Smart meters 'may lead to an increase in fuel poverty'

Government plans to install a smart meter in every British household could force a "significant increase" in fuel poverty because the cost of the programme could far outweigh the savings, the influential Public Accounts Committee (PAC) warns today.

Some 53 million electricity and gas smart meters will be installed in British households and small businesses between 2014 and 2019 providing a live display of energy costs and consumption. The Government says consumers will bear the estimated £240-per-household cost of installing the meters, but will recoup most of their outlay – and many should make a profit – as greater scrutiny of their energy consumption brings down usage.

But the PAC report casts doubt on whether the smart meters will reduce energy consumption by much and says the installation costs will hit poorer consumers especially hard.

Margaret Hodge, who chairs the PAC, said that smart meters were a good idea in theory, but that the Government's proposals of how it will work are "both challenging and subject to significant uncertainty".

"Consumers will benefit from smart meters only if they understand the opportunity to reduce their energy bills and change their behaviour. So far the evidence on whether they will do so has been inconclusive," Ms Hodge said. "Of even more concern is how the programme will affect vulnerable consumers and those on low incomes."

The total estimated £11.7bn cost of installing the meters in homes and businesses will be added to utility bills over the next 15 years.