London, U.K. --- (METERING.COM) --- December 19, 2011 - A new Smart Energy Code setting out the arrangements for the introduction and ongoing operation of smart metering and consolidating the existing industry codes dealing with retail issues in gas and electricity has been proposed by Britain’s regulator, Ofgem, to facilitate market development and reduce administrative burdens.

The proposal, in a consultation Promoting smarter energy markets, forms part of proposed reforms to the existing market arrangements in order to ensure that market development is not constrained. There also needs to be a step change in consumer engagement with the retail energy market to ensure that the benefits of the country’s smart meter rollout are realized.

The consultation identifies a total of eight areas that could materially influence the effective development of smarter markets from the platform of smart metering.

Four of these are the main areas likely to impact on energy consumers:

  • Time-of-use tariffs – should help many consumers lower their energy costs, but improved engagement will be needed to help all consumers make informed choices
  • Demand side response – more efficient use could lower overall energy costs, but this will need coordinated changes to regulatory and commercial arrangements
  • New energy services – innovation would increase the consumer benefits of smart metering and can happen without major change to the regulatory framework
  • Payment methods – more options can be made available without changes to regulatory arrangements beyond those envisaged as part of the smart metering rollout.

There are also four areas where opportunities exist to realize cost savings, improve consistency and remove constraints to the development of smarter markets:

  • Gas and electricity settlement arrangements – actual daily (gas) and half-hourly (electricity) meter reading data should be used in order to improve their accuracy and efficiency
  • Change of supplier processes – should be reliable and fast, so that customers can confidently switch supplier on a next day basis
  • Electricity data processing and aggregation services – should be procured centrally in order to reduce costs and support fast customer switching  
  • Structure of industry codes – should be consolidated to facilitate market development and reduce administrative burdens.

To fully harness the potential of smart metering and make the transition to smarter markets, it will be important to consider potential reforms in the round, identifying linkages across the supply chain and with other Ofgem, government and industry initiatives, Ofgem says in the consultation.

The consultation runs until March 7, 2012. In the light of the responses, Ofgem intends to publish its market development strategy in the summer.