Out-Law News 3 min. read

Consumers must give up an element of privacy to see biggest benefits of smart metering, says expert

The full benefits of smart metering will only be realised if consumers can be convinced to engage with the new technology, an expert has said.

The Department of Energy and Climate Change (DECC) has announced that consumers will generally be able to restrict the access of suppliers and third party companies to the 'consumption data' that smart metering records.

However, smart metering expert Chris Martin of Pinsent Masons, the law firm behind Out-Law.com, said that consumers may have to give up some of their privacy in order to see the benefits that smart metering can deliver.

"There needs to be a balancing between privacy and ensuring that suppliers and third parties have the sufficient leverage with which to deliver the benefits that smart metering can provide," Martin said. "Smart metering has the potential to help consumers to reduce their use of energy and therefore reduce their carbon footprint. In addition it can help them to monitor their energy consumption and pay less by being more efficient."

"However, consumers may have to be prepared to give suppliers and third parties access to more granular data about their energy consumption in order to benefit from those savings and efficiencies," he said. "For example, consumers could consider consenting to their supplier accessing information about their consumption on a more regular basis than just once a month for billing purposes. This could allow the supplier to better analyse whether consumers are on the cheapest tariff. Consumers could also consent to third parties, such as alternative suppliers or switching sites, so as to compare alternative tariffs."

Martin said, though, that "one of the biggest barriers" to the potential success of smart metering is "getting consumers engaged".

"Until such time as energy costs so much that more people consciously monitor their usage - in the same way that they currently regulate their petrol consumption for example - people will continue to be less caring of the energy they use and what it costs," he said. "People have the right to switch providers now, but many do not use it. For smart metering to work to its potential, consumers will need to consent to allow more to be done with their data than merely billing."

Smart metering enables a two-way flow of electricity and information that allows real-time information about demand for energy to inform the level of supply needed to meet that demand in a near-instantaneous fashion.

Smart metering technology is due to be put in place in the UK from 2014. Approximately 55 million meters will be installed, covering every UK household and business, by 2019. The Government has said smart metering will help to reduce unnecessary energy use and emissions and cut consumers' energy bills.

In a document detailing its response (94-page / 758KB PDF) to the views received in a consultation it ran on data access and privacy in smart metering, the DECC said that energy suppliers will need the "explicit consent" of consumers in order to access the most detailed information about individuals' energy consumption under the new smart metering programme. Consumption data could be accessed as regularly as every half hour under the plans.

"In order to access more detailed (half-hourly) data, explicit (opt-in) consent must have been obtained in advance," DECC said. "However, the licence conditions are not specific about precisely which format consent needs to be given in. This will allow flexibility to suppliers to receive consent by any appropriate method (for example, on the telephone, by website, or email). Suppliers would, however, need to maintain records to demonstrate that consent had been obtained."

"Suppliers would also be required to inform consumers that they could withdraw their consent at any time, and inform them of the process by which they could withdraw that consent," it said.

DECC said that consumers will generally be able to control how their consumption data is used other than where suppliers have to access it for billing "or for other regulated purposes". Suppliers will require the "explicit consent" of consumers in order to use the data for marketing purposes, whilst consumers will also be able to object if suppliers want to access consumption data that covers a period of less than a month.

Suppliers will be required to "explain clearly" what data they will be accessing, for which purposes and what choices consumers have on the matter, DECC said. Research has suggested that consumers are not always with clearly and prominently presented choices, it said, so "it will be imperative for suppliers to consider carefully the best way of presenting choices to consumers, within the bounds of the regulatory framework," the Department said.

It said that suppliers that intend to access consumers consumption data on a daily basis must give consumers a chance to opt out seven days in advance of doing so.

Consumers will be able to send on their own consumption data to third parties if they wish to, although DECC has confirmed that procedures will be put in place tor require those businesses to verify the identity of those customers.

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