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

2. BEMCA Actaris Ampy Automation Digilog ATR Group Echelon Elster Metering Horstmann Itron Landis + Gyr PRI Sensus 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 ENERGY SUPPLIERS EST & CARBON TRUST EMBEDDED GENERATION SUPPLIERS OFGEM METER OPERATORS G’MENT DTI, DEFRA SOCIAL HOUSING PROVIDERS ENERGY DISTRIBUTORS FUTURE METERING REQUIREMENTS

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

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 - CO 2 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. 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. Impact of Commercial Structure on Metering Investment Provide InstallOperateMaintain Collect Data Payment / RevenueProcessDataEmployData Distribution Activities Supply Activities Commercial Separation 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 EFFICIENCY BILLING SECURE BY DESIGN ENERGY WHITE PAPER CUSTOMER SERVICE EMBEDDED GENERATION ENERGY SUPPLIER SWITCHING FUEL POVERTY FUTURE METERING REQUIREMENTS

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