1. Introduction

The transition from SMETS1 to SMETS2 represents more than a technical upgrade in Great Britain’s smart-metering programme. It is a major example of how energy law must regulate technological interoperability, data governance, cybersecurity, consumer protection, supplier obligations and infrastructure transition simultaneously.

SMETS2 was designed to provide a more interoperable smart-metering architecture through the Data Communications Company (DCC) and the Smart Energy Code (SEC). The original regulatory framework created supplier obligations, technical specifications, communications arrangements and enforcement mechanisms around this architecture. (GOV.UK)

The future regulatory question is therefore not simply whether SMETS2 should replace older meters. It is how the law should govern SMETS2 upgrades, communications-hub replacement, firmware changes, successor technologies, data-sharing systems and future smart-meter architectures without repeatedly creating stranded assets or consumer disruption.

As of September 2026, this issue is particularly important because the existing Smart Meter Communication Licence is approaching its 2027 expiry, while a successor DCC arrangement is being developed. Ofgem states that DCC2 was awarded the successor licence in April 2026, with an initial six-year term expected to begin on 2 November 2026. (Ofgem)

2. Meaning of SMETS2

SMETS means Smart Metering Equipment Technical Specifications. It establishes the technical requirements applicable to smart-metering equipment.

SMETS2 was developed partly to address limitations associated with the earlier generation of smart meters, particularly interoperability when consumers changed suppliers.

The regulatory architecture involves several interconnected components:

SMETS technical specifications

Communications Hub Technical Specifications

Great Britain Companion Specification

Smart Energy Code

DCC licence

Energy supplier licence conditions

Ofgem enforcement

Consumer data and privacy rules

Cybersecurity requirements

The Smart Energy Code establishes rights and obligations for suppliers, network operators, DCC and other participants in the smart-metering system. (GOV.UK)

Thus, SMETS2 should be understood as part of a legal-technical ecosystem, rather than simply as a particular type of electricity meter.

3. Why Future Upgrading Requires New Regulatory Design

A regulatory system designed for a single generation of hardware can become obsolete surprisingly quickly.

Smart meters have long operational lives, whereas:

telecommunications networks change;

cybersecurity threats evolve;

software becomes obsolete;

communications protocols change;

suppliers enter and leave the market;

consumer expectations regarding data access increase;

distributed generation expands;

batteries and electric vehicles become integrated into household energy systems.

Consequently, future regulation should move from a hardware-centred model towards a lifecycle regulatory model.

The legal question should become:

How can the regulatory system ensure that smart-meter infrastructure remains interoperable, secure, upgradeable and consumer-protective throughout its operational life?

This principle is particularly relevant to the current transition away from legacy communications technologies. Government policy now addresses pre-emptive replacement of communications hubs before relevant network services cease, rather than waiting until consumers lose smart functionality. (GOV.UK)

4. First Regulatory Principle: Interoperability

Interoperability should be the central principle of future SMETS regulation.

A consumer should not lose the functionality of a smart meter merely because:

the consumer changes supplier;

the communications provider changes;

a telecommunications technology is retired;

software is upgraded;

the DCC architecture changes.

The experience with SMETS1 demonstrated why this matters.

R (Utilita Energy Ltd) v Secretary of State for Business, Energy and Industrial Strategy

This judicial-review litigation concerned governmental decisions relating to the transition between SMETS1 and SMETS2.

The challenge involved measures requiring suppliers to enrol eligible SMETS1 meters with the DCC or replace them with SMETS2 meters. The case therefore directly illustrates the legal importance of interoperability and regulatory transition. (vLex)

The case demonstrates an important regulatory principle:

Technical architecture can become an object of public-law regulation when it affects supplier obligations and consumer access to energy services.

Future regulatory design should therefore make interoperability a mandatory lifecycle requirement rather than something addressed only during the initial deployment phase.

5. Second Principle: Technology-Neutral Regulation

Future regulation should avoid prescribing technology too narrowly.

Instead of saying:

“Every meter must use technology X,”

the law could establish functional requirements such as:

secure two-way communication;

interoperability;

remote software updating;

accurate measurement;

consumer access to data;

cybersecurity;

supplier switching;

compatibility with future energy services.

Technical specifications could then be updated through appropriately governed regulatory codes.

This would reduce the risk of repeating the transition problems associated with earlier generations of smart meters.

6. Third Principle: Lifecycle Regulation

A future SMETS framework should regulate the entire lifecycle:

Design → Certification → Installation → Operation → Software Update → Communications Upgrade → Maintenance → Replacement → Decommissioning

Each stage should have legally defined responsibilities.

Design

Manufacturers should demonstrate:

cybersecurity;

interoperability;

upgradeability;

data integrity;

compatibility with regulatory standards.

Installation

Suppliers should verify:

correct commissioning;

communications connectivity;

consumer information;

accessibility requirements.

Operation

Suppliers and DCC should maintain:

reliable communications;

accurate data;

appropriate fault resolution.

Upgrade

Regulation should specify:

who pays;

who initiates the upgrade;

notice requirements;

consumer protections;

testing procedures;

fallback arrangements.

Decommissioning

There should be rules concerning:

data retention;

deletion;

equipment recycling;

replacement;

continuity of service.

7. Fourth Principle: Regulation of Communications-Hub Upgrades

The future of SMETS2 is closely connected to communications infrastructure.

A smart meter may remain physically functional while losing smart functionality because the communications network on which it depends is retired.

This creates a distinction between:

physical meter life and communications-service life.

Current government policy recognises this problem. The post-2025 smart-meter framework includes obligations concerning pre-emptive replacement of communications hubs and requires suppliers to take reasonable steps to recover meters operating in traditional mode within specified periods. (GOV.UK)

This is an important shift from reactive regulation to anticipatory regulation.

8. Sunset Regulation

Future SMETS regulation should include a formal technology-sunset mechanism.

Before a telecommunications technology is retired, regulators could require:

identification of affected meters;

publication of affected geographic areas;

consumer notification;

supplier replacement plans;

sufficient replacement capacity;

progress reporting;

contingency arrangements;

regulatory intervention where implementation falls behind.

The current framework already moves in this direction by requiring greater clarity concerning communications-service end dates and pre-emptive replacement. (GOV.UK)

9. Fifth Principle: Data Governance

SMETS2 creates significant quantities of consumer energy data.

This creates a regulatory balance between:

consumer benefit and privacy/security.

Future regulation should distinguish between:

data necessary for billing;

data necessary for network management;

consumer-accessible data;

consented third-party data;

aggregated system data;

commercially sensitive data.

The future framework should also provide clear rules governing who can access information, for what purpose and for how long.

The current policy direction is already moving towards wider, consented access to smart-meter data through potential repositories. DESNZ and Ofgem have specifically examined repositories that could allow consumers to provide third parties with access to historical smart-meter data. (Ofgem)

10. Sixth Principle: Consumer Control

Future smart-meter regulation should strengthen the consumer's position.

Consumers should have meaningful rights concerning:

access to their consumption data;

correction of inaccurate information;

third-party consent;

transparency concerning data use;

meter replacement;

service interruption;

complaints;

compensation.

This becomes increasingly important as smart meters evolve from simple billing devices into platforms supporting:

time-of-use tariffs;

demand response;

electric vehicles;

domestic batteries;

distributed generation;

flexibility markets.

11. Seventh Principle: Cybersecurity by Design

Future SMETS generations should be regulated according to a security-by-design model.

Cybersecurity obligations should address:

Hardware

Secure components and tamper resistance.

Software

Secure coding and authenticated updates.

Communications

Encryption and authentication.

Access

Role-based access controls.

Updates

Secure remote firmware management.

Incident response

Mandatory reporting and recovery procedures.

The legal framework should also clarify responsibility where a cybersecurity failure occurs.

Potential responsibility may extend across:

manufacturer → supplier → DCC → communications provider → software provider.

12. Eighth Principle: Regulatory Responsibility Across the Supply Chain

The smart-meter ecosystem is a network rather than a conventional bilateral relationship.

Responsibility therefore needs to be allocated clearly.

The existing system already distributes obligations between licences, the SEC and technical specifications. (GOV.UK)

Future reforms should prevent regulatory gaps between these actors.

13. Ninth Principle: Performance-Based Regulation

Future SMETS regulation should increasingly measure outcomes rather than only installations.

A supplier should not receive regulatory credit simply because a smart meter has been physically installed.

The relevant questions should include:

Does it operate in smart mode?

Can data be transmitted?

Can the consumer access information?

Can the consumer switch supplier without losing functionality?

Is the device secure?

Can it be upgraded?

Ofgem's compliance work demonstrates the importance of this distinction. Supplier obligations have included taking reasonable steps to ensure that installed smart meters operate in smart mode, not merely that meters have been installed. (Ofgem)

14. Regulatory Enforcement

A future framework should combine several enforcement mechanisms.

1. Licence conditions

Binding obligations on suppliers and DCC.

2. Industry-code enforcement

SEC and other relevant codes can establish detailed operational rules.

3. Performance reporting

Regular reporting to Ofgem.

4. Consumer compensation

Automatic compensation for defined service failures.

5. Regulatory directions

Ofgem intervention where systemic problems arise.

6. Financial penalties

Available where serious breaches justify enforcement.

Ofgem has already used compliance and enforcement mechanisms concerning smart-meter rollout. For example, its investigation concerning Scottish Power's 2019 rollout was ultimately resolved through alternative action, including a £440,000 voluntary payment to the Energy Industry Voluntary Redress Fund, without a formal breach finding. (Ofgem)

15. Case Law: R (Utilita Energy Ltd) v Secretary of State

This is one of the most directly relevant authorities for SMETS transition.

The litigation concerned the government's decisions regarding:

enrolment of SMETS1 meters with DCC;

replacement with SMETS2;

eligibility of SMETS1 installations;

DCC support for particular SMETS1 meters. (vLex)

Legal significance

The case illustrates that technological transition decisions can be challenged through judicial review where they affect regulated businesses.

It therefore demonstrates the importance of:

statutory authority;

consultation;

rational regulatory decision-making;

proportionality where relevant;

procedural fairness;

evidence-based technology policy.

For future SMETS upgrades, regulators should maintain a transparent evidential record explaining why particular technical requirements and transition dates are necessary.

16. Case Law: Department for Business, Energy and Industrial Strategy v Information Commissioner

The Department for Business, Energy and Industrial Strategy v Information Commissioner & Anor [2017] EWCA Civ 844 is another important authority.

The Court of Appeal described the Smart Meter Programme as arising from the EU Electricity Directive and noted the programme's objectives, including giving consumers better information about energy consumption and improving system efficiency. (BAILII)

Relevance to future regulation

The case demonstrates that smart-meter regulation is not merely a technical programme.

It involves broader questions concerning:

consumer information;

energy-system efficiency;

data;

public administration;

statutory and European regulatory frameworks.

17. Case Law: Meter-Tech LLC v British Gas Trading Ltd

Meter-Tech LLC & Anor v British Gas Trading Ltd [2016] EWHC 2278 (Pat) provides a different but useful perspective.

The dispute concerned intellectual-property rights and smart-meter technology. The court considered the proposed future SMETS2 system and its relationship with the government's smart-metering programme and the Smart Energy Code. (BAILII)

The case illustrates that future smart-meter regulation can intersect with intellectual-property law.

Therefore, regulatory design should consider:

patents;

licensing;

interoperability;

standards-essential technologies;

procurement;

competition.

A technically mandated standard should not inadvertently create unnecessary barriers to competition.

18. Regulatory Governance of the DCC

The DCC occupies a particularly important position because it provides the communications infrastructure connecting smart-meter systems with market participants.

The government originally created a dedicated licensable communications activity and the SEC as part of the smart-meter framework. (GOV.UK)

The future regulatory structure is now entering another transition.

Ofgem's 2025 decision concerning the existing DCC licence anticipated the expiry of the current licence in September 2027 and the creation of successor arrangements. (Ofgem)

The successor DCC licence is therefore an important opportunity to redesign governance around:

cost control;

service quality;

innovation;

cybersecurity;

procurement;

transparency;

consumer value.

19. Cost Regulation

Smart-meter upgrades can impose significant costs.

A future framework should establish clear principles for allocating costs between:

suppliers;

DCC;

manufacturers;

communications providers;

consumers;

potentially other market participants.

The regulatory challenge is to avoid both:

under-investment and unnecessary expenditure.

Ofgem has already been developing new approaches to DCC cost control, including an ex-ante approach for the successor licence. (Ofgem)

This is particularly important because smart-meter communications infrastructure has characteristics of a regulated essential facility.

20. Future SMETS3 and Beyond

The next generation of smart-meter regulation should not necessarily be labelled simply SMETS3.

A more sophisticated approach would establish a technology-neutral Smart Metering Regulatory Architecture.

Its basic principles could be:

Principle 1 — Interoperability

Meters should remain usable across supplier changes.

Principle 2 — Upgradability

Software and communications infrastructure should be upgradeable.

Principle 3 — Security

Cybersecurity must be continuously maintained.

Principle 4 — Data control

Consumers should have meaningful control over their data.

Principle 5 — Competition

Technical standards should not unnecessarily exclude market participants.

Principle 6 — Resilience

Smart-meter functionality should survive network and technology transitions.

Principle 7 — Accountability

Responsibilities should be allocated clearly.

Principle 8 — Consumer redress

Service failures should trigger effective remedies.

21. Smart Meters as Energy-System Infrastructure

The future smart meter may become more than a billing instrument.

It could become an interface between:

Consumer ↔ Supplier ↔ Distribution Network ↔ Flexibility Market ↔ EV ↔ Battery ↔ Renewable Generation

This creates a new regulatory question:

Should smart-meter regulation remain part of retail energy regulation, or should it become an independent digital-energy infrastructure regime?

The answer will depend on how extensively smart meters become integrated into flexibility and distributed-energy markets.

The regulatory framework should therefore be sufficiently adaptable to accommodate these developments without requiring complete legislative reconstruction each time technology changes.

22. Relationship with Smart Grids

SMETS2 and future generations can support smart-grid development by providing better information about consumption.

This can facilitate:

demand-side response;

network planning;

time-of-use tariffs;

electric-vehicle charging;

distributed generation;

battery optimisation;

flexibility markets.

However, regulation should prevent the smart meter from becoming a mechanism for uncontrolled commercial exploitation of consumer data.

The principle should be:

greater system intelligence must be accompanied by greater accountability.

23. Future Regulatory Model

A useful future model can be represented as:

Primary Legislation
↓
Ofgem statutory powers
↓
Supplier & DCC licences
↓
Smart Energy Code / Retail Energy Code
↓
Functional technical standards
↓
Certification & interoperability testing
↓
Operational monitoring
↓
Consumer redress & enforcement

This layered model allows technical standards to evolve more rapidly than primary legislation while retaining democratic and judicial accountability.

24. Key Legal Challenges

Future SMETS regulation will face several major legal challenges.

A. Technological obsolescence

Regulation must change faster than hardware replacement cycles.

B. Stranded assets

Older meters may become economically or technically obsolete before the end of their expected life.

C. Consumer consent

Greater data use creates privacy and autonomy concerns.

D. Cybersecurity

Increasing connectivity creates additional attack surfaces.

E. Supplier switching

Smart functionality must survive commercial changes.

F. Cost allocation

The law must determine who pays for mandatory upgrades.

G. Regulatory accountability

Regulators must justify significant technological interventions.

H. Competition

Standards must not unnecessarily favour particular technologies or suppliers.

25. Conclusion

The future upgrade from SMETS2 and beyond should be understood as a transformation from a metering programme into a continuously evolving digital-energy infrastructure regime.

The experience of SMETS1 and SMETS2 demonstrates that technical interoperability cannot be separated from law. The Utilita litigation, the BEIS v Information Commissioner case and Meter-Tech v British Gas illustrate different legal dimensions of smart-meter regulation: judicial review, data governance and technological/intellectual-property questions. (vLex)

The current regulatory direction is already moving toward lifecycle governance. Ofgem and government policy now address communications-hub replacement, recovery of meters operating in traditional mode, future DCC arrangements, data repositories and enhanced consumer protections. (GOV.UK)

The central legal principle for the next generation should therefore be future-proofing through functional regulation: the law should require smart-meter systems to remain interoperable, secure, upgradeable, resilient, data-protective and consumer-focused, while allowing the underlying technology to evolve.

In this model, SMETS2 is not the endpoint of smart-meter regulation; it is a stage in the development of an adaptive legal architecture for digital electricity systems.