Utilita Faces New Customer Ban for Installing First-Generation Smart Meters

Pre-payment energy specialists Utilita could be banned from taking on new customers after Ofgem revealed the supplier had been installing older smart meters.

Energy suppliers are supposed to take “all reasonable steps” to install smart gas and electricity meters in all homes and small businesses they serve before 30 June 2021. 

Smart meters display energy consumption, on the meter itself and an in-home display, in kilowatt-hours and pounds and pence and relay this information directly to suppliers. They’re supposed to help energy consumers save money by identifying where they’re using too much energy and by eliminating the need for physical meter readings and estimated bills.

But the £13.5 billion rollout of these next-generation energy meters has been troubled. First-generation, SMETS 1, meters can lose functionality when the user switches energy supplier, leaving millions of “dumb” meters in homes and businesses.

Second-generation SMETS2 meters avoid this fault and now make up more than 90% of smart meter installations. Under rules that came into force in June 2019, suppliers must take “all reasonable steps” to install SMETS2 meters and can no longer include SMETS1 installations in their official rollout targets.

However, some suppliers have continued to install first-generation meters, including Utilita. Ofgem is now consulting on banning Utilita from signing up new customers unless they install 250 second-generation smart meters by April 2021 and 15,000 new smart meters by July.

Charles Hargreaves, Ofgem’s deputy director of conduct and enforcement, said: “Ensuring all energy suppliers take all reasonable steps to install SMETS2 meters for new and replacement meters is critical to the success of the smart meter rollout as it enables smart meters to operate reliably for all consumers regardless of their energy supplier.”

Utilita says the older smart meters are better for households with prepayment meters, which make up most of its customer base, and says the proposed ban is “grossly unfair.”

Chief executive Bill Bullen said: “We have been left shocked and disappointed at the tone of Ofgem's announcement. Since 2005, we have installed effective smart meters in 90% of our customers' homes, giving many vulnerable and low-income households the best energy service they have ever experienced.

“For pay-as-you-go customers, SMETS 1 meters are proven, secure, robust and reliable, and provide excellent functionality. Serving pay-as-you-go energy households effectively is our main objective, and SMETS 2 meters do not enable us to do this in the same way that SMETS 1 meters do.”

Utilita is one of the suppliers in Ofgem's new "medium" classification of energy companies, with a 2.61% marketshare. It recently paid refunds and redress totalling £500,000 after an Ofgem investigation revealed it had overcharged 40,000 prepayment customers.

Ofgem will consult on the proposed new customer ban until 4 January 2021.