MPs Question Smart Meter Cost Savings

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Smart meters could be out-of-date already and deliver only small cost savings, MPs warn

The Public Accounts Committee (PAC) has said that smart meters will only save consumers 2 percent of their annual energy bills.

With the average UK household electricity bill at £1,328 per annum, the PAC said that consumers will only save £26 a year, and that is conditional on them changing their electricity usage and cutting their energy consumption.

Value For Money?

The committee of MPs highlighted the fact that British consumers will have to shoulder the cost of the £10.6bn nationwide installation programme, which is slated to begin in earnest late next year to get them into every household by 2020.

That £10.6bn installation cost translates to £215 per household.

Smart Meter (c) Pi-Lens, Shutterstock 2013“The costs of installing 53 million smart meters will be borne by consumers through their energy bills,” said Rt Hon Margaret Hodge MP, Chair of the PAC. “It will cost around £215 per home or small business over the next 5 years to install the meters – an additional cost people can ill afford.

“Despite consumers footing the bill, they can on average make a saving of only 2 percent on the average annual bill of £1,328 by the time the roll out is complete.”

And the PAC questioned the assumption by the Department of Energy and Climate Change (DECC) that smart meters would enable the consumer to become more “savvy” in making decisions about using energy.

“The Department is depending heavily on assumed competition in the energy industry to control costs and deliver benefits,” she said. “Relying on market forces to keep costs down may not be enough on its own to protect consumers.”

This is something energy companies don’t have a great track record on,” Hodge said. “Ofgem’s referral of the energy market to the Competition and Markets Authority reflected serious concerns about the lack of real competition in the industry.”

The PAC said that DECC should ensure that smart meters are interoperable, so they won’t need to be changed if a consumer swops supplier. It also said that DECC should require suppliers to provide a clear breakdown for consumers of the cost of smart meters, and it is also concerned at the impact of smart meters on vulnerable and low income consumers.

Out-Of-Date?

Another worrying aspect about smart meters is whether the entire programme will be already out-of-date (or indeed obsolete) by the time it is rolled out, thanks to free smartphone apps that would essentially do the same thing as a smart meter.

“Some aspects of the Programme could be out-of-date by the time it is rolled out,” said Hodge. “Evolving technology suggests that customers could receive the information on their smart phones, making the in-home display redundant. Energy suppliers will be required to offer in-home displays, even though customers may not want or use them. Consumers will have to pay for them even though they might already be out of date.”

Earlier this year, research from British Gas revealed that despite initial skepticism, the UK public was beginning to warm up to smart energy meters.

That research found that more than half (54 percent) are now saving money thanks to the energy-efficient behaviours inspired by these devices, with nearly two thirds (64 percent) of those surveyed saving up to £75 per year.

Do you know about Green IT and energy consumption? Try our quiz!