Smart Meter Upgrade Consultation on Smart Pay-As-You-Go

 
Smart Meter Upgrade Consultation on Smart Pay-As-You-Go
An Coimisiún um Rialáil Fóntas Commission for Regulation of Utilities

               An Coimisiún um Rialáil Fóntais
               Commission for Regulation of Utilities

             Smart Meter Upgrade
             Consultation on Smart Pay-As-You-Go

               Consultation
               Reference:      CRU21046             Date Published:     28/04/2021   Closing Date:   28/05/2021

              www.cru.ie
CRU Mission Statement
The CRU’s mission is to protect the public interest in Water, Energy and Energy Safety.

The CRU is guided by four strategic priorities that sit alongside the core activities we undertake to
deliver on the public interest. These are:

    •   Deliver sustainable low-carbon solutions with well-regulated markets and networks
    •   Ensure compliance and accountability through best regulatory practice
    •   Develop effective communications to support customers and the regulatory process
    •   Foster and maintain a high-performance culture and organisation to achieve our vision

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Executive Summary
Within this consultation the CRU is seeking views from suppliers, industry groups, customer
interest groups, members of the public and all other interested parties on topics around Smart Pay-
As-You-Go (Smart PAYG) policy for smart electricity meters. Smart PAYG is a prepayment service
that will be enabled by the smart meters deployed by ESB Networks (ESBN).

The High-Level Design (HLD) for the National Smart Metering Programme (NSMP) was approved
in 20141 and was revised in 20172 at which point the deployment of smart meters and the
introduction of smart services was divided into three phases. The allocation of smart electricity
meters follows ESBN’s deployment plan. Approximately 250,000 meters were installed in Phase 1
(2019-2020) and a further 500,000 meters are planned to be installed each year in Phase 2 (2021-
2022) and Phase 3 (2023-2024).

Smart services will also be introduced in a phased manner. Smart services for electricity such as
remote reads, time-of-use (ToU) tariffs, smart bills, access to historical consumption information
went live on 26 February 2021.

In line with the ‘Phased Approach’, Smart PAYG functionality is planned to be available from the
end of Phase 2 in 2022. The CRU view that from 2023, Smart PAYG will extend the range of PAYG
offers available to customers but may not replace other existing PAYG solutions. It is envisaged
however, that over time as customers and the industry gain more experience with this new form of
prepayment it may replace some of the other PAYG products, for example, ESBN keypad meters.

Purpose of this consultation

The purpose of this consultation is to inform policy decisions around the Smart PAYG service.
Most policy decisions around Smart PAYG were issued during the earlier stages of the NSMP
between 2014 and 2016 in order to provide a clear steer on the minimum acceptable customer
experience requirement before the procurement of smart metering systems commenced.
However, as noted by the CRU in earlier consultations3, some policy elements may be revisited in
order to further improve the minimum customer experience, if this can be achieved with reasonable
effort.

1
  Smart Metering High Level Design (CER/14/046)
2
  Update on the Smart Meter Upgrade (CER/17/279)
3
  Rolling out New Services – Time-of-Use Tariffs and Smart Pay As You Go (CER/15/136)

2
In 2020 the CRU reviewed the policy to support Smart PAYG functionality and published a call for
evidence to seek views on a number of topics. This consultation paper summarises the responses
received for the call for evidence and outlines the CRU proposal for key elements of the Smart
PAYG policy taking account of that feedback.

The consultation explores the following topics:

    •   How Smart PAYG will fit into existing debt management options (Section 1.1).
    •   Access to pay as you go products for all customers (Sections 2.1, 0).
    •   Offering the Standard Smart Tariff to Smart PAYG customers (Section 3.1).
    •   Customer messaging around credit balances and payment channels (Sections 0, 0).
    •   Swift reconnection and guarantees around supply (Section 4.1).
    •   Emergency credit (Section 4.2).

Next Steps

The CRU is seeking views from suppliers, consumer interest groups, industry groups, members of
the public and all other interested parties regarding the questions raised in this document by 28
May 2021. Responses should be submitted by email to smartmetering@cru.ie.

The CRU will publish responses in full on the CRU website; respondents should include any
confidential information in a separate Annex, stating the rationale for not publishing this part of
their comments.

Feedback to this consultation will be considered in the definition of the final policy, and the CRU
expects to conclude this work and issue a decision by Q3 2021.

Where necessary, the CRU will incorporate any outstanding policy decisions related to Smart
PAYG as part of the next review of the Electricity and Gas Suppliers' Handbook in 2021.

Any changes to the electricity market design will be incorporated into market changes by the end
of 2021. These technical elements will be incorporated into the Version 14 Market Design Release
which is planned to go live in Q4 2022.

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Public/ Customer Impact Statement
Smart meters are the next generation of energy meters, replacing older analogue meters which,
when fully operational, will deliver benefits for customers, the environment and the economy. The
NSMP involves the nation-wide replacement of over two million gas and electricity meters over a
six-year period. The smart meter upgrade will transform how energy consumption is measured,
managed and paid for.

Smart Pay As You Go (Smart PAYG) is a new model of prepayment that will provide customers
with smart meters the opportunity to pay up-front for their energy without the need for an additional
meter or device in the home. The deployment of smart meters and the introduction of smart
services follows a phased approach and Smart PAYG functionality is planned to go live at the end
of Phase 2 in 2022.

The Smart PAYG service will be fundamentally different in some respect from existing prepayment
solutions. Smart PAYG will enable Time-of-Use tariffs for all PAYG customers and the provision of
granular information on historical electricity consumption. The customer’s credit balance will
continue to be the basis for balance messaging like low balance alerts, and for potential
disconnections and reconnections if the customer runs out of credit. However, this credit balance
will no longer be stored and updated on the meter as the customer consumes electricity during the
day (as happens with the current technology), but it will be stored remotely by the supplier and
updated once per day.

This change in the mechanics of the infrastructure will lead to changes in balance messaging.
Instead of receiving low balance alerts from the meter, customers will receive low balance alerts
from their suppliers through other channels, for example, through text or an app. Similarly,
disconnection and reconnection will not be performed by the meter but remotely by the supplier,
and so Smart PAYG will require high meter connectivity. The change in the infrastructure may also
lead to changes around the emergency credit. Emergency credit for current PAYG customers is a
fixed monetary amount, but for Smart PAYG customers, this may change to a time-based credit.

This consultation paper is an element of the discussion around Smart PAYG policy. The
programme plan is that from 2023 customers with smart meters can avail of Smart PAYG tariffs,
either as a debt recovery solution or as a lifestyle choice, and in time this new form of prepayment
will offer a more flexible but equally robust alternative to current (non-smart meter supported)
PAYG solutions.

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Table of Contents

Glossary of Terms and Abbreviations .................................................................... 6

1      Introduction ........................................................................................................ 7

    1.1    Background ....................................................................................................................... 7
      1.1.1     The Smart Meter Upgrade .......................................................................................... 7
      1.1.2     Debt Management in the Irish Retail Market .............................................................. 8
      1.1.3     Smart Pay As You Go for Electricity ............................................................................. 9
    1.2    Purpose of this Consultation ........................................................................................... 10
    1.3    Related Documents ......................................................................................................... 12

2      PAYG Services in the Irish Market ................................................................. 13

    2.1       Smart Meter Connectivity ............................................................................................... 14
    2.2       Data Sharing .................................................................................................................... 17
3      Customer Communications ............................................................................ 20

    3.1       Offering ToU Tariffs to Smart PAYG Customers ............................................................... 20
    3.2       Customer Messaging ....................................................................................................... 22
    3.3       Payment Processing ........................................................................................................ 25
4      Disconnection and Reconnection .................................................................. 28

    4.1       Swift Reconnection.......................................................................................................... 29
    4.2       Emergency Credit ............................................................................................................ 32

5      Summary of Questions.................................................................................... 34

6      Next Steps ........................................................................................................ 35

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Glossary of Terms and Abbreviations

    Abbreviation or Term   Definition or Meaning
    CEP                    Clean Energy Package
    CTF                    Communications Technically Feasible
    ESBN                   ESB Networks
    HLD                    High Level Design
    NSMP                   National Smart Metering Programme
    PAYG                   Pay-As-You-Go
    SoLR                   Supplier of Last Resort
    RBM                    Regular Balance Message
    Smart PAYG             PAYG services enabled by ESBN smart meters
    ToU                    Time-of-Use

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1 Introduction
1.1 Background

1.1.1   The Smart Meter Upgrade

The smart meter upgrade is a project to transform how electricity and gas retail markets operate.
Older, mechanical electricity and gas meters will be replaced with updated digital meters. Smart
meters will provide many benefits for energy customers by eliminating the need to use estimated
meter readings, making new products and services available like time-of-use tariffs (where the
price of electricity varies with the time of the day), and empowering customers to make more
informed choices regarding their energy needs by providing customers with more granular
information about their consumption. The upgrade to smart meters will also provide more
information to the network companies to allow them to better manage the grid and ensure security
of supply.

The CRU’s decision to rollout electricity and gas smart meters for all residential and smaller
business customers was announced in July 20124. The CRU conducted further analysis on the
design of the smart metering solution throughout 2013 and 2014 which culminated in the
publication of the High-Level Design5 in October 2014. The HLD set out the broad parameters of
the overall design of smart electricity and gas meters in Ireland to be procured by ESB Networks
and Gas Networks Ireland. Since the publication of the HLD the CRU has developed customer
policy in a number of areas like transition to time-of-use tariffs, Smart PAYG, and the provision of
information to customers. Smart PAYG is described in more detail in Section 1.1.3.

The High-Level Design (HLD) was revised in 20176 at which point the deployment of smart meters
and the introduction of smart services was divided into three phases. The allocation of smart
electricity meters follows ESB Networks’ (ESBN’s) deployment plan. Approximately 250,000
meters were installed in Phase 1 (2019-2020) and a further 500,000 meters are planned to be
installed each year in Phase 2 (2021-2022) and Phase 3 (2023-2024).

Smart services will also be introduced in a phased manner. Smart services for electricity such as
time-of-use tariffs, smart bills, access to historical consumption information went live on 26

4
  Decision on the National Rollout of Electricity and Gas Smart Metering (CER12008)
5
  Smart Metering High Level Design (CER/14/046)
6
  Update on the Smart Meter Upgrade (CER/17/279)

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February 2021. Note that smart services currently include smart electricity services only. The gas
smart metering solution is planned to be delivered in Phase 3.

1.1.2      Debt Management in the Irish Retail Market

Rules around debt management in the Irish Retail Market are set out in the Electricity and Gas
Suppliers’ Handbook, Code of Practice on Disconnections. The Handbook sets out that “suppliers
are required to implement procedures for dealing with customers having difficulty paying” their bills
and must have “options available for these customers in order to avoid disconnection of supply”.
While suppliers have their own processes set out in their Codes of Practice, the general options
available to customers in debt are to agree on a payment plan with their supplier and gradually
repay their debt with each bill, or to receive a PAYG meter and gradually repay their debt with each
top-up. The Handbook sets out that “disconnection of a customer due to non-payment of account
must only be carried out as a last resort.”

The requirement to offer a PAYG meter to customers who have difficulty paying their energy bills
was introduced by the CRU in 2010 with CER/10/203 7. The context for the decision was that the
economic backdrop at the time resulted in increasing numbers of domestic disconnections and an
interim solution was necessary until smart meters with prepayment functionality became available.

CER/10/203 provided a definition for customers in financial hardship: “A customer is taken to be
in genuine financial hardship if they are unable to make payments against their bills without
assistance and are finding themselves in constant arrears. In order to identify customers who need
these meters suppliers are expected to work with MABS and St. Vincent DePaul who are best
placed to identify individuals in need of this level of assistance.”

Furthermore, the CRU accepted a proposal that “customers with debt outstanding for more than 6
months and above a value of €700 should be considered eligible for a budget controller”, but also
emphasised that “customers should also show signs of being in financial hardship”.

For customers who are in genuine financial hardship and struggle to manage their electricity bills
ESBN installs a keypad meter instead of the “meter of record” at no additional cost to the customer.
ESBN keypad meters are offline meters which means that these meters do not communicate
through a telecommunications infrastructure. The customer can purchase a top-up through a
variety of payment channels (cash, phone, website, app), depending on the supplier. Following

7
    Guidelines for Budget Controllers (CER/10/203)

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top-up, the customer receives a top-up code and enters that top-up code manually into the meter
to adjust the credit balance on the meter.

1.1.3      Smart Pay As You Go for Electricity

Apart from ESBN keypad meters, offered by suppliers as a debt management solution, many
suppliers in the market provide ‘lifestyle’ products using their own meters that are installed in a
property in addition to an ESB Networks meter8. Some meters are offline, with the same or similar
functionality as the ESBN keypad meter. Others have built in smart functionality as well, which
allows top-up codes to be transmitted to the meter (instead of typing them in manually), allow the
collection of consumption data which customers can use to better monitor their electricity
consumption, or allow the customer to avail of emergency credit through the suppliers’ app.

Contrary to 2010, in 2021 customers have multiple PAYG solutions to choose from. If they are in
debt and in genuine financial hardship, they can avail of an ESBN keypad meter, at no additional
cost to the customer. Otherwise, they can choose a supplier that offers a lifestyle PAYG product
and purchase a ‘lifestyle’ PAYG meter. If telecommunications are not appropriate at their location
to facilitate smart functionality or they are reluctant to share their granular consumption data with
their supplier, they can choose an offline meter which does not transmit any data (ESBN keypad
meters are also offline meters). Altogether, PAYG products are quite popular in the Irish electricity
market with an overall market share (hardship and lifestyle combined) of approximately 12%.

The NSMP will introduce changes to the prepayment services available to customers because the
smart meters that are currently rolled out by ESB Networks across Ireland are capable supporting
PAYG arrangements as well. Enabling Smart PAYG functionality via the ESB Networks meter from
2023 will enable the expansion of PAYG services to customers without the need for an additional
meter. Suppliers will be able to develop PAYG products without needing to invest in a meter
themselves and the focus will likely shift to a model based on customer-supplier interaction. This
will also remove any technical obstacles to switching between prepayment and credit billing
options.

Smart PAYG, that is, PAYG services facilitated by ESBN smart meters, will have key differences
compared with existing PAYG solutions. Current PAYG meters store and display balance
information on the meter and de-energise/re-energise the customer’s premises automatically,
based on that balance information. In contrast, smart meters on Smart PAYG tariffs will not store
balance information. Instead, the supplier will calculate the customer’s credit balance in their own

8
    The ESB Networks meter is the ‘meter of record’. Consumption recorded by this meter is used for billing.

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system, using meter reads (delivered from the smart meter remotely) and customer top ups
(delivered from their payment provider, or through the suppliers’ own systems). Smart PAYG
customers will no longer add credit directly to the meter, as the credit will be added to the
customer’s balance. This change will impact balance messaging as balance alerts will no longer
be driven by the meter but will rather be established by suppliers based on customer needs.
Similarly, de-energisation and re-energisation will not be performed automatically by the meter but
will be triggered remotely by the supplier in line with the requirements set out by the CRU.

Smart PAYG may also introduce a change to the emergency credit facility available to PAYG
customers. CER/15/2719 sets out that Smart PAYG customers will be able to consume energy for
a limited period of time after their balance turns negative, however this may be time limited rather
than credit limited. This decision is revisited in this consultation paper.

In line with the ‘Phased Approach’, Smart PAYG functionality is planned to be available from the
end of Phase 2 in 2022. The CRU view that in 2023, Smart PAYG will extend the range of PAYG
offers available to customers but may not replace other existing PAYG solutions. It is envisaged
however, that over time as customers and the industry gain more experience with this new form of
prepayment it may replace some of the other PAYG products, for example, ESBN keypad meters.

1.2 Purpose of this Consultation

In 2020 the CRU issued a call for evidence10 to seek the view of the public around Smart PAYG
policy items that had previously been identified by the CRU as requiring further consideration
before Smart PAYG services may go live in 2022. The paper focused on items that were
intentionally left open at earlier stages of the programme to be finalised later if necessary, and on
items that the CRU viewed may have significant impact on customers.

While respondents welcomed the opportunity to contribute to the discussion on Smart PAYG
functionality, many concerns were raised regarding the proposed solution. For example, these
concerns included guarantees around timely reconnections, constraints around providing real-time
balance information, or the requirement for an advanced IT and customer service infrastructure to
provide the same quality of service that PAYG customers are used to. Concerns were also raised
around customers in financial hardship who are not eligible for a Smart PAYG service because of
low meter connectivity or do not want to share their half-hourly consumption data. Respondents

9
    Rolling out New Services: Smart Pay-As-You-Go (CER/15/271)
10
     Call for Evidence on Smart Pay-As-You-Go (CRU20169)

10
offered a variety of suggestions which the CRU appreciated and considered while drafting this
consultation.

The consultation explores the following topics:

     •   How Smart PAYG will fit into existing debt management options (Section 1.1).
     •   Access to pay as you go products for all customers (Sections 2.1, 0).
     •   Offering the Standard Smart Tariff to Smart PAYG customers (Section 3.1).
     •   Customer messaging around credit balances and payment channels (Section 0, 0).
     •   Swift reconnection and guarantees around supply (Section 4.1).
     •   Emergency credit (Section 4.2).

While the CRU recognises that the new Smart PAYG solution to be delivered in 2022 will offer a
different PAYG service and some customers may prefer to be served by some of the existing
PAYG arrangements, the CRU considers that for many customers the new PAYG solution will
provide more flexible and economical alternatives to prepayment.

The purpose of this consultation is to inform CRU decisions on Smart PAYG policy. The
consultation expands some of the topics brought forward within the call for evidence and addresses
some of the concerns raised by respondents. The CRU aims to ensure that suppliers can offer,
and customers can choose a Smart PAYG service that leverages the smart metering infrastructure
and provides benefits like access to time-of-use tariffs or information on historical consumption to
PAYG customers as well. These decisions, where necessary, will be incorporated in the next
review of the Electricity and Gas Suppliers’ Handbook in 2021.

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1.3 Related Documents

     •   ESB Networks - Service Level Agreements (CER 04/345)
     •   European Third Package Directive (EU Directive 2009/72/EC)
     •   Guidelines for Budget Controllers (CER/10/203)
     •   Decision on the National Rollout of Electricity and Gas Smart Metering (CER12008)
     •   Smart Metering High Level Design (CER/14/046)
     •   Smart Pay As You Go (CER/15/054)
     •   Rolling out New Services – Time-of-Use Tariffs and Smart Pay As You Go (CER/15/136)
     •   Rolling out New Services: Time-of-Use Tariffs (CER/15/270)
     •   Rolling out New Services: Smart Pay-As-You-Go (CER/15/271)
     •   General Data Protection Regulation (Regulation (EU) 2016/679)
     •   Empowering & Protecting Customers (CER/16/125)
     •   Update on the Smart Meter Upgrade (CER/17/279)
     •   The Customer-Led Transition to Time-of-Use (CRU19019)
     •   Electricity and Gas Suppliers' Handbook 2019 (CRU/19138)
     •   Phase 1 Checkpoint Review (CRU/20/075)
     •   Call for Evidence on Smart Pay-As-You-Go (CRU20169)
     •   Comparison Tools for Time of use Tariffs (CRU/20146)

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2 PAYG Services in the Irish Market
A variety of PAYG services are available to electricity customers in the Irish Market. Some
customers may prefer a PAYG service as a lifestyle choice, others may require a PAYG service
as a debt management solution. Since the CRU’s decision in 2010, all suppliers are required to
offer a PAYG service to customers in genuine financial hardship.

In the past 5 years a number of new entrants to the market have sought a derogation from providing
PAYG services to electricity customers in financial hardship. The basis for seeking a derogation in
most cases was that establishing and managing a third-party service was resource intensive and
was seen by some new entrants as a barrier to entry while at the same time, the NSMP would
enable Smart PAYG services from 2023. In that context, the CRU has granted derogations to these
suppliers. From a customer protection perspective, the condition for the derogation restricted these
suppliers’ ability to disconnect customers in debt.

A number of the respondents to the call for evidence set out their view that the IT infrastructure
required to provide a Smart PAYG service is going to be complex to build and quality assure, and
some respondents highlighted that the cost of establishing such a system could disproportionately
impact small suppliers and become a barrier to market entry, similarly to the existing prepayment
solution.

As a solution, a number of respondents suggested the establishment of a SoLR for PAYG. In
summary, the concept was that some suppliers should either not be required to offer any PAYG
services and direct their customers to the SoLR for PAYG who can offer a suitable PAYG product
for them, or only be required to offer Smart PAYG, maybe even with limited functionality (for
example, without cash top-up), and if their customers would prefer an ESBN keypad meter, direct
them to the SoLR for PAYG. The CRU notes that the Clean Energy Package (CEP) will likely
transform the retail market and this type of innovative solution around a Public Electricity Supplier11
is welcome but may not be deliverable by 2022 especially since the market wants policy clarity
around Smart PAYG policy by the middle of 2021.

The Clean Energy Package is a set of European Union level legislative acts that will bring
considerable benefits to customers, industry, and the environment and underlines EU leadership
in tackling global warming. The acts address many topics within the energy sector, one of which is

11
  While respondents refer to a “Supplier of Last Resort”, this is a specific measure used in the event of a
sudden exit of a supplier from the market, whereby the SoLR will take on all that suppliers’ customers. The
CRU considers the concept proposed by respondents is more like the Public Electricity Supplier (PES) role
provided for in legislation, whereby the PES has a duty to supply customers.

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smart metering where they continue to provide the legal basis for the NSMP and include provisions
around the details of smart metering systems.

The CRU is cognisant that the Clean Energy Package has set out an evolution roadmap for the
retail electricity market and market participants. It is anticipated that more diverse energy actors
will enter the market over the coming decade and the regulatory framework may need to change
to reflect their business activity. In that context, the CRU understands that a balance between
customer protections and new entrant costs must be met. In Ireland, PAYG has become a core
option for debt management and the CRU considers it is vital to maintain access to a PAYG service
for customers in financial hardship. The CRU view that in time, Smart PAYG will be a viable
alternative to the current prepayment solution.

That said, given that the availability of PAYG products has expanded since 2010, there may be
value in exploring stakeholder views around the range of debt management options suppliers
should be required to offer.

The next two subsections address two topics which the CRU view most relevant to this discussion,
smart meter connectivity and data sharing arrangements.

2.1 Smart Meter Connectivity

The Smart PAYG service will require sufficient meter connectivity to be able to meet the service
requirement set out in earlier decisions. This means some customers may not be eligible for a
Smart PAYG service if meter communications are consistently unreliable at their location. Within
the call for evidence the CRU inquired how respondents view PAYG services should be facilitated
for customers who wish to or need to avail of these services but may not be eligible for Smart
PAYG because of low meter connectivity at their premises.

Summary of Responses

In order to address the concern around eligibility, some respondents suggested that comms could
be improved, or Communications Technically Feasible (CTF) 3 could be considered sufficient to
avail of the Smart PAYG service. CTF is a quantitative metric of meter connectivity ranging from 0
to 4, where 0 is the lowest and 4 is the highest level of connectivity. CTF 3 may be considered
together with another suggestion which highlighted that 100% reliable connectivity is essential to
a Smart PAYG service and suggested implementing Smart PAYG without the de-energisation
functionality to eliminate the risk of any delay to the reconnection procedure. It was indicated that
this might be an acceptable service for some customer groups.

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Some respondents suggested to consider retaining the existing PAYG infrastructure in some form
(either provided by ESBN or by the suppliers) to serve customers who cannot avail of Smart PAYG
because of low meter connectivity. It was emphasised by some that there should be a clear
separation between the rules for customers in financial hardship and customers who would like to
avail of a Smart PAYG product as a lifestyle choice. Multiple respondents suggested that only
customers in financial hardship should be guaranteed an offline PAYG solution if they cannot avail
of a Smart PAYG service and this requirement should not apply to lifestyle PAYG customers.
Others argued it may be unreasonable to retain the current hardship PAYG solution at its current
state for the low volume of hardship customers that may not be eligible for a Smart PAYG tariff,
and suggested to establish a mechanism for these customers (such as the SoLR for PAYG) to
move to a supplier that can serve them with an offline PAYG meter.

CRU’s View and Proposals

The current Smart PAYG policy sets out that the connectivity of the smart meter must allow the
requirements set out in earlier decisions like CER/15/271 to be satisfied. While it is not written
explicitly in any of the decisions, the CRU expects that this means the customer must have CTF 4
to avail of a Smart PAYG service.

The CRU considers that customers in genuine financial hardship should always be offered an
appropriate debt management option including a prepayment solution if requested. If the meter
connectivity at their premises does not allow them to avail of a Smart PAYG service provided by
their supplier, then an alternative is required.

This implies both that conventional prepayment meters currently installed by ESBN may be
retained for a longer period of time, and also that suppliers who will have customers with smart
meters below CTF 4 (or without smart meters, in the transitional period) and in need of a
prepayment solution may have to operate a conventional prepayment infrastructure “as well” which
will have a cost implication. In the context of new entrants and ensuring that the cost of providing
this option is not a barrier to entry, the CRU is seeking views on the options below.

Option 1

All suppliers are required to offer a prepayment solution to customers in genuine financial hardship.
Where a customer in financial hardship cannot avail of a Smart PAYG tariff (service provided via
the ESBN infrastructure) because the customer does not have a smart meter, or the connectivity
of their smart meter is not appropriate, and their supplier does not offer other prepayment products,
the supplier must allow the customer to switch to a supplier with an appropriate prepayment
product free of any charges (for example, early termination fees).

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The CRU considers this option would allow suppliers to limit their investment to a single
prepayment infrastructure, should they prefer not to operate both the Smart PAYG infrastructure
and the current PAYG infrastructure (ESBN keypad meters). Suppliers that decided to invest in
the current PAYG infrastructure would not be impacted by Option 1 as they could facilitate all
customers. However, if a supplier chose to invest in the Smart PAYG infrastructure only and could
not offer a Smart PAYG tariff to some of their customers, then they would have to allow those
customers to move to a supplier that can serve them. This requirement would only apply to
customers in financial hardship.

Option 2

A supplier may choose not to offer a prepayment solution. In that case, the supplier must allow all
their customers in genuine financial hardship to switch to a supplier with an appropriate
prepayment solution free of any charge s (for example, early termination fees).

As the range of PAYG products have expanded since 2010 and multiple suppliers offer PAYG
products to lifestyle PAYG customers as well, it seems that in 2021 PAYG may be a sustainable
product category by itself. Therefore, it may no longer be necessary to require suppliers to offer
PAYG services in order for PAYG services to be available to customers. This option proposes a
more principle-based regulation where suppliers may choose not to offer a prepayment service,
as long as their customers in need can choose to avail of a prepayment solution with another
supplier.

Option 3

All suppliers are required to offer a prepayment solution to all customers in genuine financial
hardship unless a derogation from this requirement has been granted by the CRU. Suppliers who
have received a derogation are prohibited from disconnecting customers to whom they cannot
offer a prepayment product.

The CRU considers that this option presents a purely commercial decision for the supplier – to
invest in PAYG services or to seek the derogation and carry the cost of customer debt. Some
suppliers may seek a derogation from offering PAYG in general, others may choose to invest in
the Smart PAYG infrastructure only and seek a derogation from offering an alternative prepayment
solution to customers with no smart meters or smart meters with inappropriate meter connectivity.
In the context of the CEP and new energy actors who may be required to apply for a supply licence,
a threshold may be set above which a supplier may not receive a derogation and must meet the
pay as you go requirements that currently apply in the supplier handbook.

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Questions

1.   What is your view of the proposed alternatives for providing prepayment services for
     customers in financial hardship?

2.   How do you think these alternatives would impact you and/or your customers?

The CRU acknowledges suppliers are currently only required to offer a PAYG solution to
customers in financial hardship and do not have such obligations towards other customers.

2.2 Data Sharing

In line with the policy decisions set out in the 2015 decision paper on Smart PAYG 12, Smart PAYG
functionality will require ESBN to collect Midnight Readings from smart meters every night at
midnight. These readings will contain half-hourly consumption data and will be provided to
Suppliers every day to calculate Midnight Balances and balance estimates which will be shared
with customers through Regular Balance Messages.

The CRU notes that the bulk of the smart metering policy was defined before GDPR 13 and
envisaged that all customers would share their half-hourly consumption data to have quicker
access to better information about energy usage and costs. In that context, the current smart
metering infrastructure supports the provision of Smart PAYG services to customers only if they
agree to share their half-hourly (interval) data with both ESBN and their Suppliers.

The CRU asked respondents to provide their views on data sharing.

Summary of Responses

The CRU received diverse responses on this topic. Some of the respondents supported the former
decision which stated that if a customer does not want to share their data daily, they will likely not
have access to Smart PAYG14.

Others raised the following concerns:

     •   Article 4 (11) of GDPR (“consent”): while lifestyle customers may make their choice when
         consenting to the terms and conditions of the Smart PAYG service, customers in financial

12
   Rolling out New Services: Smart Pay-As-You-Go (CER/15/271)
13
   General Data Protection Regulation (Regulation (EU) 2016/679)
14
   Empowering & Protecting Customers (CER/16/125)

17
hardship are not actively consenting as per GDPR as they have no alternative but to share
         their half-hourly data, otherwise they will be disconnected.
     •   Article 5 (1) (c) of GDPR (“data minimisation”): personal data should be “adequate, relevant
         and limited to what is necessary in relation to the purposes for which they are processed”.
         From a GDPR perspective, collecting 24-hour registers or day/night/peak registers daily
         would be sufficient for the purposes of the Smart PAYG service and so collecting half-
         hourly data may be excessive.

A respondent suggested that “there is a possibility that PAYG solutions could be offered without
this half-hourly data, if there was access to ‘special reads’ without there being any charge”.

Other respondents suggested that customers in financial hardship who do not want to share their
half-hourly data should be offered an offline alternative, which is currently the ESBN keypad meter.

Respondents also suggested that suppliers should not be required to offer an offline alternative to
lifestyle PAYG customers as these customers have a choice between availing of a Smart PAYG
service and other arrangements available for them in the market.

CRU’s View

In terms of data minimisation, the CRU notes that Smart PAYG policy requires suppliers to
calculate personalised credit balance estimates to advise customers how long their credit balance
is likely to last. In that context, the CRU considers that half-hourly consumption data helps suppliers
provide more accurate balance estimates.

The CRU understands the only meter configuration that allows smart meter data to be collected
daily collects a data set that contains half-hourly consumption data. Any other meter configuration
only allows the collection of meter data bi-monthly, and any change to the existing meter
configurations would require a major change to the underlying infrastructure.

The CRU view that upcoming legislation around smart metering data may provide more flexibility
and such Smart PAYG data flows should be revisited at a later stage in the programme.

The CRU view that any concerns around data sharing should only consider customers in financial
hardship, as lifestyle PAYG customers have more control over their data sharing arrangements.
Lifestyle PAYG customers can choose to avail of a Smart PAYG product and agree to share their
half-hourly consumption data, find a supplier that can offer them an offline PAYG product, or
ultimately sign up for a credit tariff that doesn’t require them to share half-hourly consumption data.

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The CRU considers that all customers have a choice when signing up with the supplier as credit
customers. The 2016 decision paper “Empowering and Protecting Customers” sets out the
following:

     •   “A Supplier may provide for a customer’s account to be switched unilaterally to Smart Pay-
         as-You-Go mode as an alternative, “last resort” measure to halt the accumulation of debt
         for an account that is in arrears. This is in the event that the customer was aware of this
         option both over the course of the communication from the supplier to the customer to try
         to resolve the debt and at the time of the customer signing the terms and conditions for the
         tariff product.”
     •   “The option, if it were to be adopted by a Supplier, would need to be provided for under the
         terms and conditions of the customer’s contract for supply of electricity and/or gas. Smart
         Pay-as-You-Go requires data to be available routinely to the Supplier every day, in order
         for the Midnight Balance to be calculated and communicated to the customer. The terms
         and conditions would need to provide for customer consent in respect of the collection of
         these data.”

The CRU considers that a customer may actively consent to data sharing when signing up for a
credit product. A supplier may require the customer to confirm that regardless of the tariff structure
they sign up for, in the event that they should accumulate debt, and be required to switch to a
PAYG service, or otherwise be disconnected, they agree to share their half-hourly data with their
supplier, for the purpose of providing the Smart PAYG service.

In line with current practice in the market, if a customer wishes to avail of a PAYG service they
need to share their data to support the product. The future policy direction for European retail
markets has been set out in the Clean Energy Package and envisages enabling highly engaged
consumers. These consumers will have access to more data about their energy consumption than
ever before as smart meters are deployed, and market operators will facilitate greater data access.
In that context, the CRU considers it appropriate that data is required for certain products, like
PAYG products to function properly (for example, to provide up to date balance information, or
consumption insights).

Where a customer needs to avail of a debt management solution but does not want to share half
hourly data, the customer will be able to manage their data through a prepayment plan.

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Questions

3.     What are your views on the requirement that to customers who do not want to share their half
       hourly data, suppliers are only required to offer payment plans?

4.     Do you think a PAYG product that requires less granular data would be appropriate?

3 Customer Communications
While the previous section discussed topics around eligibility for Smart PAYG as a debt
management option and the condition for availing of the service (data sharing), this section
explores questions around customer communications like offering ToU tariffs, balance messages,
and available payment channels.

3.1 Offering ToU Tariffs to Smart PAYG Customers

In earlier communications the CRU outlined the benefits of ToU tariffs. ToU tariffs will enable
customers to save money and participate in protecting the environment by shifting some of their
electricity consumption to times of the day when electricity demand is lower. In 2019 the CRU
published its decision paper on a Customer-Led Transition15 that confirmed a gradual introduction
of ToU tariffs to the Irish electricity market with customers having the option to avail of such a tariff
or not. As a first step in this gradual process the 2019 decision set out that “once smart services
‘go-live,’ an electricity supplier must have available a time-of-use tariff for electricity customers,
this can be limited to a supplier’s Standard Smart Tariff”.

The CRU’s question within the call for evidence was whether offering one or more ToU tariffs to
Smart PAYG customers should be mandated to suppliers. The CRU understands this question
may have been slightly misunderstood and would like to reiterate that signing up for a ToU tariff
will remain the customer’s choice. The question was whether suppliers should be required to “offer”
ToU tariffs to Smart PAYG customers as well. The CRU also wishes to clarify that if a supplier only
serves PAYG customers, then they already have to offer ToU tariffs to their PAYG customers as
per the 2019 decision.

Summary of Responses

Responses were diverse on this question. Some arguments were in favour of setting out this
requirement for suppliers, emphasising that customers in financial hardship should be provided

15
     The Customer-Led Transition to Time-of-Use (CRU19019)

20
with every opportunity to reduce their utility costs, mandating the Standard Smart Tariff for PAYG
customers as well would provide means for price comparisons, or offering ToU tariffs to PAYG
customers as well may encourage ToU participation.

Some arguments were against requiring suppliers to offer ToU tariffs to PAYG customers,
indicating for example that suppliers will offer the tariff is they see commercial reason or customer
need. It was pointed out that suppliers will have ToU built in, offering ToU tariffs to PAYG customers
will be simple if there is demand. Others highlighted that ToU tariffs may be more expensive if
there is no shift in behaviour, PAYG customers may not value additional decision points and
mandating ToU will add to the operational burden for suppliers post the release of Smart PAYG.

CRU’s View and Proposal

The CRU’s view is that over time ToU tariffs should be available to all customers, regardless of
whether they are credit customers or PAYG customers. The CRU acknowledges that some view
the operational burden for the Smart PAYG infrastructure to be significant and recognises that any
decision that may simplify the service should be considered in the transitional period of the
programme. On the other hand, availability of at least some ToU tariffs to Smart PAYG customers
as well would ensure that these customers can also participate fully in the energy transition and
may realise tangible benefits if they can, and are willing to, change their consumption patterns.
Moreover, availability of the Standard Smart Tariff would allow customers to compare prices as
the 2020 decision16 on comparison tools requires all suppliers to calculate Estimated Annual Bills
for their Standard Smart Tariffs. In that light, the CRU view that suppliers should be required to
offer a Standard Smart Tariff to Smart PAYG customers as well.

On that basis the CRU is proposing that all suppliers are required to offer a Standard Smart Tariff
to all their customers with appropriate meters, both credit and PAYG customers.

Question

5.     What is your view regarding the proposal to offer a Standard Smart Tariff to all customers with
       appropriate meters?

16
     Comparison Tools for Time of use Tariffs (CRU/20146)

21
3.2 Customer Messaging

The 2015 decision on Smart PAYG17 sets out the minimum requirements for customer messaging.
One element of the customer messaging framework is the Regular Balance Messages (RBMs)
and the default frequency for RBMs is weekly. RBMs are regular messages that contain the
customer’s most up to date credit balance and a balance estimate (the estimated period of time
the balance is predicted to last) as well when the estimate is below 7 days.

As mentioned in a 2015 consultation on Smart PAYG18 it is likely that RBMs will be a main driver
for when the customer chooses to top up and because of this the CRU view that it may be
necessary to ensure that the minimum requirements for RBMs always allow customers to plan
their top-ups. However, within the current policy framework, receiving balance estimates in time to
allow planning ahead does not seem to be guaranteed. This stems from two decisions:

       •   RBMs must be sent weekly by default.
       •   RBMs must include a balance estimate only if the estimate is below 7 days.

It follows from the above requirements that when a customer receives a balance estimate it may
require the customer to top up within a day to stay connected which does not allow planning ahead.
While the requirements set out in the decision are minimum requirements and suppliers are
expected to meet, if not exceed them, it remains open whether the minimum requirements ensure
an acceptable quality of service for customers.

Within the call for evidence the CRU inquired whether stakeholders view the minimum
requirements for Regular Balance Messages ensure appropriate quality of service or whether the
current policy should be amended. The CRU also inquired how suppliers plan to set up messaging
with Smart PAYG customers.

Summary of Responses

Multiple respondents viewed Regular Balance Messages should be less prescriptive and
suggested a principles-based approach. A respondent emphasised that principles-based
regulation could be more enduring in a rapidly changing technological environment.

17
     Rolling out New Services: Smart Pay-As-You-Go (CER/15/271)
18
     Rolling out New Services – Time-of-Use Tariffs and Smart Pay As You Go (CER/15/136)

22
Some suggested to separate requirements for lifestyle PAYG customers, and customers in
financial hardship. While hardship PAYG customers may need regular reminders, lifestyle PAYG
customers may want to lead on their communications.

Multiple respondents raised concerns around calculating balance estimates and suggested to
remove the requirement to inform customers if they have less than 7 days credit. Some indicated
balance estimation is not workable and may mislead customers. Some argued suppliers cannot
accurately forecast future consumption at individual level, others emphasised Smart PAYG will be
working a day behind and balance estimates will not be based on real time data.

Respondents highlighted the inherent problem that customers may not have immediate access to
their balance and will not receive a signal when balance is low. A respondent raised concerns
around customers who have limited access to their supplier’s website or mobile app due to lack of
a broadband or credit on their mobile phone to receive push notifications or literacy or other
difficulties that may impede comprehension.

Some respondents agreed with the concern raised by the CRU. While some indicated that they
are reluctant to advise extra prescription as the policy is already too prescriptive, a respondent
noted a time and minimum balance level for alert may be necessary, for example, a 7-day alert
(static) and another when balance reaches x value based on the standard 4200 CRU national
average usage. A respondent suggested RBMs to be issued more regularly than once a week and
also that every RBM should contain a balance estimate for customers in financial hardship.

CRU’s View

The CRU’s view is that the current framework provides sufficient flexibility for all customers to take
control over their communication preferences. For example, the supplier and the customer may
agree that the Regular Balance Message Channel is the supplier’s website or app from where the
customer can access previous Midnight Readings. Customers who do not have access to the
supplier’s website or app or would prefer another channel of communication may still choose to
receive text messages for example.

The CRU view that calculating balance estimates is necessary to help customers plan their top-
ups and the requirement makes good use of the half-hourly data that customers must share with
their suppliers to avail of a Smart PAYG service. As suppliers will have access to half-hourly
consumption data, the CRU view they should be able to calculate personalised balance estimates
with reasonable accuracy that will help their customers plan their top-ups. The CRU understands
the uncertainty around estimates can be managed by estimating intervals for example. For
example, a balance message could indicate “your new balance is €x which is expected to last 3-5

23
days”. The CRU does not intend to prescribe a desired accuracy for these estimates, the only
expectation is that the estimates should help customers plan their top-ups.

The CRU understands some respondents had opposite views around messaging requirements for
hardship PAYG customers, some suggesting that the proposed minimum frequency of messages
may frustrate some customers, while others suggesting that hardship customers should receive
more frequent notifications.

Proposals

The CRU maintains the view that the minimum requirement of weekly balance messages that only
contain a balance estimate when the balance is below 7 days do not offer sufficient protection to
customers. While there may be value in providing estimates in all balance messages, the CRU
view that balance estimates are most helpful when the balance is low and so estimates should not
be mandated for all balance messages.

The CRU proposes to supersede the requirement set out in CER/15/271 3(b)(iii): “The Regular
Balance Message must include an estimation of how long the customer’s current credit will last,
only where this estimate is less than 7 days, based on their previous usage patterns.”

The proposed change is that including a balance estimate in the Regular Balance Message is
required if the estimate is less than 10 days. The new requirement sets a timeframe which makes
it unlikely that a customer will have less than 3 days to top up after receiving the first Regular
Balance Message (either push or pull) that contains both a credit balance and a balance estimate.
The impact of the proposed change from 7 to 10 days is explained in the following simple example:

When the threshold is 7 days a customer whose balance estimate is 7.1 days will not receive a
balance estimate in their weekly balance message. A week later, when they receive their next
balance message, the message may require urgent action and require them to top up within a day.
Similarly, if the threshold is 10 days a customer whose balance estimate is 10.1 days will not
receive a balance estimate in their weekly balance message. However, a week later, when they
receive their next balance message, the message will prompt them to top up within about 3 days
(assuming their consumption pattern haven’t changed significantly) giving the customer time to
plan their next top-up.

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Question

6.     What is your view regarding the proposal to provide credit balance estimates within Regular
       Balance Messages if the estimate is below 10 days?

       If you consider the current balance messaging framework too prescriptive, please provide
       examples that illustrate your view.

3.3 Payment Processing

Suppliers offer multiple channels for topping up a customer’s PAYG account, including cash
payment, top-up by phone, or through the supplier’s website, app. Within some of these channels
the customers may interact directly with their suppliers while in others there may be intermediaries
involved.

During cash prepayment when customers purchase a top-up in a retail outlet, the front office
providers (An Post, PayZone) receive the payment from the customers and transfer these
payments to the suppliers. They also interact with the back-end provider Secure Meters to provide
the top up codes to the customers. The customer then receives a code from the front office service
provider and enters that code into the PAYG meter to top up their balance on the meter.

The CRU understands that within the current framework interaction with suppliers is through batch
processing of data on a daily basis. This means when a customer purchases a top-up in a retail
outlet, they will instantly receive a top-up code which they can use to top-up their balance on their
meters, but the supplier will not receive notification of the top-up until they process vends later
during the day.

With the introduction of Smart PAYG, suppliers will have to be notified of transactions more
frequently to allow near-instantaneous adjustment of customer credit balances, for example to
avoid being disconnected or to ensure swift reconnection. According to the High-Level Design19 it
is expected that retail point of sale transactions will be credited to customer credit balances near
real-time but current practices do not seem to be compatible with this decision. This has also been
highlighted by respondents in earlier consultations on Smart PAYG 20. The CRU view that the
customer experience around cash prepayment is very important for all PAYG customers and is

19
     Smart Metering High Level Design (CER/14/046)
20
     Rolling out New Services – Time-of-Use Tariffs and Smart Pay As You Go (CER/15/136)

25
particularly important for customers in financial hardship, as they may not have access to other
channels of prepayment.

Within the call for evidence the CRU inquired:

     •   How customers manage top-ups for PAYG meters and specifically if there are any
         differences between the available options for hardship and lifestyle PAYG customers.
     •   Whether the payment infrastructure should be amended to ensure customer experience
         around top-ups for Smart PAYG will be equal to or better than it currently is for PAYG
         customers.

Summary of Responses

According to a 2017 MABS study, the majority of hardship PAYG customers topped up by cash in
2017. While respondents did not disagree on the importance of cash top-ups, especially for
hardship customers, some respondents indicated that due to COVID-19 there has been a push
towards card payments through a website or app, and others added COVID-19 may have brought
about long-term changes in top-up patterns. It was suggested that the CRU should access supplier
and vendor data on change in payment patterns in 2020. A respondent noted that mobile apps
have proven the most popular among lifestyle PAYG customers.

A respondent mentioned that remote re-energisation involves cooperation between multiple
parties, some of which are not regulated by the CRU (Payment Service Providers), and time
constraints may be reduced if suppliers could eliminate unregulated parties from the re-
energisation process. This may be possible if suppliers were not required to offer cash top-up
facilities to their Smart PAYG customers but could limit top-up options to online payment channels.

In terms of difference between hardship and lifestyle PAYG customers, those who provided a view
claimed they do not offer separate payment channels to the two cohorts of customers and a
respondent added that different top-up channels will likely not be required.

The CRU notes the view of some respondents that the move from batch to real time processing
will be significant and will require suppliers to engage with industry partners to assess feasibility,
costs, and timelines. Others emphasised instead that the concern is that the information customers
will see will not be based on live data, but rather on the previous midnight reading, and might not
be accurate. A respondent added that updating the customer’s balance in real time is critical to
delivering customer certainty and comfort with the service.

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