This report for energywatch looks at the consumer costs and benefits following the introduction of the type of smart meter most likely to achieve the significant consumer benefits that smart meters can bring. In addition to the current Energy Retail Association minimum specification for a smart meter, we would wish to see included import/export and debit/credit switching facilities. The report attempts to quantify some of the non energy saving benefits associated with the introduction of smart meters and updates the recent studies on energy saving benefits from the earlier 2006 studies.

The central estimates are that smart electricity meters will (on average) benefit customers between £36 and £42 per year with an additional £4 per year from the social benefit of saving carbon dioxide emissions. The corresponding figures for gas are between £22 and £31 and an additional £9 per year. The main annual consumer benefits are from energy saving (up to £13 electricity, up to £17 gas), reducing the penalty currently faced by prepayment customers (£6 each fuel), reduced supplier and distributor costs ultimately paid by consumers (£5 each fuel) and more sophisticated time of use tariffs (£15 electricity only).

There is clear evidence worldwide that there has been a marked fall in recent times in the cost of smart meters. This means that the cost of an electricity smart meter has dropped to between £50- 70 covering capital, installation, hardware and software and increased Operations & Maintenance costs; the equivalent range for gas is £65-95. Using power line communication should restrict annual running costs to a few pounds per year.