The secret life of an opening meter reading
22nd February 2017
If energy confuses you, you’re not alone.
Even we find it more complex than it needs to be, and part of the reason we started Octopus Energy was to make it clearer and easier for everyone. This means picking apart the complicated bits to give you a good understanding of how the energy industry works.
With this in mind, I want to answer one of the most common questions our customers ask:
“Why didn’t you use my opening meter reading to start my account?”
It should be straightforward, right? You give us the opening reading, your old supplier uses it to close your account, we use it to start your account, and hey presto, you’ve got a seamless switch.
But sadly, rules within the industry make this outwardly simple process rather tricky.
It’s helpful to think of your opening reading as the basis of a “handover” reading – one that we and your old supplier agree on so they can close your account and we can open one for you.
Sometimes, this handover reading is exactly the same as the opening reading you’ve given us. At other times, it could be different, and I’ll explain why shortly. The crucial point to remember is that no matter what “handover” reading is agreed, you won’t pay for the same energy twice. It just changes the start point with us, and the end point with your old supplier.
So, why don’t we always use the opening reading you give us?
Well, let’s start with what happens when you submit your meter reading.
When we receive your opening reading, we forward it to an independent meter validation company, who validates it on our and your old supplier’s behalf. Meter validation companies prevent energy suppliers from arguing over readings, and using them is a regulatory requirement. And because this process takes time, it’s one of the reasons a switch might take longer than expected.
Validating your reading simply means checking that it’s in line with your past usage, and all meter validation companies use a special calculation to do this. They begin by working out a maximum acceptable reading, which I’ll outline now.
First, they take your last validated reading (which would’ve been when you were still with your old supplier), and the number of days between this reading and the one you submitted to us.
Then, they take your estimated yearly usage (adjusted for seasonality) and convert this to a daily figure. They multiply the daily figure by the number of days between your last reading and your opening one to get your expected usage for this period.
Finally, they use a factor of 2.5 to account for swings in your usage between your last validated reading and your opening one.
So the calculation becomes:
Maximum acceptable reading = Last validated reading + (expected usage x 2.5)
Once they’ve calculated the maximum, they’ll accept your opening reading if it is:
a) The same as the maximum acceptable reading, or
b) Equal to your last validated reading (meaning you haven’t used anything since your last reading – if you were on holiday, for example), or
c) Between the last validated reading and the maximum acceptable reading.
Otherwise, should your opening reading be more than the maximum acceptable, or less than your last validated reading (this last is called "negative consumption"), they'll use an estimate.
The estimate is calculated by adding your last validated reading to your expected usage, like so:
Estimated reading = last validated reading + expected usage
Either way, the difference between an opening reading and an estimate is often quite small, and can even work in your favour.
How does this work in practice?
Well, let's take a look at a couple of simplified examples.
You send an opening electricity reading of 3265 on 1st of February, which we then send to the meter validation company. Your estimated annual consumption is 3100. They have your last validated reading as 2800, which you gave 30 days before your opening reading.
Maximum acceptable reading = 2800 + ((3100/365) x 30 x 2.5)
= 2800 + 637
Since your opening reading of 3265 is between your last validated reading and the maximum of 3437, your reading would be accepted.
Now, let's now pretend that your last validated reading was actually 2500.
Maximum acceptable reading = 2500 + ((3100/365) x 30 x 2.5)
= 2500 + 637
Since your opening reading of 3265 is more than the maximum of 3137, your reading would be rejected. Instead, they'd calculate an estimate:
Estimated reading = last validated reading + expected usage (note that we don't use the 2.5 multiplication factor here)
= 2500 + ((3100/365) x 30)
= 2500 + 255
Please remember that these are simplified examples – your estimated annual usage incorporates some pretty complex maths (to account for seasonality) that you can check out on Elexon's Annex S-2: Supplier Volume Allocation Rules document. It's on page 23.
Giving us your opening reading is one of the most important parts of your switch – it gets us off on the right foot and helps keep every kWh accounted for. But please don't worry if we use a slightly different figure. We'll always keep you updated, and if you've any questions, just drop us a line to firstname.lastname@example.org.
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