Budget-Busting Smart Meter Roll out May Only Save Customers £11

The £11 billion smart meter roll out will save consumers just £11 per year on their energy bills, a report from a parliamentary group has claimed.

The report from the British Infrastructure Group predicted that the roll out programme will miss its target of installing 53 million gas or electricity smart meters in 30 million homes by 2020.

Meanwhile, delays, mismanagement, and cost increases have pushed up the total cost of the programme by £1 billion more than initially anticipated in 2016, while keeping consumer savings low.

Smart meters automatically send data to suppliers via the mobile phone network, eliminating the need for manual meter readings. They also include visual displays, showing customers how much energy they’re using, both in Kwh and in pounds and pence. Smart meters are supposed to ensure savings by delivering accurate readings to suppliers and helping consumers monitor and reduce their energy consumption.

However, a botched roll out programme has left millions of customers with first-generation smart meters that make switching suppliers difficult. The report found that of the one million households with smart meters which switch suppliers annually, half find their meters have “gone dumb” after the handover.

New suppliers are often replacing working smart meters with their own smart meters even when they can receive data from the old ones, pushing up costs.

Second generation smart meters make switching easier, but the roll out has been extremely limited. In January 2018, just 450 had been installed, sending just 80 live readings. Meanwhile, some homes are still being fitted with first generation meters, despite their failings.

The report also found that suppliers, facing fines of up to 10% of their turnover if they fail to meet the 2020 target, are using scare tactics to coerce consumers into accepting smart meters. The report documents cases of consumers being incorrectly informed that smart meters are compulsory, that without a smart meters their bill will increase, and that current meters are unsafe. Providers are also scheduling smart meter installation without consumer consent.

Consumers have financed the £11 billion roll out through a levy on energy bills. The government has insisted that smart meters will save consumers £300 million in 2020, with savings rising annually and reaching £1.2 billion in 2030.

The report from the British Infrastructure Group warned that most of the savings from smart meters would be made by suppliers. There are “no safeguards” to ensure that suppliers don’t pass the rising cost of the programme—and potential fines for delays—onto consumers in their energy bills, the report says.

"The roll-out is at serious risk of becoming yet another large scale public infrastructure project delivered well over time and budget, and which fails to provide energy customers with a meaningful return on their investment," said Conservative MP Grant Shapps, chairman of the British Infrastructure Group.

To limit costs and preserve savings for consumers, the report recommends suppliers begin the mass production and installation of second-generation, switchable meters immediately and compensate consumers for each day their smart meter malfunctions. A spokesperson for the Department for Business, Energy and Industrial Strategy said the government welcomes suggestions to “ensure the ongoing success of the roll out programme,” and that it was already working with Ofgem to address issues raised in the report.

Energy UK, which represents the energy industry, said: "Suppliers have installed more than 11 million smart meters. However, as with any large and complex infrastructure programme there will be challenges to overcome."

Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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