The areas identified by Ofgem include the development of common standards, the streamlining of metering regulations, and involvement with running pilot schemes for the government
However it is felt that more consideration needs to be given to the issue of ‘stranded assets’ and the ’28 day rule’, both of which arise when consumers are able to switch suppliers.
Historically UK utilities owned, operated and read all meter points within their region, and investment in meter reading technology was secure as any additional benefit for the supplier could continue to be extracted throughout the working life of the meter. But the scenario has now changed with consumers able to switch suppliers, and incentivizing investment in new metering technology is more complicated in order to avoid ‘stranding’ these assets.
While Ofgem compares the risks of stranded meter assets with those faced by broadband or cable television suppliers that have developed successful business models to deal with consumer switching, it is argued that there are differences between the two sectors with the cable TV companies typically having bespoke equipment that is not compatible with other companies, as well as fixed term and price contracts, including penalty clauses for early exit.
The ’28 day rule’ currently allow consumers to switch supplier within 28 days of giving notice. Ofgem is currently running a trial to assess whether the suspension of this rule will allow more energy efficiency projects to be implemented in residential homes. While originally one of the main enablers of competition, the clause is now believed to offer limitations to technical and contractual innovation.