older street lights. Networked street lights can: • Deliver more than 50% in energy and operational savings • Help city’s meet carbon reduction targets • Provide a platform for additional smart city and smart grid applications

Unlocking Smart City and Smart Grid Value Through Lighting A wide range of products and applications are emerging to enable cities and grid operators to modernize services and optimize systems. The vast majority of these require reliable, cost effective and efficient 2 way Machine to Machine communication (M2M). Applications innovate across a diverse range of areas deliver benefits to a combination of stakeholders including the city, energy networks, businesses and consumers. Examples include traffic monitoring and signaling, distributed renewables, smart metering, electric vehicle management, demand response programs, parking management and quality measurement to name a few. The networking of street lighting presents an ideal opportunity to enable network connectivity for these types of applications at no extra cost, creating a city wide canopy of dedicated, reliable M2M communication. Figure 1 illustrates the integration of multiple smart city applications supported by a single network established via the initial smart street lighting business value.

Smart Street Lighting - Key Elements

Smart street lights yield significant energy and operational savings. To capitalize on the opportunity and build maximum ongoing value, five critical areas must be evaluated: • Choose a solution based on standards for maximum flexibility and business agility

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The Silver Spring smart street lights solution overview Figure 2 outlines the major elements:

Street Lights – Network Foundation for Growing Value

SMART STREET LIGHTS : THE FAST TRACK TO SMART CITY VALUE

Five critical areas to fast track value

Silver Spring pioneered the use of the Internet Protocol (IPv6) in smart grid networks. With smart street lights, demand flexibility and choice in photocells and luminaires combined with agile control system integration. • Reduce risk by building on a platform proven at scale Smart streetlights require a resilient, high-availability network designed to support a rich and growing variety of smart city endpoints. • Increase leverage by adopting a network that supports multiple applications The Silver Spring network offers the performance, reliability, and capacity needed to support multiple applications. A common network supporting multiple applications saves time and money.

One network for many city applications

• Look for built-in security with proven processes and technology Policy management, multi-layer protection and monitoring are built into the platform, offering unparalleled levels of security. Apply our proven security technology and processes to your smart city applications as well. • Gain choice from a well-managed and thriving ecosystem Use open standards to gain the advantages of proven and well-established business practices, certification procedures, and integration standards. The Silver Spring solution combines software, hardware and services to empower operators to reduce costs by up to 50% while improving community safety and environmental impact.

The capabilities of the Silver Spring solution offer a fast path to production deployment and community impact. Well-tested services ensure an operational street light network with support many smart city applications. Leading cities are working together with Silver Spring to continuously grow the value of their smart city applications. Your street lighting initiative can similarly benefit from our experience accelerating smart city value. To discuss Smart Street Lighting and our value please contact our UK & Ireland Smart Cities lead Brian McGuigan at bmcguigan@silverspringnet.com

Utility Business Winter 2013

UTILITY BUSINESS

TRANSFORMING THE WAY CUSTOMERS ENGAGE WITH ENERGY

Market transformation: Defining customer experiences By Ray McDiarmid, Utilities Market Director, Capita Customer Management Observers of the industry will recognise that the pace of change is quickening in the energy market and social commentary is dramatically increasing. The market is transforming at the same time that it is having transformation forced upon it. There is a race to a more customer centred service model between the big players, transition to petrol forecourt-style pricing, smart meter rollout looming and Government imposed levies seemingly everywhere one looks. Perceived corporate greed amongst the big six dominates the headlines but there seems to be a sense of the market fighting back and demanding proper debate. Pricing increases are clearly regrettable in the current economic climate and hostility towards energy providers is already at an all time high. This is exactly why the sector needs a depoliticised debate that engages the average person on the street. The political spotlight needs to shift away from what the big six are taking out of the market; a modest percentage return if reports are to believed, in favour of a more transparent account of what’s really driving the upward trajectory of energy bills.

Tariff simplification will change the customer dynamic and put the emphasis firmly on customer experience as the key battleground for attracting, retaining and increasing consumer trust and spend moving forwards. This is in stark contrast to the last five years, where nearly three quarters (72%) of consumers choosing to switch their energy providers were motivated to do so for cost savings reasons. Petrol forecourt style pricing, with one rate to consider as opposed to a minefield of complex tariffs will go a long way towards neutralising rate variance between the big six. In the lead-up to the revised 2020 smart meter target, the industry must work hard to eliminate the root causes of customer dissatisfaction and unwanted contact, most notably a systematic removal of the over-reliance on estimated consumption at the start point of a new customer relationship, erroneous billing and dated home-moving processes. Consumers are already demanding a much wider choice of ways to engage, or indeed disengage with energy providers on their own terms. Waiting for smart to fix these issues will not be tolerated and consumers will vote with their feet.

This needs to be done without further alienation of an already disenfranchised population who have been conditioned in to thinking that price hikes equate to high corporate dividends. Any notion that the likes of SSE’s 8.2% increase will flow straight to their bottom line is considerably wide of the mark.

To put a different perspective in place, the opportunity to retain and grow consumer loyalty is shifting away from ‘switching to save’ to ‘staying (or joining) for better service’.

Above all, energy providers simply have to become associated with delivering exceptional and differentiated customer experiences. Central to this is broadening the view of ‘what good looks like’ beyond direct comparison with peers in the same, largely underperforming, marketplace. Consumers base their impressions of value and individual worth to an organisation based on reference points outside of the energy sector. The likes of Marks & Spencer, O2, BMW and others represent far more relevant and aspirational benchmarks for energy providers as they develop their customer operating strategies.

The continued investment and adoption of digital alternatives to the telephone as a sales or service channel will enable energy providers to eliminate or automate many unwanted, or non-value adding contact types. Residual telephone contact will, of course, always be important as an escalation channel, or for those consumer segments that value speaking to a ‘real’ person. Make no mistake though; contemporary service design is all about the relationship between digital transformation, harnessing the power of ‘mega-data’ to generate deep customer understanding and the resulting richness of personalised customer experiences that can be delivered.

www.utility-business.org An example of digital techniques in their simplest form is the intervention of technology to provide information or resolve queries, where a telephone call would previously have been necessary. Whether this will be exclusively technology assisted (self-service) or a combination of technology and advisor (assisted-service). In many cases a consumer query can be more conveniently addressed via a live web chat session before being handed off for completion of the process in a self-service environment. Digital allows the service organisation to incorporate the likes of video guides, smart FAQ’s and intuitive web forms, which lead to a much richer brand experience. By handling up to five simultaneous web chat sessions there are also significant operational efficiencies to be had.

As a result of success in the digital operating model, closer integration of a new middle office domain will occur. The back-office becomes increasingly automated and residual front office activity becomes more specialist or value-adding. Collapsing traditional multi-tiered hand-offs between disparate front and back-office departments, often straddling onshore and offshore service locations, will become the norm. Commercial mechanisms in the outsourced environment will continue to evolve in order to guarantee certainty of outcomes and transformational benefits. Top tier outsourcers are starting to contract on a fixed fee per customer account, as opposed to traditional resource and headcount based models as a way of underwriting risk.

Assisted digital channels, such as where an advisor can take control of a customer’s computer via a remote connection and ‘co-browse’ a website, can act as an important bridgehead to demonstrating the power of self-service. This reduces the likelihood of repeat telephone contact and delivers the best long-term behaviours and outcomes for all parties. These channels are particularly appropriate for every day tasks traditionally serviced through the call centre, such as change of tenancy, meter readings or bill payments.

An interesting footnote to consider, as the industry gains confidence to down-size its customer contact portfolio in favour of new asset-light ways of engaging with customers, is the associated reduction in operational flexibility. From a contact perspective the market remains highly seasonal. Furthermore, delivering against the regulator’s smart meter rollout target by 2020 is reliant on handling millions of units of incremental contact with consumers in order to inform, encourage, schedule (and re-schedule) installations, manage the fallout from complaints and the long-tail of consumer hand-holding of anything that’s new. Clearly the same digital principles apply but the need to establish contact with the silent majority will require significant telephone activity.

With more sophisticated customer segmentation models in all of the big six’s locker, it is important that these contact channels co-exist and are developed with a recognition that the balance of power has to shift to the consumer in terms of allowing them to decide how to resolve problems or queries. The evolution from telephone call, to assisted-service, to self-service drives significant efficiency gains in the customer operating model and actually improves the customer experience as consumers become more empowered to engage with companies in the way that they choose and are most comfortable with.

MARKET TRANSFORMATION: REFINING CUSTOMER EXPERIENCES

“The likes of Marks & Spencer, O2, BMW and others represent far more relevant and aspirational benchmarks for energy providers as they develop their customer operating strategies.”

To overcome this, Capita anticipates much closer collaboration between in-house and outsourced operations, with underlying processes designed firmly in favour of the customer experience. The physical location is also becoming less sensitive as voice contact reduces. This will enable scalability of a flexible contact model that can expand and contract rapidly to absorb the likes of smart meter rollout, whilst also guaranteeing a better customer experience in the business-as-usual environment.

Utility Business Winter 2013

Utility Metering: Roll-Out Delay A Window of Opportunity Event Chairman Mike Buss welcomed over 120 delegates to this annual seminar at Birmingham’s Motor Cycle Museum. This year’s proceedings provided an update of key issues across the Utility Metering supply chain, with a focus on smart metering and the progress of Governments’ roll-out programme. The announcement by the Department of Energy and Climate Change to delay mass roll-out of smart meters until the autumn of 2015, and to be complete by end 2020, has met with mostly positive praise from industry participants. However general consensus is that this extended ‘window of opportunity’ must be put to good use to develop and test all component parts of the system in order to deliver a successful mass deployment. The seminar considered what could be learnt from Foundation Phase, the impact on the supply chain, what still needs to be developed and demonstrated and reviewed the progress being made in engaging consumers in the smart metering experience.

Learning from Foundation Phase Smart meters will be installed in two stages: the Foundation Phase and Mass Roll-out. Foundation started in April 2011 and will end with the start of mass roll-out in 2015. The foundation phase is critical to the meter manufacturer, said Steve Cunningham, Chief Executive of Landis+Gyr - design is nothing without practice and proof that the product works under the market arrangements. Extensive testing and piloting is crucial during this phase. A significant number of smart meters are being installed by suppliers during Foundation with the objective that the appropriate testing and trialling is undertaken so that the meters and communications arrangements are failsafe and the consumer has a positive experience. RWE npower has only just launched an installation plan, explained Simon Harrison. Volumes are not their priority, they are concentrating on getting the basics of smart right for customers, installers and the business. Their focus during Foundation is to build an understanding of capabilities and catalogue experience. The market has to learn during this period.

DCC and associated services Colin Sawyer is the Head of End to End Solution Design for the Smart Metering Programme at DECC. With the contracts now signed to establish and operate the smart metering Data and Communications Company (DCC) this should provide the trigger for ramping up the ‘delivery machine’ he said. Smart DCC Ltd, a part of Capita PLC, has been granted the DCC Licence. CGI IT UK Limited has been appointed the Data Service Provider (DSP) contract to operate and develop the system controlling the movement of messages to and from smart meters. The contract involves 3 elements, explained Smart Utilities Lead Richard Hampshire:- application development and management of the data systems and DCC user gateway, hosting and system integration (inc. security). It is an eight-year contract period with a go live date of September 2015. Arqiva Smart Metering Limited will be the Communications Service Provider (CSP) for the North region and Telefónica UK Limited the CSP for the Centre and South. Gemserv has been appointed as the Smart Energy Code Administration Service (SECAS). They have a four year contract with the Smart Energy Code (SEC) Company to develop and maintain the SEC that sits at the heart of smart metering. SEC sets out the detailed provisions governing the relationship between the DCC and the users of its services.

Smart Partnerships Landis+Gyr and British Gas have announced a £600m smart meter deal. As a result Landis+Gyr will supply the majority of the 16 million smart meters British Gas will install in its customers’ homes. Landis+Gyr expect to double its 600-strong UK workforce and extend its manufacturing facilities to meet not only the demands of British Gas’s roll-out, but also those of its other UK customers as the roll-out gathers pace. British Gas will recruit 500 Smart Energy Experts in 2014.

Events sponsors:

The events speakers were:

A significant proportion of those living in urban areas across Europe are located in multi-dwelling units, often high-rise, presenting a challenge for the deployment of smart energy meters. Siemens Metering, Communications & Services and GEO have solved the problem with a unique ‘shared infrastructure’ solution, utilizing a Broadband-overPowerline (BPL) backbone integrated with wireless radio technology that enables standard smart meters to be installed, commissioned and connected to a Wide Area Network (WAN) gateway. ByBox has partnered with RWE npower to support their smart meters logistics requirements. ByBox’s network of 1,500 dropbox locations will be used to collect smart meters and other related parts. The service will provide detailed track and trace of assets throughout the supply chain from manufacture, to engineer, to wall and return to asset owner. Trilliant Incorporated has been selected by British Gas to provide the communications platform and equipment for their Smart Meter deployment - their UnitySuite™ Head-End Software system currently manages all smart energy devices.

The Customer Experience The Central Delivery Body (CDB) has been talked about for a long time but came into formal existence in July 2013. The public will be at the heart of how the CDB is organised, explained Sacha Deshmukh, the new Chief Executive. Deshmukh is a communications professional and new to the energy sector. Since joining he has started to appreciate some of the historical influences on the current market structure and is sympathetic to the challenges facing the energy companies. However, he believes smart presents a real opportunity to transform relationships between customers and their energy supplier. The CDB is currently doing some significant work around the motivators for consumers to engage with smart (the need for control, transparency, choice,

1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11)

Mike Buss, Sensus UK Systems Ltd (Chair) Steve Cunningham, Landis+Gyr Simon Harrison, RWE npower Neill Young, Trilliant Colin Sawyer, DECC Andrew Gedny, ByBox Steve Rafferty, Siemens Metering, Communications & Services Graeme Forbes, Gemserv Richard Hampshire, CGI Richard St Clair, Elster Metering (Chair) Stuart Lacey, ElectraLink Ltd

12) 13) 14) 15) 16)

Jason Brogden, Energy UK Vic Tuffen, Tuffentech Services Ltd Sacha Deshmukh, Central Delivery Body Patrick Caiger-Smith, Green Energy Options (GEO) Ltd Ann Robinson, uSwitch

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UTILITY METERING: ROLL-OUT DELAY - A WINDOW OF OPPORTUNITY

to understand and see what they are buying). By Christmas the CDB will launch some of this thinking in their Consumer Engagement Plan. This will be a detailed, substantive evidence based piece of work which sets out the right consumer engagement approach, the behavioural change model that will engage, excite and motivate consumers by different social group. Key will be a central knowledge hub for the sector and Government, partners and stakeholders to ensure consistent messaging is adopted. Classic communication channels – print, TV, digital – will be used to start informing this knowledge. GEO products and services work with smart meters to support the energyefficient home, explained Patrick Caiger-Smith, Chief Executive Officer. Engaging people is about making things simple, attractive and relevant, he said. GEO has worked hard to understand the information that people need to manage their energy consumption and usage through extensive customer research backed up by quantitative and qualitative field trials. People want simple ideas, small changes and results. Interest has to be seeded first so consumers are excited and prepared. There needs to be a balance between technical and emotional involvement with energy use and the technology. Installing in home displays within the smart meter programme offers an introduction to consumer engagement but is not the full solution. Enduring engagement will only be achieved if there is cross household appeal using multi-communication channels with an installation plan that is drip fed not ‘fit & forget’. The consumer has to make the choice to become more efficient and enabled to do so in a simple and fun way.

Exhibition Further to the seminar programme the day provided a topical supply chain exhibition showcasing the event sponsors along with exhibitors EDMI, Elster, Junifer, Lowri Beck, Meter Mimic, SICK (UK) Ltd, Siemens, Tuffentech and Utiligroup.

Utility Business Winter 2013

Viewpoint Smarter Innovation Through Collaboration - Delivering for Customers in the Water Sector

Mark Smith

Managing Director WRc plc

As I write, the water sector is in the final throes of developing their PR14 business plans which must be submitted to the regulator by 3rd December 2013. Ofwat will carry out an extensive risk-based review of each business plan with final determinations published in late 2014, just in time for the next 5 year cycle to begin on 1st April 2015. This review will be completely different from previous ones because the regulator has insisted on customer engagement during its development. Ofwat has said that if a company produces a wellevidenced business plan, proven to be acceptable to its customers and stakeholders, it would be subjected to far less scrutiny and challenge. This will result in a final determination closely resembling the submitted business plan which is a significant carrot for the utilities. In combination with this, another interesting demand is for each utility to be innovative in how it delivers services so customer experience and hence value is enhanced which should result in lower bills. Given the challenges that the water sector faces including climate change, population growth and changing demographics among others, the move from a traditional (and capital intensive) prescriptive regulation to a more innovative valuedriven approach must be welcomed. The gas and electricity sectors have taken a different approach to innovation with standalone allowances that are ring-fenced as a means to drive innovation in their businesses. Although linked to technology strategies of the networks, such funds could be challenged for not being linked to pure customer outcomes. By linking innovation and the drive for innovation to customer requirements, the water sector hopes to overcome these challenges whilst delivering excellent services in an economic and political environment that is hostile to any increase in bills. So is this even possible? It is, if we make innovative thinking a core foundation of the water industry. To do this, all innovations must be driven by customer requirements and the customer (not the regulator) must be seen as the most important stakeholder in the sector. After all, as Henry Ford once said; “It’s not the employer who pays the wages. Employers only handle money. It’s the customer who pays the wages.”

At WRc, we have been looking at customer requirements for water services over the next century as a natural starting point. The graphic is a depiction of Britain in 2065 where we have hotter, sunnier summers and very wet winters with intense rainstorms as well as more people living in urban areas. Bulk water is captured and stored before being sold through wholesale asset management companies to customers who select their supplier from a range of competitors. The customer is much more aware of the water cycle through education and is in control of their consumption, using technology to make key decisions. Local treatment, rainwater harvesting and grey-water recycling is normal. Farmers manage the upper catchment for water quality as well as food growth. This is a vision of the future that may or may not be accurate but each customer will always have 5 basic needs from their water supplier. These core needs are: 1. 2. 3. 4. 5.

24/7 supply of clean drinking water Unobtrusive wastewater removal Positive impact on the environment Affordable bills Choice of services

These needs are a minimum in any developed country and will not change unless mankind itself changes. The challenge for the water sector is to move forward on all 5 fronts whilst maintaining the asset base at the same time. Every journey starts with the first step and if we are to be efficient in getting to the destination of choice, it is essential to understand where we want to go and start moving in that direction as soon as possible. In my mind, innovation has happened when a problem of one era is no longer of concern in another era. It only occurs when a chain of stakeholders collaborate towards a common goal. It requires a combination of leadership, problemdefinition, invention, commercialisation, testing, verification, implementation and communication. If any part of the chain is missing, the original problem will not be solved.

WRc is working with partners in the utilities, supply chain, regulators and academia to convert these customer needs into technical goals, against which a route to success can be mapped. These goals are defined in simple language and are very aspirational. Examples of which are “failure-free sewerage”, “zero street-works” and “zero leakage”. An Innovation Action Group (IAG) is formed for each goal and it consists of people from the sector who want to make things happen. They provide the leadership and energy with workshops held to define projects that are necessary to deliver on the overall goal. These projects can range from a need for fundamental research, through new standards, to testing of existing technologies and can be picked up and delivered by any of the stakeholders. A key function of any IAG is that all its outputs must sit in the public domain for everyone to contribute to – there is no room for closed sessions – it is all about collaboration and sharing information towards a common goal. These projects can then be taken forward by whoever is in a position to raise funds and complete them. The results from each project are, of course, subject to the terms and conditions of the project and may or may not be shared with other members of the IAG. Collaborative funding of projects is another way of ensuring rapid progress towards solutions and sharing the risk incurred by a utility. One vehicle for raising such funds is the WRc programme for collaborative research called Portfolio. This is a catalogue of collaborative innovation projects that is published twice a year in January and July. The catalogue contains up to 15 new projects that are available for funding and each contributor covers a percentage of the project cost whilst benefitting from receiving the entire solution. This approach is very familiar in the water sector with approximately 20 new projects started every calendar year. The high profile project researching Cured-In-Place (CIP) for Repair of Gas Distribution Mains is an example of one such collaborative project currently being progressed in the gas sector with some new exciting projects being rolled out in the near future.

www.utility-business.org

VIEWPOINT We have many challenges to surmount, all of which must be approached with an open mind and innovative outlook. In today’s economic conditions we need to solve our customers’ problems without asking for more money from bill-payers whilst increasing our service record. Where there is openness and collaboration between stakeholders, magic can happen and value for customers generated. Why not come along to the WRc Open Innovation Day in April 2014 to explore these relationships. It’s time for everyone to get involved in delivering a brighter future for our customers and forget the old divisions and empires of the past. For further information contact: Mark Smith at mark.smith@wrcplc.co.uk or 01793 865137

Mark Smith is the Managing Director of WRc plc, a water sector R&D and innovation company based in Swindon. His technical expertise is in wastewater treatment, particularly biological processes. Having graduated as a chemical engineer in Ireland, he joined WRc’s wastewater team and, except for 2 years spent in USA, has been active in the UK water sector for the past 23 years. Mark is proud to be part of an industry that supplies and removes more than 17 billion litres of water per day in the UK without actually killing anyone. He is also frustrated that the same industry has been known, at times, to strive to achieve mediocrity - no more or no less than the regulator demands. However the latest challenges being faced; climate change, population growth, floods, droughts and energy deficits are not going to be solved by aiming for the lowest common denominator. The industry must embrace innovation and Mark believes that collaboration holds the answers. He sees innovation as having occurred when the industry is not talking about the same issue year after year. It does not occur accidentally and must be nurtured and encouraged by all parties. Failure, is a key part of innovation, and must also be encouraged, because all too often, fear of failure drives mediocre thinking.

Utility Business Winter 2013

New Members & Directory Mike Stratton & Associates Ltd is a professional consultancy working with clients in the utilities market and supply chain offering a range of technical and commercial services in the UK and internationally. The business is headed by Mike Stratton who has over 30 years industry experience, and is a former Trading Director at Wolseley UK and Past Chairman of the Pipeline Industries Guild. The business harnesses the in-depth knowledge and skills from leading experts to deliver specialist consultancy, business services and industry intelligence, to enable timely response to trends and changes within the global markets. The company also helps its clients by connecting markets, suppliers and end users in the UK and worldwide, identifying commercial opportunities and positioning businesses with key customers and suppliers. The company represents PipeLife Norge AS, the Norwegian based pipe manufacturer and the major Japanese Trading House, Tokyo Sangyo Co Ltd in Europe as well as offering expertise through associate businesses in America, Canada, Italy, India, Australia and Holland. Mike Stratton and Associates adds value for clients through: • Identifying and facilitating merger and acquisition opportunities • Carrying out supplier due diligence • S ourcing and supplying commodities and bespoke engineered products against client specifications • Offering an independent and un-biased commercial view • G iving access to an established network of high level decision makers and opinion formers For further information contact Mike Stratton: Email: mike.stratton@msaglobalconnections.com Tel: +44 (0) 7854 473 881

EDMI are pleased to be new members of the Energy & Utilities Alliance. EDMI is a leading smart meter solution provider, offering a range of innovative products including digital meters, advanced infrastructure and energy management systems. With over 30 years’ industry experience, we have a proven track record for sophisticated smart metering technology manufactured to the highest quality. The entire EDMI product range is reliable, upgradable and accurate. EDMI has joined EUA in tandem with the introduction of a new smart gas meter range. With an unrivalled reputation in the development of high quality smart electricity meters and an existing business of conventional gas meters, EDMI is ideally placed to provide a robust and reliable smart gas meter to complement our metering solution portfolio in the British residential metering market. Membership in EUA offers EDMI a gas-focused insight into the government-driven smart metering programme, with an opportunity to participate in working groups collectively with other industry players. We look forward to working with the organisations members in the coming months and years. For further information contact: Email: gas.enquiries@edmi-meters.com www.edmi-meters.com

GAS STORAGE OPERATORS GROUP Centrica Storage Cheshire Cavity Storage Group Ltd E.ON Gas Storage UK Ltd EDF Trading Gas Storage Limited Eni Uk Ltd Gateway Storage Company Ltd Halite Energy Group Humbly Grove Energy Ltd INEOS Enterprises Ltd Islandmagee Storage Ltd King Street Energy ScottishPower Energy Management Ltd SSE Hornsea Ltd Statoil Storengy WINGAS Storage UK Ltd NETWORK ENGINEERING AND EQUIPMENT GROUP Aeon International Ltd AMEC Group Limited Amey AVK UK Ltd Balfour Beatty Utility Solutions Bureau Veritas Carillion Utility Services Clancy Docwra Limited Crane Ltd t/a WASK Drain Center Fast Flow Group Ltd Fiorentini UK Limited Fulcrum Fusion Provida Limited Future Energy Group Gas Measurement Instruments Ltd. George Fischer Sales Limited GL Noble Denton GPS PE Pipe Systems J Murphy & Sons Morland Utilities Ltd Morrison Utility Services National Grid Northern Energy Connections Ltd Northern Gas Networks Ltd P N Daly Limited PLCS Limited Radius Systems Ltd SARCO Stopper Ltd Synthotech Special Products Limited Veolia Water Outsourcing Ltd METERING TECHNOLOGY GROUP D I UK Limited EDMI Elster Metering George Wilson Industries Limited Itron Metering Solutions Landis+Gyr Secure Meters

METERING SERVICES GROUP Axiom Metering Ltd Calvin Asset Managment Co-operative Energy E.ON Energy Solutions EDF Energy Customer Field Services Energy Assets Ltd G4S Utility Services Ltd Gentrack Lowri Beck Services Ltd Providor Siemens Metering, Communications & Services Tuffentech Services Ltd DATA & COMMUNICATIONS MANAGEMENT Alcatel Lucent Arqiva Bglobal Metering Ltd Buss Metering Services Ltd DNV KEMA Ltd Electralink ELEXON Ferranti Computer Systems Hewlett Packard Panasonic Industrial Devices Sales Europe GmbH Power Plus Communications AG Sensus UK Silver Spring Networks UK & Ireland Smarter Metering Services Ltd Xemex NV ASSOCIATE MEMBERS ByBox Capita Symonds Ltd CEVA Logistics Limited CNG Services Ltd Develop Training Ltd Engage Consulting Enzen Global Ltd Generis Technology Ltd Gtc Kingsley Plastics Ltd Lightsout Computer Services Lomax Training Services Ltd Mike Stratton & Associates Ltd Rhead Group Ltd Simply Marcomms Ltd (SMPR)

EUA Events Programme 2013/2014 EUA Events

2013 ICOM Winter Conference, Science Museum, London ** Utility Regulation, Hogan Lovells, London *

Dec 3 Dec 5

2014 Feb 7 Feb 26/27 March tbc May tbc May 14 June 5 July tbc Sept tbc

Dinner Dance, Hilton Metropole, Birmingham ** HHIC/Warwick Uni/ICOM/MEBC Heating event ** Utility Street Works, London * Data & Communications for Smart Metering, London * EUA/IGEM Awards Lunch, Hilton on Park Lane, London ** ICOM Lunch ** Utility Asset Management, London * Utility Metering, Midlands location *

With strong, well balanced programmes plus engaging and knowledgeable speakers EUA events are a must attend for anyone interested in gaining up to date industry information, knowledge sharing and networking. We offer marketing and promotional opportunities at all of our industry leading seminars. Sponsoring or taking exhibition space can help position your brand alongside sector peers, give useful brand exposure, facilitate networking and can help generate new leads or support existing interests.

EUA Events Team For information on attending, speaking, sponsoring or exhibiting at any of the above events, please contact: *Vanessa Webster E: vanessa@eua.org.uk or t: 01926 513763 **Natalie Flay E: natalie@eua.org.uk or t: 01926 513741

www.eua.org.uk/events

NOW!

www.eua-events.org.uk • Never miss details of latest EUA events - straight to your inbox • Event coverage • Speaker profiles • See who is speaking, sponsoring, supporting • Find out more about sponsor and exhibiting opportunities It’s straight forward; just visit www.eua-events.org.uk and click on receive event updates.

To book your seats/table email Natalie Flay natalie@eua.org.uk call 01926 513741 or book online at ww.eua.org.uk/events