Civic pride, the public interest and paying the bills: what does fairness look like for our water supplies?

On hot, sultry summer evenings tourists unsurprisingly flock around the Trevi Fountain in Rome.  There is no better place to enjoy the beauty of the city, an Italian ice cream and dream.  Whilst throwing coins into the Fountain, what few may realise is that the water they are looking at is being transported through an ancient Roman aqueduct. Infrastructure that the far-sighted Romans recognised could help provide one of the foundations for the prosperity of the city  – and indeed empire – for generations to come.

From fine art and the flowing waters in Rome, take an about turn and move on literally to what was London’s dirtiest hour: the Great Stink of 1858.  Sewage on the banks of the Thames had accumulated to such an extent that cholera outbreaks were rife and thousands were dying.  Step forward one of the greatest of the Victorians, Joseph Bazalgette.

Joseph, London’s Metropolitan Board of Work’s Chief Engineer, realised something needed to be done – and at scale.  He designed London’s sewer network, in the process reducing the risk of future cholera outbreaks and cleaning the water in the Thames.  His vision was such that he ensured that the diameter of the sewer pipes being built was considerably wider than what was needed at the time.  This enabled the network to accommodate the extra demands of the growing city and keep the river clean – without the need for digging up roads and knocking down buildings to build more pipes.

As these examples illustrate, the benefits of any new water related investment extend beyond the individuals that use it to wider society and can often be enjoyed both today and way into the future.  Having a long-term vision for such as essential service that can deliver multiple benefits, along with civic pride, would therefore seem important.

But here’s the rub. The future is uncertain.  No one knows exactly how much water will be needed in the years to come, where it will be needed and whether new technologies will emerge that will change the way it is delivered and used.  In addition, the coming generations that may benefit from such far-sighted investments and infrastructure aren’t around to speak up.

At the same time, those who currently use the services, and are likely to be expected to pay for future investments, may already be having problems in terms of paying today’s bills.  A sobering one in eight households across England and Wales currently struggle to be able to afford to pay for their water.  For many, the current system looks far from fair.

This presents policy makers and regulators with an age old challenge – how to balance the interests of current and future generations.   Clearly much can be said about not investing in new pipes and other infrastructure ‘ahead of need’. No one wants to see white elephants and stranded investments that aren’t really needed, particularly when many of today’s consumers already find it hard to make ends meet.  However, it is also important to recognise that putting off decisions around new investments may potentially make them more expensive in the future, reduce opportunities for growth or foreclose future options, particularly if space subsequently becomes more restricted.

These are big issues of public policy that all consumers and citizens should have a say in.  In an investor-owned water system as in England, it is even more important that the public interest is heard when significant decisions are made if they are to be seen as providing ‘just’ water for both today and tomorrow.

In recent years there have been significant and welcome developments in GB in terms of consumer engagement in the water sector.  Local people are now being given a voice in many of the decisions that relate to their water services through formal ‘consumer challenge groups’.  How the collective interests of citizens and communities are able to shape how services and investments need to evolve is likely to be the next stage in this journey.

As our future climate becomes more unpredictable and we increasingly face the risk of too little or too much water, uncertainty may well become more acute.  What we do know, however, is that when droughts and floods hit, communities are in the front line and need to pull together.   Having a shared and developed view of how far and fast we need to invest for a resilient future would seem wise.

All this will necessitate a ‘deep dive’ into the issue of fairness:  what is fair for individuals, communities, our shared society and the future?  People often have clear views about what is unfair – such as risks and benefits not being shared – but less so as to what fairness itself is.

A public dialogue over the issue of public interest and what a ‘just’ water system looks like is a good place to start. It would seem unwise to wait for what could be the UK’s Twenty First Century equivalent of the ‘Great Stink’ before we are galvanized into action.  If we do, Bazalgette and the architects of the Roman aqueducts may rightly question whether we have learnt all we can from their pioneering legacies.

This post from Sharon Darcy has been written as a contribution to the JustWater programme that is raising awareness and activism about water in the run up to the UN World Water Day in March.  Sustainability First’s New Energy and Water Public Interest Network (New-Pin) is exploring these issues.   At a workshop later this month New-Pin will be asking how far market approaches can deliver desired long-term public interest outcomes such as fairness in energy and water supplies. 

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A world of multiple-choice

 

A view by Sharon Darcy, Sustainability First Associate

When I was working in China in the 1980s I was lucky enough to be able to afford to buy a bicycle; the main way to get around at the time.  At the small town’s only bike shop, I looked at the array of gleaming machines.   All identical.  Still enthused by the idea of my own transport, I thought this was a minor inconvenience and tried one for size.  Just right.  It was only then that I realised the nervousness of the on-looking staff.  Neither that bike – nor any of the others in the shop – actually worked.  The choice was in effect zero.

Since that time, I’ve realised just how important choice is.   Most of us don’t like it when we have no choice.  Being able to choose between different services and providers can help create thriving markets, drive innovation and ensure that what we buy meets our needs.

In recent years there has been an increasing shift in public policy to get people to take more personal responsibility and to make more choices for themselves.  Just as we have long shopped around for groceries, so too can we choose between energy, insurance and communications providers.  The boundaries of choice are now being pushed further to include services such as pensions.   And to help reduce the impacts of an aging population on a stretched public purse, there may well be increasing pressure on us to make choices in areas such as social care.

All this choice sounds well in theory, but what does a world of ‘multiple-choice’ mean in practice? We all know that not all choices are the same.  And we clearly all start from different points in terms of the choices we make.  There are lots of areas where we don’t always have a choice.  The table below provides a high-level categorisation of six different types of choice.

 

  Type of choice When choice is made Examples of areas in which choice is made
1 Consumer choices At time of individual transaction ·         Consumer goods
2 Essential or ‘foundational’ service choices As services are normally used continuously, choices can be ‘rolling’
  • Energy
  • Communications
  • Insurance
  • Banking
3 Life-stage choices At key life stages
  • Education
  • Housing: renting / buying & mortgages
  • Retirement planning
  • Social care
4 Distress choices In response to problems
  • Key equipment eg boilers
  • Health services: physical & mental
  • External shocks: accidents; crime; terrorism; flooding etc
5 Personal choices Over time and cumulatively
  • Well-being: physical; mental & spiritual
  • Community
6 Ethical and moral choices Over time, cumulatively. Can be instinctive
  • Treating others fairly and with respect

 

Decision makers in government, regulators and companies spend much time looking at the costs and benefits of choice in their particular areas and at how some groups of people may find it more difficult to make choices.  There is also a growing acceptance that the insights from behavioural economics can be used to maximise the effectiveness of choice.  However, there has been less attention paid to understanding the cumulative impact of choice and how different types of choices interact.

Taking a holistic view of the choices we are increasingly being asked to make raises a fundamental question:  are there any limits to the number and combination of choices that we are willing and able to make?

Are there limits to our capacity to make choices?

  • Given that there is a limited number of hours in the day for people to exercise choice, are we likely to suffer from choice ‘over-load’?
  • How do we ensure choice works as a society for the increasing numbers of people who are ‘time poor’, such as the one in five who usually work over 45 hours a week or those that have to juggle multiple jobs?
  • If policy makers introduce ever-more measures that put pressure on people to make choices about essential services, will this have a knock-on impact on choices in other areas of their lives?

Are there any limits to our capability to make choices?

  • Does ‘shopping around’ drive short-term thinking and make us less able to focus on, and judge, our total overall and long-term interests?
  • What impact does the growing uncertainty and frequent lack of permanence of modern life – such as temporary work contracts and the rise in private rental accommodation – have on the ability of increasing numbers of people to make effective choices?
  • Given the increasing availability of information, is it getting easier or more difficult to make the ‘right’ choices? If big data leads to services becoming increasingly tailored to meet our own individual interests, what impact will this have on our collective interests?

All this is not to undermine the value of choice but rather to recognise that it is not a silver bullet for society’s problems.  Exploring what the collective and societal impact of choice is would seem to be important.  Three ideas may be helpful in thinking about what weight to give to choice in future public policy thinking:

  1. Given the high degree of consumer inertia and reluctance to exercise choice or switch providers in many markets, rather than seeing this as an obstacle that consumers need to ‘wake up’ from, see if this can be turned into a positive. The automatic enrolment programme in DC pensions is a good example of this.  Building long-term and trusted relationships where loyalty is rewarded should be good for business.
  2. Transparently and collaboratively explore the advantages of community and collective choices rather than individual choices. These can play to the collective strengths of the group and can spread and share downside risks.
  3. Platforms, brokers and automation may help us make choices in an increasingly complex world. However, these are often driven by similarly complex algorithms.  Understanding how such services are checked for accuracy, and being transparent about who does the checking and how costs and benefits are shared, is likely to become increasingly important.

Multiple-choice questions in exams don’t always give students the chance to show the subtleties and nuances of their thinking. Introducing choice in complex areas of real life decision-making is likely to have the same challenge.  It’s something we need to discuss openly and not be unduly ‘ideological’ about.

 

 

Public engagement in energy and water – more than window dressing

Most people would agree that public engagement in the energy and water sectors is generally a ‘good thing.’  However, like motherhood and apple pie, there can often be quite different ideas of what ‘good’ looks like.  Sharon Darcy summarises the latest New-Pin discussion paper on Consumer, citizen and stakeholder engagement and capacity building which explores whether the long-term public interest is being sufficiently represented through current approaches to engagement in the sectors.

Engagement in energy and water has been primarily driven by the drive to address market failures and develop more customer-centric services. There has also been a desire to give consumers a greater voice in how decisions are made, helping to improve the quality and comprehensiveness of decision-making, reduce regulator involvement, and increase the legitimacy of the process (potentially to the extent of having consumer or stakeholder representatives on boards).

There has been a growing interest in how engagement can also lead to culture change in companies.  Helping them in the move from being commodity to service providers that actively engage and collaborate with their customers is important in an era where in both sectors expectations on the demand side are increasing.

There is no single best approach to engaging consumer and citizen representatives in long-term decision-making.  However, greater clarity is needed about who owns the decision to engage, what the purpose of the exercise is and what the ‘red-lines’ of decision-making are.  Without clear objectives, it can be difficult for the public to understand why they should take part and for decision makers to measure the impact of the activity.

Company-led engagement undoubtedly brings many benefits.  Companies are best placed to feed the rich insight from engagement into their business plans.  Having a ‘golden thread’ that links engagement activity at the operational and strategic levels is vital.  However, given the significant social and environmental externalities in both energy and water – and the associated distributional and systemic impacts – a wider perspective which includes government- and regulatory-led engagement may also be needed for long-term issues.

There are some important gaps in how the public can engage on long-term issues.  Engagement needs to be appropriately ‘framed.’  Individual companies may not always be best placed to do this, particularly if the sector is going through a transition such as the move to low carbon.  Engagement also needs to cover what matters to stakeholders including ‘big-ticket’ issues: rates of return / cost of capital and strategic investments in the development of our energy and water systems.

A coherent view of engagement is needed to look across the disaggregated value chain in energy; and at the wider environmental context in water, where five-year price review plans need to dovetail in with longer-term Water Resource Management Plans.  To take account of the needs of future users, it will help to look at how behaviours and interests are evolving, particularly around local, community and regional interests – and how digital communications are leading to changed expectations in how we engage as citizens.

Consensus at all times is not achievable: there can be differing interests both within and between generations. Engaging consumer and citizen representatives on the ethical values applied in arriving at judgements about what is ‘fair – both between and within generations – and articulating these will be helpful on contentious issues.

Companies, regulators and policy-makers each need to set out their vision and expectation for stakeholder engagement on long-term issues.   Judging and assessing the impact of engagement can also be improved.  Challenge logs, a ‘you said: we did’ approach and independent accreditation of the process can all help.  Engagement will rarely negate the need for regulation. However, it can inform the need for regulation to re-assess and to re-focus.

Public interest advocates need resources. Without dedicated funding, and checks and balances in governance arrangements around this, engagement on long-run issues could be set up to fail or be unduly influenced by vested interests.

New-Pin has produced two engagement tools.  Firstly, a ‘Decision-making Framework’ to help all actors work out the best approach for them on engagement on long-term issues. This builds on the UK Regulators Network principles for effective engagement and includes: clear objectives; inclusivity; tailoring to the circumstances; transparency; and a developing, iterative approach. Secondly, to help build capability amongst consumer and citizen groups, we commissioned BritainThinks and London Economics to produce a Research approaches overview’ paper to guide public interest advocates in their discussions with both water and energy companies on the pros and cons of different research techniques.

We hope that these tools help ensure that engagement moves away from being a compliance activity or ‘just window dressing’ to being fully valued – and appropriately resourced – on all sides.

Smart and fair domestic electricity pricing

In an article first published in New Power (Issue 90, August 2016), Jon Bird, Sustainability First Associate, looks at the result of time-of-use charging trials in energy and water and finds there are winners and losers in making the transition.  It may be impossible to make it fair for everyone, but we must tackle the extremes.

Elective and mandatory half-hourly settlement (HHS) for domestic electricity customers, locational pricing for transmission losses, distributed generation embedded benefits, the future of distribution use of system charges – these are all currently being discussed as we head to a world of smart meters and smart electricity pricing for domestic customers.

What they all have in common is the aim of making different elements of the final electricity price more reflective of the actual input costs that go to generate and deliver the electricity to a particular customer.  Economic theory tells us that cost-reflective pricing provides the most efficient system as a whole, as well as the best incentives on retail customers to change their behaviour to keep their own costs as low as possible.  But does this work in practice and is it fair to all customers?  This is the subject of a recent paper by Sustainability First Associate, Jon Bird[1], and topic for a Sustainability First roundtable held on 13 July 2016.

Whilst these initiatives will increase cost-reflectivity for suppliers, their impact is diluted by the increasing proportion of the bill that goes to cover the social and green levy costs.  End-prices might also need to become more location-specific if they were to reflect the actual costs of dealing with a more decentralised electricity system.  Moreover, they are all costs faced by an electricity supplier – and not directly by the electricity customer. How the supplier turns these into a final retail tariff for the customer will be up to it and will depend on its own marketing priorities.  One major retailer is offering a new FreeTime tariff – with free electricity on Saturdays or Sundays. This is not strictly cost-reflective, but nevertheless aims to reduce weekday peaktime load.

Several recent trials of a time-of-use (ToU) tariff in the UK and Ireland have shown, on average, a positive response in terms of a reduction in peaktime use of electricity.  But more work is needed to see if bill reductions from peak-shifting can be replicated amongst all electricity users (not just trial customers) – particularly given the CMA’s concerns that many customers currently do not react to a much larger bill saving they could achieve by switching tariff.

Any change in approaches to pricing creates winners and losers.  This has occurred in the water industry, when water metering and charging by volume was introduced in water-stressed parts of the country.  Using data from the ToU trials shows that, whilst on average for each demographic group, the potential impact of introducing ToU tariffs (leaving aside any possible behaviour change) is small, there can be wide variability within demographic groups.  This needs exploring in more detail and indeed Ofgem has recently commissioned some work to explore just this.

One way to seek to avoid significant losers among retail customers is to make any change voluntary.  This is behind Ofgem’s push for elective HHS.  In this situation, a customer and their supplier could agree to move to HHS with a corresponding change in retail tariff.  But this would only be attractive to those customers likely to gain financially.  This would encourage suppliers to search out those customers at the expense of the remainder who would, assuming no change in the overall cost of supply, end up paying more.

A similar problem arises if the costs faced by a supplier become more cost-reflective, but customers can choose to remain on a standard p/kWh flat tariff.  In this case, customers who use more electricity than average during peak times would lose money by changing tariff.  So they would wish to stay on their flat tariff.  Some of these may be customers in fuel poverty who have little ability to shift consumption behaviour. But others may have high discretionary peak-time use, such as electric vehicle charging. These customers could be persuaded to move to off-peak times – or could opt to pay more for their peak-time use.

There is no easy answer that is fair for every customer. Policy makers need to be aware of the possible consequences for customers in advance of any change to half-hourly settlement – and find ways to deal with them.  The general view in our Sustainability First workshop was that it will be important to keep down the overall cost of power supply and therefore to continue towards greater cost-reflectivity in supplier charges – and also, to some degree, for customers. However, any problems and unintended consequences for customers will need to be addressed. In the end, it may be that we cannot come up with an approach which is fair – and seen as fair – for everyone. But we should at least be able to tackle areas of extreme unfairness – such as customers who are in fuel poverty with inflexible peak-use, or, at the other extreme, those customers with large peak-time use which may be largely discretionary.

There will need to be an informed stakeholder discussion on these fairness issues as we move towards half-hourly settlement, to enable a common understanding of the issues and explore  whether an element of consensus can be built around the way forward.

[1] “Smarter, fairer? – Cost-reflectivity and socialisation of costs in domestic electricity prices” http://www.sustainabilityfirst.org.uk/index.php/other-publications

New-Pin : Governance and the Public Interest in a post-Brexit World

As summer turns to autumn, the size of the task following the Brexit vote has come into sharp relief.  It will be some time before there is another ‘natural break’ to step back and take stock.

The new government has multiple and pressing issues to deal with.  Negotiating Brexit is clearly top of the agenda.  Continuing to align UK climate policy with the 2015 Paris agreement provides an opportunity to strengthen our position as a world leader in sustainable energy policy and environmental protection.  However, from a sustainability point of view, addressing the issue of why people voted as they did is also crucial.

Understanding why people felt left out and left behind, and then working out what to do about it, will be important if the Brexit negotiations and the new Government are going to meet raised public expectations.   Bridging the divide between communities, regions and nations – as well as between the young and the old – will be a long-term and difficult process.

Early indications suggest a certain pragmatism by the new Government. Concrete steps that start addressing social divisions will be needed.  Similarly, practical changes that can start to genuinely empower citizens and communities will be required.

June’s referendum delivered a strong signal on the need we all often feel for more ‘control’ in our lives.   This extends beyond the desire for a political voice in our communities but also to having a say in how corporations are run and behave.

Ensuring that the public voice can be properly heard in the day-to-day services that we all use and rely on would be a good place to start.

Energy and water services fall squarely into this camp.  Demonstrating that companies in these sectors are responsive to people’s needs and provide services that are affordable and sustainable – both for current and for future generations – is vital to build confidence that the companies and their regulators work in the public interest.  Similarly, ensuring that the long-term strategic investments that shape these services take the views of citizens and communities into account is key if trust in decision-makers is to be maintained.

Over a year ago Sustainability First set up the New Energy and Water Public Interest Network (New-Pin) precisely to tackle some of these questions. The Network brings together consumer, citizen, environmental and public interest groups with regulators, government representatives and companies. It seeks to ensure that a long-term public interest ‘voice’ is better heard in these services.  In our post-Brexit world, the New-Pin project is now more relevant than ever.

In October, for the fifth New-Pin project paper and workshop, we will be exploring how best to actively engage consumers, citizens and other stakeholders in the energy and water sectors, particularly on the hard questions and answers that need to inform difficult decisions and trade-offs for the long-term.   The papers will be posted on the Sustainability First website in the late autumn.

But stakeholder engagement is meaningless if it doesn’t help shape decision-making in practice.  Shortly before she became prime minister, Theresa May said ‘I want to see changes in the way that big business is governed’ noting that many boards are drawn from the same ‘narrow social and professional circles’ as the executive team.  She went on to add ‘So if I’m prime minister, we’re going to change that system – and we’re going to have not just consumers represented on company boards, but workers as well’.

In the year ahead, the New-Pin project will look at the public interest and board-level governance of the energy and water companies.  We will explore with company chairs and independent non-executive directors how they bring the views of consumers and citizens to the board table and how they reflect the long-term public interest in reaching their Board decisions.

This autumn, Sustainability First will begin by asking public interest groups what questions they think we should be putting to energy and water company board members.   If you’d also like to suggest some issues that you think we should explore in our planned board-level conversations, we’d be delighted to hear.

Sustainability First is pleased that our New-Pin project will offer some practical tools to public interest advocates, as well as to the water and energy companies and to their economic regulators, to help them tackle some of the big questions raised by the prime minister about how to ensure a country for everyone. Through New-Pin, Sustainability First will continue to identify new and practical ways to better engage all sections of society in our long-term economic future.

Resilience: time for a new approach?

 

No one wants power cuts, water restrictions or sewer flooding.    Equally, a one-hundred per cent service guarantee is neither feasible nor affordable. Drawing on the latest New-Pin discussion paper on Long-run resilience in energy and water, Sharon Darcy explains why approaches to resilience that focus on risk management and adaptive planning are becoming increasingly important.

Until recently, most discussions about resilience in energy and water were largely focused on the reliability of infrastructure and the security of big bits of kit.  This mirrored the frequently traditional approach to ensuring resilience through supply side solutions where ‘hard’ engineering interventions were able to bring a degree of certainty to service delivery.

Led by the energy sector, ‘softer’ demand side approaches are now getting more traction, along with an increasing focus on consumer and commercially led solutions that can help to address the supply / demand balance in a sustainable way.  Some people argue that demand-side measures may turn out to be less dependable than those on the supply side. But, faced with uncertainty about the future, demand-side developments may also offer diversity and flexibility for both sectors.

As approaches to resilience have evolved, so too has the way in which the issue is ‘framed’ in discussions.  There is now broad agreement that as well as having a technical dimension, resilience also has social and environmental dimensions, for example, which recognise that energy and water are part of wider services and systems.

Climate and technological change, and the significant unknowns these bring, are driving new ways of thinking about resilience in energy and water.  Most visibly, this can be seen through the impact of extreme risks – such as intense rainfall leading to flooding, or thinking on cyber crime. Responses to each are highly dependent on effective approaches to public communication.

Less obvious, perhaps, is the fact that we are increasingly dependent on electricity for the digital connectivity that drives every aspect of our lives.   When the power goes down, computing and communications systems can be ‘disabled’ – having a knock on effect not only on energy and water resilience but also more broadly.  The floods in Lancaster in December 2015 provide stark evidence of these wider impacts.

The fact that the energy and water sectors are becoming both increasingly complex and more interdependent can accentuate this problem.  Many of the approaches designed to secure future long-run resilience, such as desalination or carbon capture and storage, may in practice bind the sectors more tightly together.  Changing consumer and citizen expectations, such as the desire for constant broadband connectivity, are also leading to pressures for improved contingency planning and more innovative ways to respond, and recover, when services fail.

The development of more local and regional resilience solutions pose new opportunities and risks.  Whilst decentralised approaches can be attractive, they raise questions about what happens to existing networks.  Similarly, new cross-sector approaches can help avoid single-point failures and may potentially lead to combined energy and water efficiency packages.  However, they also add to the complexity of decision-making; thinking about, let alone delivering, a ‘system of systems’ approach to resilience is a major challenge.  Market solutions to resilience are providing flexibility and innovation but can also lead to the increased fragmentation of services, requiring transparent rules for access-pricing and a need to ensure the end to end customer experience is, within reason, secured against future shocks.

Stakeholder engagement, both as consumers and citizens, is important in a world where the demand side plays a bigger role in securing resilience.  More attention is needed on how to capture stakeholder views on cross-sector issues effectively.  Re-examining existing standards which may be strongly engineering-based may also help with addressing future resilience.  In energy, for example, deterministic standards can be inflexible.  A more risk-based and tailored approach to standard setting may be more appropriate given uncertainties.

Resilience needs strong leadership to bring together the wide range of actors needed to deliver it. There is already much going on in the sectors with significant scenario planning being undertaken.  Doing more to share lessons and mainstream good practice should be relatively easy.

The harder task is likely to be to ensure leadership when resilience solutions raise distributional questions or when the most appropriate approach may require coordination between institutions and funding streams. The following resilience principles may be of help here:

  • Risk based – take account of the full range of risks, including systemic risks.
  • Agile – build in optionality and adapt to changing circumstances.
  • Engaged stakeholders – ensure that the public are engaged and that this shapes decisions.
  • Understanding of affordability – take account of fairness, including across generations.
  • Cross-sector view – ensure approach is holistic and joined up technically, commercially and from the citizen and consumer view-point.
  • Partnerships and collaboration – build connections and promote diversity.
  • Transparency – share assumptions, clarify responsibilities & explain decisions.

Managing risks in a proactive way and using an adaptive planning approach is likely to bring greater benefits than putting on a hard hat or pair of wellies mid-crisis and calling for immediate – and visible – action.

 

 

 

‘Public interest’ use of household smart meter energy data

Sustainability First launched a short ‘research challenge’ last year, together with the Centre for Sustainable Energy in Bristol and the academic network, TEDDINET.  We asked two university researchers – Simon Elam from UCL and Jess Britton from Exeter University- to look at the ‘public interest’ agenda for smart meter data.

Most current thinking about smart data is focused on commercial innovation by energy companies and others – but we may miss an opportunity. For the first time, in every home, accurate time-related energy-use data will be recorded at the meter (half-hourly for electricity and daily for gas).  Smart meter data could clearly serve a wider ‘public interest’ agenda in many helpful ways. But, with much effort rightly being devoted to getting the smart-meter roll-out ‘right’, a wider public benefit dimension does not currently get the attention it deserves.  That is why we launched our challenge.

We have now published the excellent papers that Simon and Jess have written.  Here is a taster of their findings.

What might an improved energy usage evidence base deliver for different actors?

  • Better targeted advice – nationally, locally – for consumers & households.
  • For government: improvements to energy models and demand-side inputs, to evidence-based energy policy; to better targeted interventions. Better evaluation of outcomes: for the fuel poor, for energy efficiency, heat, self-generation, including the distributional impacts of policy.
  • For energy companies, networks and regulators: better-targeted investment for smart grid and smart energy systems and community energy projects.
  • For cities: better evidence to support local energy schemes, to target energy efficiency, to plan and develop infrastructure for electric cars, for heat, for housing development.
  • Better-targeted local services for the elderly, the fuel poor, young families, students; and better-informed partnerships – with social landlords, the health agencies.
  • Better insights from academic research and the not-for-profit sector.

Today’s official data for energy consumption remains fairly basic, being derived from customers’ anonymised annual consumption figures. Local-level data, and some limited half-hourly data from trials, is also available. Today’s annual consumption data can also link to other data sets: for example, on the housing stock, demographic or deprivation data.

But for the future, half-hourly energy-use data offers significant new analytical power in terms of the public interest uses touched on above.

So what issues would gaining access to this data raise?  Success of the smart meter roll-out depends – critically – on customer trust.  For this reason, the Government has rightly given a great deal of attention to deciding who can access smart meter data and how.  The Data Access and Privacy Framework  puts the consumer in control of their data.  For example, energy suppliers are entitled to use one-month aggregate data for billing, but, if the supplier wants to access half-hourly data stored on the meter, their customer must give an explicit ‘opt-in’ consent.

Others can also access smart meter data, but likewise with individual customer ‘opt-in’ consent.  Organisations who may wish to use this data for wider ‘public benefit’ analysis may need quite sophisticated systems and be well-resourced, if they are to be able to meet the requirements to be a ‘trusted’ data-user with the Data Communications Company and to manage the process of obtaining individual customer consents. For those without a direct interface with energy-customers already, this might prove quite a big step.

These challenges for making use of smart meter data for ‘public interest’ purposes are not insuperable.  But customer trust in the smart meter roll out is essential and it is right that the privacy hurdle is set high.  Equally, the wider public policy benefits from the use of smart meter data could well be significant.  The opportunity is there. Much could be done with data aggregated to a level that ensures customer privacy.  We hope that our roundtable held in mid-March made a good start in raising the importance of harnessing smart meter data to develop better public policy. This is a conversation we will wish to continue, not least to help inform  the 2018 review of the privacy rule-set.