Smart meters: what can the water industry learn from their rollout in energy?

The early rollout of smart meters in the UK focused mostly on potential financial savings for customers. The Government expected households to save £250 a year as they became more aware of their energy use, and the messaging to customers from energy suppliers reflected the idea that smart meters were money-saving devices.[1] However, in reality, households with a smart meter only reduced energy consumption by approximately 2%, and customers were soon disillusioned as their bills remained unchanged.[2]

Over time the energy industry pivoted to a new message – that smart meters can help to achieve Net Zero, thus promoting the vision of a greener future for customers. Sustainable messaging was utilised by advertising agencies such as AMV BBDO who created Smart Energy’s ‘The Quiet Revolution’ campaign, emphasising the sustainable benefits that smart technology can bring to the nation. The ‘Einstein’ campaign also focused on the CO2 savings smart meters can bring to Britain, such as enabling the switch to renewable sources of energy.

The water industry would be well advised to follow this approach. Emphasising how smart meters can reduce water consumption and help achieve Net Zero could be more effective in gaining public support for the smart rollout than a focus on financial benefits. This is due to customer scepticism of financial benefits following the smart energy rollout, and the growing public appetite to protect the environment.

[1] https://www.ourbow.com/smart-meters-dumb-implementation/

[2] https://www.keele.ac.uk/research/researchnews/2020/june/energy-research/smart-meter-research.php

Moorhouse are currently working in the Central Programme Team on the Market-wide Half-Hourly Settlement (MHHS) programme which seeks to utilise the smart energy network to gather half-hourly energy reads. This will ultimately help to achieve Net Zero and give time-of-use tariffs to customers. Over the past year, we have seen the electricity industry work together in unprecedented ways, sharing knowledge and innovative ideas even amongst competitors as it delivers a game-changing programme.

The water industry has historically struggled to move beyond individualism, with similar pilots and trials being duplicated in different regions due to a lack of data sharing and transparency. Organisations such as UK Water Industry Research (UKWIR) and Spring have sought to overcome these difficulties in recent times, and it is incumbent on water companies to demonstrate further collaboration to Ofwat in their PR24 plans. New policies around open data would be a good place to start.

The smart rollout has allowed energy suppliers to change the customer experience in many ways, for better and for worse. On the plus side, it has allowed suppliers to offer innovative and environmentally-friendly tariffs to customers. For example, tariffs which offer radically reduced electricity prices to customers during the night allow for electric vehicles to be charged cheaply. More controversially, some energy firms have been accused of using smart meters to cut off supply for vulnerable households remotely, resulting in negative press for energy firms.

Yet the potential for improving the customer experience by using smart metering in water is huge. Much like the energy industry, it can create time-of-use tariffs for customers who can then change their habits to obtain lower prices. Such tariffs can help reduce water stress in particular regions as charging higher prices at certain times can encourage water efficiency. Smart metering can also help customers to discover leaks at their property which would otherwise go undetected, leading to lower prices in the long term. Using data for such purposes, water companies can make smart metering work for them and their customers.

The smart rollout in energy received a lot of negative press in its early years, and has struggled to recover its reputation since then, despite solid progress. The Government’s initial ambition to complete the smart rollout by 2020 proved to be overly ambitious and had to be delayed until 2024. This fed a narrative of defects and inertia, undermining the public perception of smart metering and the morale of staff working on the rollout.

This is a pitfall which the water industry needs to avoid in AMP8 which runs from 2025-2030. To avoid it, the industry must focus on operational excellence, strong programme management and good communication with customers. This will result in fewer cancelled or failed installations, a workforce properly incentivised and working to its capacity, alongside a clearer sight of metrics. A further benefit which will impact the bottom line of water companies is improved Customer Measure of Experience (C-MeX) and Developer Services Measure of Experience (D-MeX) scores.