title: Smart Meters Act 2018 source: https://www.legislation.gov.uk/ukpga/2018/14 classified: primary ingested: 2026-04-10 chapter: 2018 c. 14 royal_assent: 2018-05-23 tags: [smart-meters, DCC, half-hourly-settlement, special-administration, Ofgem, SMIP]
Smart Meters Act 2018
Chapter: 2018 c. 14 | Royal Assent: 23 May 2018 | Extent: England, Wales and Scotland
Short Act: 14 sections, 4 Parts, no Schedules. It does three things: extends regulatory powers for smart metering, creates a safety net if the Data and Communications Company (DCC) fails, and gives Ofgem tools to deliver half-hourly settlement.
What it does
Part 1: Extension of powers (s.1, now omitted)
The smart metering programme ran on a set of Secretary of State powers in the Energy Act 2008 and the Electricity and Gas Acts that were due to expire on 1 November 2018. Section 1 pushed that expiry to 1 November 2023 to cover completion of the rollout. Those five extra years have now elapsed and s.1 itself was omitted by the Energy Act 2023 on 26 October 2023; it served its purpose and has been tidied away.
Part 2: Special Administration Regime for the DCC (ss.2–10)
The DCC (Smart DCC Ltd) is the GB-wide data network for smart meters, sitting between every meter and every energy supplier. It holds licences under both the Gas Act 1986 and the Electricity Act 1989. No existing energy special administration regime (designed for generators, networks, or suppliers) covered it. This Act creates a bespoke SAR:
- A court can place the DCC into administration on application by the Secretary of State or Ofgem (with Secretary of State consent).
- The administrator's objective is to keep the smart meter communication service running efficiently and economically, and to make the administration order unnecessary: either by rescuing the company or by transferring its undertaking.
- The mechanics are lifted wholesale from the Energy Act 2004 SAR regime (ss.156–167 and Schedules 20–21), substituting "smart meter communication licensee administration" for "energy administration" throughout.
- The Secretary of State can modify gas and electricity licence conditions to fund any shortfall in administration costs. The mechanism works by requiring other licensees to raise charges and pay the proceeds toward the shortfall.
- This 18-month licence modification power expired in January 2020.
The DCC in practice: Smart DCC Ltd has been the licensed provider since 2013. As of 2026 it has enrolled over 35 million smart meters. The SAR provisions have never been triggered.
Part 3: Half-hourly settlement of electricity imbalances (ss.11–13)
Electricity is settled in half-hour periods (Settlement Periods). Before this Act, most domestic and smaller non-domestic customers settled against a standard load profile (a statistical estimate of when consumers use electricity) rather than their actual metered consumption. Smart meters record half-hourly consumption data, making market-wide half-hourly settlement (HHS) technically possible.
Section 11 gives Ofgem a direct power to modify electricity code documents (including the Balancing and Settlement Code) and related agreements where necessary or desirable to enable or require half-hourly imbalances to be calculated using actual smart meter data rather than profiles. This bypasses the standard industry code modification process for the specific purpose of delivering HHS.
Section 12 sets the procedure: Ofgem must publish a notice, consult mandatory consultees (licence holders, Secretary of State, Citizens Advice, Citizens Advice Scotland / Consumer Scotland), allow at least 28 days for representations, then publish a decision notice explaining how representations were addressed.
Section 13 amends the Electricity Act 1989 to allow Ofgem to specify an effective date less than the normal 56-day minimum for licence modifications that are part of the HHS programme, subject to conditions (purpose, consultation, and a 5-year time limit).
Commencement: Sections 11–13 did not come into force at Royal Assent. The Secretary of State brought them into force on 30 April 2024 via S.I. 2024/465. Ofgem launched its market-wide HHS programme in the intervening period under its existing code modification powers; this Act provides a backstop direct power and an accelerated modification route.
Structural map
| Part | Sections | Subject | In force |
|---|---|---|---|
| 1 | s.1 | Extension of smart metering powers | 23 May 2018 (omitted 26.10.2023) |
| 2 | ss.2–10 | Special Administration Regime for DCC | 23 July 2018 |
| 3 | ss.11–13 | Half-hourly settlement powers for Ofgem | 30 April 2024 |
| 4 | s.14 | Commencement and extent | 23 May 2018 |
Key actors and obligations
| Actor | Obligation | Section |
|---|---|---|
| Court | Makes smcl administration order on application | s.2(1) |
| Secretary of State / Ofgem | May apply for smcl administration order (Ofgem needs SoS consent) | EA 2004, s.156 as applied |
| Smart meter communication administrator | Must manage DCC's affairs to achieve the s.3 objective | s.2(3) |
| Secretary of State | May modify gas/electricity licence conditions to fund administration shortfall; 18-month window | ss.6–7 |
| Ofgem | May modify electricity codes for HHS; must follow s.12 procedure | ss.11–12 |
| Gas/electricity licensees | Subject to licence condition modifications under s.6 (charges to fund SAR shortfall) | s.7 |
Relationship to other instruments
Upstream (grants powers this Act exercises or extends): - Energy Act 2008, s.88: the licence modification power extended by s.1 (now omitted) - Electricity Act 1989, Part 1: the licensing framework within which ss.11–13 operate - Gas Act 1986, Part 1: same for gas licensing - Energy Act 2004, ss.156–167, Schedules 20–21: the SAR template applied by s.4
Downstream (modified or created by this Act): - Electricity Act 1989, s.11A: amended to permit sub-56-day effective dates for HHS modifications (s.13) - Utilities Act 2000, ss.33(1) and 81(2): amended to recognise s.6 as a modification route - Energy Act 2004, ss.159(3) and 170(1): amended to extend to smcl administration
Amending this Act: - Energy Act 2023, ss.215(7), 334(2)(k): omitted s.1 from 26 October 2023 - Nuclear Energy (Financing) Act 2022: repealed s.6(10)(b) from 1 June 2022
Related secondary legislation: - Smart Meters (Licensable Activity) Order 2012 (SI 2012/2400): defines the smart meter communication service as a licensable activity - S.I. 2024/465: commenced ss.11–13 on 30 April 2024
Policy significance
DCC as a single point of failure. The smart metering programme created a centralised GB-wide data utility with no backup. Smart DCC Ltd holds natural monopoly licences that cannot simply be handed to a competitor. The SAR provisions address this by giving the court and the Secretary of State the tools to keep the service running during an insolvency event, including the power to fund the administration by spreading costs across the licensed industry.
Half-hourly settlement. The direct Ofgem modification power in ss.11–13 reflects frustration with the pace of the industry code modification process for a programme with strategic regulatory backing. HHS moves electricity billing from statistical profiles to metered reality. It sharpens the demand-side price signal and is a prerequisite for time-of-use tariffs, smart charging, and flexibility markets. The 5-year window (from 30 April 2024) means the backstop power expires 30 April 2029. Verify on legislation.gov.uk whether the window has been extended.
Current state of s.1. The extension to November 2023 served its purpose. Smart meter rollout continues under post-2023 licensing frameworks. The omission of s.1 by the Energy Act 2023 is administrative tidying rather than a policy reversal.
Source
Full text (enacted, with commencement annotations and amendment history): sources/legislation/uk/2018-smart-meters-act.md
Clause-level index and defined terms register: sources/legislation/uk/2018-smart-meters-act-pass1a.summary.md