BEAMA Energy

1. BEAMAEnergy Market Deregulation and Industry Consolidation Les Woolner Chairman - BEMCA

2. Actaris Ampy Automation Digilog ATR Group Echelon Elster Metering Horstmann Itron Landis + Gyr PRI Sensus BEMCA BEAMAEnergy Metering & Communications Association

3. UK Deregulation - Why? • Privatisation - brings need for competition. • EU Legislation, including Common Rules for the Internal Market in Electricity. • Competition gives better prices and efficiency, more customer choices, better customer service, more innovation…

4. UK Deregulation - What? • Ongoing Regulation for Transmission, Distribution, and Interconnection Networks. • Establishment of Power Exchanges & Balancing and Settlements Arrangements. • Separation of Licensed Suppliers and Relaxation of Energy Price Controls. • Also (uniquely) Separation of and Competition in all Metering Services.

5. UK Deregulation - When?

6. UK Deregulation - Wholesale • 1990 - Electricity “Pool” (England + Wales) • with unbundling of generation and transmission • 1992 -“Dash for Gas” and CCGT stations • 2001 -“NETA” trading arrangements (ISO) • bringing power exchanges & balancing market. • 2005 -“BETTA” will cover Scotland too • with separation of transmission in Scotland. • Many generation companies exist now.

7. UK Deregulation - Retail • 1998 - All domestic customers eligible: • new Initial Settlement & Reconciliation system • 2001 - “PES” Separation in the14 old areas • supply and distribution are fully separated • start of separation of metering services • 2005 - British Gas is largest of 6 Residential Suppliers in GB (has no electricity network) • Supplier “Hub” drives market arrangements.

8. UK Deregulation - Others • 1994 Meter Operation competitive>100 kW • 1998 Meter Reading competitive >100 kW • 2001 Metering Services fragmentation: • MAP Meter Asset Providers • MO Meter Operators (Half-hour and Non-HH) • DC Data Collectors (Half-hour and Non-HH) • DA Data Aggregators • PPMIP Prepayment Infrastructure Providers • 2004 Competition in all Metering Services

9. Today’s Influencers OFGEM EST & CARBON TRUST ENERGY SUPPLIERS SOCIAL HOUSING PROVIDERS ENERGY DISTRIBUTORS FUTURE METERING REQUIREMENTS EMBEDDED GENERATION SUPPLIERS METER OPERATORS G’MENT DTI, DEFRA

10. Impact on Residential Metering Market Size By Sector 1MW+ 5,000 100kW+ 70,000 Polyphase 1,400,000 Whole Current Single Phase 3,700,000 Prepayment Single Phase Residential 4,000,000 Multi Rate Single Phase 17,500,000 Single Rate

11. Impact on Residential Metering • Ongoing investment in equipment & operations • without any new benefits. • Largely like-for-like equipment installations • plus extension of “key” prepayment system. • Trials of new technology have not led to rollout • Supplier’s lack of interest in system innovation • Real & perceived barriers in industry processes

12. Problems & Issues • Lack of joined-up energy policy • short-term v long-term issues - CO2 and costs. • Barriers to New Metering Technology... • Lack of drivers for AMR - fragmentation of costs and benefits between the stakeholders. • 2-Yearly Meter Inspections kill off AMR. • Limited scope for DSM under NETA - few differences under BETTA from July 2005?

13. Problems & Issues (2) • There are fewer and larger Suppliers now • each with its own commercial needs and views. • Suppliers’ big billing systems are inflexible. • Competition is mainly on price per kWh. • Competition in metering services: • real long-term benefits, or just an experiment? • various views from different Suppliers.

14. Fully Competitive Well Developed Some Progress Initial Steps Only Not Functioning In Europe (All Consumers) • Objectives of the European Commission: • Create a single European market for electricity • Open the electricity sector to competition • All consumers should have access to competition in electricity supply by 1st.July 2007 • Progress-to-date varies greatly but most established member states have some element of competition in supply and are working towards full competition.

15. In Europe

16. Impact of Competition • Roll-out of competitive market has resulted in significant variation in the commercial structure of Utilities across the European Union • Commercial integration remains a prime factor in determining investment decisions. • UK has experienced high degree of vertical dis-integration with commercial separation of core activities of generation, distribution and supply activities. The has been followed by significant horizontal integration resulting in greater business focus. • Other markets have not experienced such degree of commercial re-structuring and generally a high degree of commercial integration of core activities remains.

17. Commercial Separation Supply Activities Distribution Activities Process Data Payment / Revenue Employ Data Provide Install Operate Maintain Collect Data Impact of Commercial Structure on Metering Investment Metering Value Chain Commercial separation creates disconnects in the value chain. Installations tend towards minimum Regulated standards and legal obligations Purchase decisions tend towards cost focus rather than value focus.

18. Future Changes & Opportunities ENERGY WHITE PAPER ENERGY EFFICIENCY BILLING FUEL POVERTY ENERGY SUPPLIER SWITCHING FUTURE METERING REQUIREMENTS SECURE BY DESIGN CUSTOMER SERVICE EMBEDDED GENERATION

19. BEAMAEnergy Ltd Westminster Tower, 3 Albert Embankment, London SE1 7SL t: 020 7793 3007 f: 020 7793 3003 e: beamaenergy@beama.org.uk w: www.beamaenergy.org.uk