Can smart meters counter high bills and energy use?
As Which? warns of consumer chaos, firms insist evidence supports their faith
Sunday 29 January 2012
Eleven billion pounds, millions of households and a decade to finish the job. No it's not high speed rail two but the roll-out of smart energy meters in every home across the UK.
The meters will allow consumers to see precisely how much energy they are using minute by minute and end the much disliked practice of estimated billing. Seeing how much energy is being using and its cost is meant to prompt us to go easier on the gas and electric. Do your bit to save the planet and cut your bills at the same time, that's the big idea.
But the scheme, which has already started to a limited extent – over half a million homes have had the meters installed in the past year according to our research – is under fire, with a leading consumer group calling for at least a major rethink or for it to be strangled at birth.
Meanwhile, a recent Public Accounts Committee report sounded alarm over the high costs and uncertain benefits of a scheme likely to disrupt the lives of millions.
"This scheme is a recipe for expensive chaos," says Richard Lloyd, the executive director of consumer group Which?. "We will have representatives of energy firms – which are less trusted than even the banks – visiting every home in the land to rip out the existing meter to install a smart one. Apart from the practical and security difficulties who will pay for this? The answer: the consumer."
But, according to the Department for Energy and Climate Change (DECC), costs won't be passed on to the consumer because of competition between providers, a point echoed by Elliot Grady, from British Gas.
"Customers will save in two ways. First, by seeing their energy usage they should be able to alter it to lower their bills. Second, accurate billing will save us a lot of time and money dealing with customers who have a wrongly estimated bill. In a competitive energy market this should be passed on in the form of lower bills."
However, with Ofgem, the energy regulator, currently investigating providers for potential price fixing and criticism over higher bills, can consumers really rely on competition to fix it for them? "The officials at DECC must be the only people in the country who believe the market is in any way competitive," says Mr Lloyd.
He also has serious doubts over the theory that smart meters will even lead to reduced energy usage.
"Remember that the people who have been trailed are the most interested in the area of energy saving and are bound to react proactively to the information they get from the smart meter readers," says Mr Lloyd. "However, who is to say that most households will not either ignore the information or perhaps just make usage cuts for a couple of weeks and then return to their old ways?
"And will providers not increase per unit pricing if they find that usage falls? It could be £11bn wasted."
Yet providers say that the evidence supports the idea that smart meters change behaviour: "Of the customers we've surveyed that have smart meters installed, 80 per cent say it has changed the way they use energy, and 64 per cent said it prompts them to make energy efficiency measures," Mr Grady says. Official estimates put bill savings through smart metering at between 5 and 10 per cent.
Likewise, First Utility, a smaller provider which since it was founded in 2008 by Mark Daeche, has specialised in smart meter technology says 56 per cent of its customers have changed how they use energy after installation and, crucially, the technology can be built upon.
"By providing the right tools, such as an online portal where customers can see in more detail when they are using energy, it can empower them to make changes and therefore reduce their costs," says Jonathan McGregor, First Utility's head of marketing. "The UK's energy infrastructure is badly outdated – many people have meters which have not been changed for decades and updates are needed. A lot of the anger regarding the cost of the roll-out is arguably because consumers don't feel they are getting a good deal from the Big Six firms here in the UK," Mr McGregor adds.
There are also gathering concerns that utility firms will use installations to push other products and services while in consumers' homes. Last year, The Independent on Sunday highlighted how British Gas was advertising for installers partly paid through sales commission. To date only a few providers have signed up to the Which? "Don't sell just install" code of conduct.
Above and beyond this, the consumer group says customers with smart meters have reported being unable to switch between providers: "They are being told that the provider they wish to move too cannot effectively read their meter remotely, therefore they can't switch.
"This sort of technological hitch has to be sorted quickly if the scheme isn't going to fall into disrepute as it has in Australia, where the state government of Victoria has halted the scheme."
Claire Stone, Shopworker from Aberdare, Mid Glamorgan
Ms Stone had a smart meter installed by First Utility last July
"It's a great aid. I am able to keep an eye on what I am using and spending, plus which household items cost more," she says.
Claire also likes that smart metering means an end to estimated bills. "I'd always find myself overpaying and having to go back to the energy companies for a refund time and again." She even uses the smart meter as an educational tool for eight-year old Joseph: "I have been showing him how much power we're using and the need to turn things off at the wall rather than leave it on standby."
Claire has noticed a small reduction in bills but is concerned about how the costs of installation will be passed on: "I have been lucky with First Utility but you can imagine the providers will pass on the cost to customers and if usage falls the unit price will no doubt rise ."
Compare with the Independent: See how much you could save by switching credit cards. Compare now
Ukraine crisis is Russian roulette for investors
Make money as a mystery shopper
Investment Insider: Poundland may not be cheap when it floats
How to start your own internet business
The whole truth about legal fees: Conveyancing can knock a big hole in home-buyers' finances. To get the best deal you must cross-examine solicitors about their charges, says Sue Fieldman
- 1 Bad cattitude: Family call police after crazed and 'hostile cat with a history of violence' attacks baby before attempting to 'flee custody'
- 2 Family forced to flee home after discovering 'terrifying' nest of spiders in bananas
- 3 First Kiss: Filmmaker gets 20 strangers to make out on YouTube with awkward results
- 4 Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
- 5 Bob Crow death: 'Admired by his members, feared by employers' - Tributes pour in for RMT union leader and 'working class hero' Bob Crow
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
iJobs Money & Business
£1000 per month: Inspiring Interns: The company works with Tier 1 FTSE 100 Ban...
£35000 - £60000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...
£60000 - £80000 per annum + BONUS + BENEFITS: Harrington Starr: A top, City ba...
VOLUNTARY ONLY - EXPENSES REIMBURSED : Reach Volunteering: Fantastic opportuni...
Day In a Page
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill