RT HON HILARY BENN MP, MS SUSANNA MAY AND MR PAUL CHAMBERS

20 FEBRUARY 2008

  Q80  Miss McIntosh: So you are telling me that in North Yorkshire I could live in one of these homes and I would not need my central heating on?

  Mr Chambers: Yes. Not yet.

  Chairman: If you were an estate agent, Mr Chambers, you might have a customer here!

  Lynne Jones: It is not just about new build. When we were in Germany the farmers I was mentioning earlier had got a biomass and biogas plant and photovoltaic system but they had installed a heat main within the village, 500 homes, and the householders did not have to pay anything for the installation, they managed to get the investment, and I have to say it was fuelled a lot both by the money the householders would pay for their heat but also from the feed-in tariff as well and the systems they have there. It is also useful to learn this in terms of heat mains. We need to do more to encourage authorities, like has been done in Woking, on combined heat and power and, indeed, in Birmingham has now got combined heat and power, but to do that at a domestic level the local authorities would not have the investment to install a district heating scheme for households which would benefit from it without some incentive from the Government.

  Q81  Chairman: I think our frustration, Secretary of State, reflects the fact that a third of our emissions are accounted for by the generation of heat. We seem to be treading water and saying we are now going to look at it again after you looked at it before with the Biomass Task Force. You may have a different perspective on it but if we thought renewables in the electricity generation area was going slowly, we think this is going at a snail's pace. We have got to move on.

  Hilary Benn: Indeed I look at it from the perspective of eight months. I have met Sir Ben Gill and talked to him about a number of things.

  Q82  Chairman: Your own Department could only identify two out of your 50-odd boilers that were suitable for renewable heat. Am I right in saying that? You have not found any more from your Department, have you, that might be suitable?

  Hilary Benn: I would need to go and check, I do not know.

  Chairman: There we are.

  Q83  Mr Williams: I think the Secretary of State would agree that if we are going to engage the citizens in this task they have to have an understanding of the energy that they use and the patterns of energy that they use, and the best way for them to establish that is through a metering system or a display system so they can understand when they are using the energy. We were a bit disappointed with your response on metering and we did not quite understand what your strategy was for this or whether you understood if somebody had a meter installed now that it should be good for future use and being able to modify their behaviour in terms of energy usage. As I understand it, there is a consultation going on now in terms of metering and billing. Can you tell us how that consultation is getting on and is BERR taking the lead on that matter?

  Hilary Benn: Yes and there will be an announcement in the coming weeks on this. It is a very important issue but it is a complex one; there are big costs potentially involved. But we remain of the view that introducing smart meters within ten years and VDUs is the right approach.

  Q84  Chairman: Tell me what you mean by the term "smart meter"? What is your personal definition of a smart meter; what does it do?

  Hilary Benn: It does a number of things, as I understand it. One, obviously it reads your meter without somebody having to come and bang their head going down into your basement or wherever it is. Secondly, it could vary the tariff depending on the time of day.

  Q85  David Taylor: Are you talking of just electricity now or electricity and gas?

  Hilary Benn: You can have smart meters in relation to both.

  Q86  David Taylor: To both but not just for electricity?

  Hilary Benn: You could have them for both because if you have the technology that enables whatever the flow is, be it gas, be it electricity to be read and automatically sent back to the supplier, then you have one of the benefits—ability to adjust the tariffs. I have to say also one which gives the public information about the customer—the use. Having seen one of the current visual display units at work in Leeds as part of a project that British Gas are doing—as you know, they are taking eight houses in eight streets in eight cities and giving the eight households £20,000 to spend on energy efficiency measures, see what happens in a year and those who save the most get another £50,000—it is a very creative project, I have to say. But talking to two residents in particular who have their VDU on the sideboard in their living room it certainly had an impact on them, because they described to me how putting the tumble drier on it went "whoomph" and made them think about their energy use in a way that not having a visual display unit had not.

  Q87  Chairman: The reason I asked that question was that I just wanted to be clear that when we use the term smart metering you are talking about a sophisticated device and not merely some device to read out, because there have been some press reports that the Department for Business Enterprise and Regulatory Reform has a different idea—a much simpler meter which simply gives the consumer some information but not to do all the interactive and clever things that you have just so adequately described.

  Hilary Benn: Indeed and I—and I am sure you do not believe either—do not believe everything I read in the newspapers.

  Q88  Chairman: As long as there is unanimity across government that when the term "smart meter" is used—

  Hilary Benn: That is absolutely what the government understands a smart meter to be. Then there are the VDUs that you can get currently and there is at least one power company that is already making those available to customers who want them. I would say it is not a competition between the two but obviously getting smart meters installed right across the piece is going to take some time. Certainly the energy companies' view, from talking to them, is that it would be good to try and do that as quickly as possible. But at the same time if we can by making available for customers who want them—visual display units—currently, then going back to your point about the need to get on with it, that can have an impact too.

  Q89  Mr Williams: But surely the visual display unit and the smart meter should be an integrated technology.

  Hilary Benn: I agree.

  Q90  Mr Williams: And not something that is separate. You give the impression that you see these as separate bodies.

  Hilary Benn: No, I do not and I apologise if I did that. The point I was making is that you can get the visual display units currently which you clip on to your cable; they cost about £15 or so.

  Q91  Lynne Jones: They are more than that.

  Hilary Benn: I am advised that if the companies are going to give them away for free the cost price is of that order, £15 or so, and that gives you certain information. That is slightly complex in that apart from the bars that go up and down and show you what the usage is, if you want to get a reading of what your bill is going to be you have to enter the right tariff. That is the short term and that is why I made the point that it is not about competition.

  Q92  Lynne Jones: Why waste money? In Northern Ireland they already have full deployment of the new meters. It is already happening in part of the UK and other countries—Italy has complete smart meter installation. So why go down the route of displays when we could actually have a programme of smart metering of all new build, when all meters are supplied and by energy companies cooperating to do it street by street because that is the only way we are going to get it done quickly; otherwise it is just going to be dribs and drabs and it is going to take far too long.

  Hilary Benn: I agree with that. My point is that it is not a competition between the two because even getting on with it—

  Q93  Lynne Jones: But it is. If money is being spent on issuing these visual display units that takes money away from installing the smart meters.

  Hilary Benn: At £15 a time in the context—

  Q94  Lynne Jones: It is more than that.

  Hilary Benn: In the context of the energy companies, if they are giving them away free to people so that it is not costing the customers in a direct sense then I would have said that there was a case now for trying to raise the awareness of consumers of their energy use, while at the same time getting on with the introduction of smart meters; and, yes, part of the smartness of a smart meter will have to be a visual display unit so that customers get the benefit of that information. My argument is simply that it does not have to be either one or the other; you can make visual display units available now as the technology is there—you clip it on you can see it, and we have all seen them at work—while also getting on with smart meters.

  Q95  Mr Williams: One of the impediments or one of the obstacles seems to be that there is a disagreement between Ofgem and the energy companies about how this should be achieved. Ofgem are going for some market system of competition whereas, as I understand it, the energy companies would like it done on a more planned and regulated basis. Do you see that as a problem?

  Hilary Benn: That is indeed one of the issues which the consultation process has been looking at and upon which the government is reflecting and will reach a view when we make the announcement.

  Q96  Chairman: Secretary of State, let me put this to you. I was talking to a representative of one of the major power providers who made it absolutely clear to me that unless we had a system of smart meters eventually the grid that we have would not be able to cope with a significant increase in micro-generation because you need this more sophisticated metering arrangement to make it work. You have committed the government to looking positively at this development—the two seem to go hand in hand.

  Hilary Benn: I do not think there is any argument between us as to the benefit of smart meters and the need to get on with their introduction; the question is what is the best way in which to do it?

  Q97  Chairman: So just to round this little bit up what is the timetable for an announcement, an indication as to the way forward? When will we have certainty in this field?

  Hilary Benn: In a few weeks is the answer but I cannot tell you precisely.

  Chairman: Mr Taylor has a supplementary on that and then we are going to move on to Bali.

  Q98  David Taylor: My supplementary is really a clarification in that the display units to which the Secretary of State refers, Chairman, are likely to make only a miniscule contribution, bearing in mind that two-thirds of household heat consumption relates to gas and you cannot just strap on the £15 devices that he says you can get from Argos to monitor that very effectively. It is necessary for the fully fledged smart meter to be committed to by the government and for there to be a timetable for it. I launched in the committee room round the corner a few weeks ago a "Look Smart" campaign to get smart meters into the Energy Bill. That did not happen but there is a desire on behalf of most sides of industry to get cracking on this. It has to be mandated, there is no way round that. The point of making it advisory or recommending that it be done, it has to be a requirement on the energy suppliers.

  Hilary Benn: The government shares the view that you have expressed that in order to make progress we are going to need smart meters and that is precisely why—

  Q99  David Taylor: Mandated.

  Hilary Benn: --- we have had this consultation and we will announce how we are going to do that when that is completed.