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SPEECH/10/155

John Dalli

Member of the European Commission, responsible for Health and Consumer Policy

"Consumer issues in the area of smart meters and smart grids"

Figures and graphics available in PDF and WORD PROCESSED

Keynote Speech at the EURELECTRIC Policy Workshop, organised by the European Electricity Industry Association, in Brussels

Brussels, 13 April 2010

Ladies and Gentlemen,

It is a pleasure to be here today to open this conference to explore "how smart grids will change the face of Europe's electricity distribution and consumption."

This is a good opportunity to meet you early in my mandate and to learn more about the work that you do.

Electricity is indispensable for our prosperity. The way we generate, distribute and consume electricity defines how we run our economy and how we manage our planet's resources.

Our vision for energy will shape the future of our societies.

I have already made it clear that my intention is to put consumers first.

Households are your most important customers as they consume more than 30% of EU electricity directly – and a lot more indirectly if we take into account industrial processes that use electricity to deliver products and services.

We need to demonstrate to European citizens that changing our economic model from public or private monopolies into market competition can yield positive results for them.

Consumers, both individually and collectively, can influence the markets, if they feel that they do not receive the fairness and quality that they expect in terms of services and prices.

Even during our current economic difficulties we need the courage and conviction to invest in the medium and long term in order to ensure that both the industry and the consumers receive the expected benefits.

This is certainly the case for energy, which requires essential investment in key areas such as innovation and new technologies.

An EU policy for European consumers

My aim is to work to the benefit of European citizens while, at the same time, ensuring that the Internal Market functions well and that competition really benefits consumers.

To participate actively in any given market, consumers must have the right information to be able to compare prices and offers. Plus, they must know their rights and be able to take action if things go wrong, in a way that is simple, prompt and affordable.

Simplicity and transparency are essential if we want markets to function better.

I am firmly convinced that the Internal Market has the potential to bring down prices and offer better quality service to European consumers.

At the same time, particular attention is needed for areas that are both technical and new to consumers. And electricity falls into this category.

Competition and electricity and energy sustainability

Most European households now have the possibility to choose their supplier.

This is groundbreaking. Most national markets were previously integrated public monopolies with no competition and fixed tariffs for everyone – consumers and industry alike.

There was no competition in fuel, in price and in quality of service. Furthermore, there was no innovation.

All this is changing. And attitudes are changing too.

Today, it is clear that the way we currently consume is not sustainable. And energy plays an important role there.

Consumers are willing to contribute to a better and greener future for our planet. But their share of the costs should be in proportion to their consumption.

Competition can lead to better prices that reflect better services and greater efficiency in power generation. Indeed, competition can help us to save more energy, use our scarce resources better and help drive innovation.

The European Commission is developing a coherent strategy that calls for resource efficiency, greater use of indigenous energy sources and a reduction in greenhouse gas emissions.

This is mirrored in the EU's "20-20-20" objectives which call for a 20% cut in our greenhouse gas emissions, a reduction of primary energy use by 20% through energy efficiency and 20% of energy use reached through renewables – all by 2020.

Technology and how we use it will play a major role in meeting these goals.

Let me now share with you some of my thoughts on the functioning of energy markets for consumers.

Scoreboard and retail electricity study

I am a firm supporter of evidence-based policies. We need strong evidence in order to focus on the right areas for European Consumer Policy.

The Consumer Markets Scoreboard serves to provide such evidence. It identifies where the Internal Market is failing to meet consumer needs. The Scoreboard will now be strengthened and expanded to improve its effectiveness and precision.

We will continue to monitor complaints, prices, satisfaction, switching and enforcement – followed up by in-depth market studies to identify problems, and then devise appropriate solutions. Electricity is an area that we are currently looking at.

The in-depth study of electricity retail markets was announced last year. Our objective is to map out the challenges for individual electricity consumers in the electricity market. And we want to answer fundamental questions:

  • How far do consumers benefit from electricity markets in terms of choice, price and quality?

  • Are consumers able to make informed, rational and empowered choices?

We want to understand how consumers behave in retail markets, and how electricity markets function for them.

And I am pleased that Eurelectric is closely involved in our work that should deliver some concrete findings for the Third Citizens' Energy Forum this autumn.

I can assure you that we will consult you both before and after publication of the report.

I now wish to turn to the main theme of this conference: smart meters and smart grids.

Smart meters and smart grids and consumers

Smart grids and smart meters are important for the future of the energy sector.

These technologies have the potential to change our lives for the better as they can help moving to a greener, more sustainable and more efficient use of energy.

But, in so far as they mark a departure from the way that energy has traditionally been generated, distributed and consumed, smart grids and smart meters also pose a challenge.

Consumers themselves have an important role to play in meeting this new challenge.

Smart grids and smart meters empower the choice of consumers – whether individuals, industry or the public sector.

But to reach the objective of installing smart meters in 80% of EU territory by 2020, we need to make progress in three areas in particular:

  • First, smart meters must be designed so that non-experts can use them.

  • Second, smart meters must offer information that is relevant to consumers. This means real time consumption displayed in a way that is easily understandable – in euros rather than kilowatts per hour.

  • Third, there is growing concern about data protection and privacy. I understand that both for smart meters and smart grids in general some degree of profiling will take place.

It is essential that guarantees are given that personal data will be protected. Equally, data transfer systems must be reliable against any security breaches so that the development of smart grids and meters is not hindered as a result.

I invite you today to work together with the European Commission to ensure that smart grid and smart meter security issues are addressed properly.

This means that concerns over data protection and privacy are addressed proactively, and not just simply to comply with legislation.

We are working closely with research initiatives such as the Smart Grids Technology Platform, and with the policy and regulatory development under the Task Force for Smart Grids.

If we want everyone to consume energy more responsibly we need to be equipped with the right software and hardware to support consumer choice and action.

I am sure that you will agree that improved metering and better grid management should also result in better offers and tariff structures which match the consumption profiles of consumers.

In short I look forward to the future design of energy and electricity to being much more consumer-focused.

Conclusion

Ladies and Gentlemen,

It is clear that technology is a facilitator for change. But it is a means and not an end in itself.

Smart grids and smart meters can provide better results not only for the entire energy system – but also for individual consumers.

But we need to ensure that the system and the instruments to be used by consumers are 'fit for purpose'. In other words, they have to be consumer-friendly.

If they are to be successful and deliver the benefits for which they have been designed, these instruments must be easy-to-use, inspire trust and help consumers.

For it is the market that has to work for consumers and the consumers that have to work the market.

Thank you.


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