Guest Blog by Alex Henney.
Last year Richard Bacon MP, who has been on the Public Accounts Committee for a decade, and journalist Richard Hope wrote “Conundrum: why every government gets things wrong – and what we can do about it”. There were 12 chapters of case studies of government screw-ups of which nine were IT. There was a chapter “The public sector and IT – a permanent disaster”. Do you think the Department of Energy and Climate Change (DECC) could learn from the experiences? Of course not – it has got itself enmeshed in yet another mess, the roll-out of smart electric and gas meters.
In principle smart meters for residential electric consumers are a good idea provided they are installed with clear objectives that will achieve beneficial results such as eliminating estimated bills, speeding up switching, facilitating more responsive behaviour; are designed to be hack-proof so that hundreds of thousands could not be turned off suddenly to crash the grid; and are implemented efficiently. Although their design and installation is a non-trivial task that needs to be undertaken with care, it can be done efficiently and without a song and dance as has been shown by Enel, the very large Italian electric company, and in Finland. Enel wanted to cut theft so designed a meter in 2000 and by 2008 had had rolled out 32M at an all in cost for the meter, installation, and transferring the data over the electric network for £65. The Finnish government legislated a roll-out in and by last year all 80 of the network companies had installed meters and hourly data was collected from them every day.
DECC knew best and has devised by far the most complicated and one of the most expensive (£134 for electric meters, £225 for electric and gas meters) roll-outs in the world for a total cost of £12bn which if it is ever implemented will provide a limited service (the meters cannot communicate with computers and smart phones) using obsoleting technology. The reasons for the complexity are choosing the suppliers rather than the network companies to roll-out the meters; rolling out not just the electric but combined electric and gas meters; collecting data by wireless via the government promoted Data Collection Company (DCC), which is resulting in 3 types of system because the main one will only work with 70% of dwellings; and requiring interoperability of equipment (rather than of data). This has led to a Smart Energy Code of more than 1000 pages and growing, which is multiples of volume of the documentation required elsewhere.
The government announced a roll-out in 2007. Work proceeded at a languid pace with endless wheel spinning until it got serious under the Coalition when it became a vanity project. The cost/benefit analysis was rigged from a loss of £4½bn when undertaken by a competent firm of engineering consultants to a benefit of nearly £5bn by civil servants so that mindless ministers could run around proclaiming the good they were doing. The roll-out was supposed to start in earnest this year but slipped to next year. This summer the DCC first said it needed another £11m, then in November it published “Resetting the DCC Delivery Programme” where “resetting” is a euphemism for slipping another year and wasting another £90m. Who wants to bet against further slippage and cost?
The reason for the mess is technical ignorance and gross incompetence by DECC civil servants coupled with ministers who do not have the wit to be able to challenge the officials.The project should be stopped and a number of civil servants fired, as would have happened long ago if this project were run in the private sector.
Alex Henney was once a director of London Electricity. In 1987 he was the first person in Britain (and perhaps Europe) to propose a competitive restructuring of the electricity industry, and was involved with the then Secretary of State and officials in the early days of restructuring. Subsequently he has advised on restructuring electric markets from Norway to New Zealand. Among other things he undertook a study of smart metering in 12 jurisdictions and made submissions to the Minister of Energy and the Energy and Climate Change Committee on the expensive mess being made here.