Why Ed Miliband is to blame for Britain's disastrous smart meter rollout
Britain's disastrous smart meter rollout can be traced back to a decision made by Labour during Ed Miliband's first stint as energy secretary.
Labour made the unusual move in 2009 to entrust the rollout of smart meters to energy suppliers, while most of Europe relied on local network operators.
As the Government continues to lag behind its target to have smart meters installed in three quarters of homes by 2025, industry insiders fear that Mr Miliband's now-defunct climate change department made 'the wrong call' at the rollout's earliest stage.
During his first stint as energy secretary, Mr Miliband tasked a newly created Department of Energy and Climate Change (DECC) with ensuring all households had a smart meter installed by 2020, a target which has since been watered down several times.
The department consulted in 2009 on how best to meet the targets, and ultimately decided to entrust the rollout to energy companies, rather than distribution network operators (DNOs).
DNOs connect households to the electricity network, and manage the movement of energy from power stations into homes and businesses. In most European countries, network operators were placed in charge of smart meter rollouts for ease of delivery and cost.
The energy department maintains that trusting suppliers to finish the smart meter rollout was 'the most convenient option for households', having considered but ultimately rejected a DNO-led option in a 2009 impact assessment.
The impact assessment concluded that the net benefits of each approach were 'very close'. DECC forecast the DNO option would have a net benefit of £5.65bn, while the predicted benefit of using suppliers was £5.98bn.
Almost a decade later, an independent review of the rollout found that it had been a 'mistake with profound consequences' to leave the rollout in the hands of suppliers.
The review, written in 2017 by Professor Dieter Helm, Professor of Economic Policy at the University of Oxford, noted that Labour's approach contrasted with 'almost every other European country', which had opted for DNO-led rollouts.
Labour had argued at the time that suppliers were thought to bring innovation, especially through customer relationships.
But Professor Helm said the rollout had instead been 'haphazard, patchy and high-cost'. He added that costs passed on to consumers had been higher than they would have been.
The Competition and Markets Authority had argued that smart meters would make it easier for customers to switch. But Professor Helm said suppliers were instead encouraged to 'capture and keep customers', and that switching was not in suppliers' interests.
This became problematic when millions of first generation smart meters went 'dumb' when households attempted to switch suppliers.
Even now, the Department for Energy Security and Net Zero estimates some four million smart meters do not work properly.
A senior energy source said: 'As it turns out, the rest of the world was right and the UK was wrong.
'Ed Miliband made the wrong call then. The whole programme has been a disaster, costing consumers billions so far, and the deadline for completion keeps getting pushed back.
'Mr Miliband is once again in charge of the department and making some big calls on net zero – with a highly questionable track record.'
Ministers were reportedly lobbied heavily by energy companies while the policy was being thrashed out.
Juliet Philips, of lobby group Beyond Fossil Fuels, said that while it was 'a little unfair to blame Ed Miliband, when the plateau of the smart meter rollout happened under the Conservatives', there had been missed opportunities throughout the rollout to mandate smart meter installation.
She added: 'I'm not sure it's a silver bullet solution, but I think DNOs should certainly play more of a role in the future.
'I can see the logic of a DNO-led rollout, as well as more place-based approaches to installing smart meters on a street-by-street basis – particularly given the transition away from 2G and 3G.'
The Data Communications Company, which connects smart meters to homes, declined to comment when approached by The Telegraph.
The company's former chief executive, Angus Fleet, argued that 'now is definitely time to pivot' to a DNO-led rollout.
Writing in trade publication, Utility Week, he said: 'I believe it is also time to make smart meters mandatory.
'The amount of time, effort and money spent trying to persuade could be better spent on innovation, new services and reducing energy bills for consumers.'
A spokesman from Energy Networks Association said: 'We respect the Government's decision to appoint energy suppliers to lead the rollout of smart meters.
'In Britain, suppliers have responsibility for metering and any transition of responsibility at this stage would be operationally challenging and likely incur additional costs and delays.'
A DESNZ spokesman said: 'There are now 37 million smart and advanced meters in homes and small businesses across Britain, making up 65pc of all gas and electricity meters.
'These are giving consumers more control over their energy and helping to save money on their bills.
'Energy suppliers install smart meters as this is the most convenient option for households. They can service both gas and electricity meters – unlike electricity distribution network operators.
'Smart meters are not mandatory, but households may be missing out on cheaper deals if they do not have one.'
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