Margaret Hodge,
Chair, Public
Accounts Committee
 
London, U.K. --- (METERING.COM) --- January 18, 2012 - The idea of smart electricity and gas meters is a good one, but Britain’s program for a nationwide rollout is both challenging and subject to significant uncertainty, the Commons Public Accounts Committee has found.

Based on evidence from the Department for Energy and Climate Change (DECC), the consumer bodies Citizens Advice and Which?, and supplier EDF Energy, the Committee reported issues around the costs and benefits and the impact on vulnerable consumers. In particular, it is far from certain that all consumers will benefit from having smart meters in their homes, the Committee said.

The plan is to install approximately 53 million smart electric and gas meters in all homes and small businesses in the country by 2019, at an estimated cost of £11.7 billion.

Among its conclusions the Committee noted that consumers will have to pay energy suppliers for the costs of installing smart meters through their energy bills, but many of the benefits will pass in the first instance to the energy suppliers. No transparent mechanism presently exists for ensuring savings to the supplier are passed on to consumers, and the track record of energy companies to date does not inspire confidence that this will happen.

Competition between energy suppliers is also queried. While the DECC insists competition is the best way to ensure consumers benefit from suppliers' savings, past performance suggests that it does not work effectively in this market and should not be relied on to keep prices low.

The Committee said there are also significant uncertainties in a number of key areas in the program. Consumers may not be willing to cooperate with the installation of smart meters. Further, significant practical difficulties may arise in procuring and installing the required data communications service before the planned rollout of smart meters in 2014. The DECC needs to address these remaining uncertainties by conducting proper trials to identify and manage the risks associated with an IT project involving such a substantial amount of money.

The Department needs to ensure that the vulnerable, those on low incomes and those who use prepayment meters also benefit from smart meters. There are also issues around cyber security which need to be addressed if confidence in this new technology is to be gained.

“Consumers will benefit from smart meters only if they understand the opportunity to reduce their energy bills and change their behavior,” said Committee chairman Margaret Hodge. “So far the evidence on whether they will do so has been inconclusive. Otherwise, the only people who will benefit are the energy suppliers.”

The report comes days after Which? raised concerns that the smart meter program could fail consumers and called for it to be halted for review.