The Government must urgently cut smart meter roll-out costs

by , Campaigns Officer Energy & Home 7 October 2014
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Have you had a smart meter installed in your house? The official roll-out’s due to start next year, but we’re concerned about the £10.9bn cost. That’s why we’re calling on the Government to urgently cut costs.

Energy meter

A number of energy suppliers, including British Gas and Eon, have already started installing millions of smart meters up and down the country. However, the full roll-out won’t begin until the end of 2015. If everything goes to plan, we’ll all have gas and electricity smart meters in our homes by 2020. But, with you and me footing the bill, what’s being done to ensure we’re getting value for money?

We’ve previously called on the Government to pause the smart meter roll-out so that costs could be properly assessed. The roll-out was delayed for year. But now that the programme’s set to begin in earnest in December 2015, we’re calling on the Government to do all it can to cut the costs that will ultimately end up on your energy bill.

Three ways to cut smart meter costs

Today we wrote to the Energy Secretary, Ed Davey, ahead of his speech at the Liberal Democrat Party Conference, to make him seriously consider cost cutting measures.

The Government says that competition between suppliers will keep costs down, but with the energy market undergoing a full scale investigation by the Competition and Markets Authority, we’re not convinced.

So, as part of our Fix the Big Six campaign, we have identified three ways in which savings can be made:

1. The Government should explore using economies of scale to drive down costs. The meters themselves are one of the biggest costs for the roll-out, yet suppliers are currently buying meters separately. A centralised approach could save hundreds of millions of pounds.

2. A coordinated approach to the installation of meters in multi-occupancy buildings, such as flats, is required to reduce disruption and cost. Otherwise, there could be an unnecessary duplication of effort and costs, with visits from multiple suppliers.

3. Suppliers are required to take ‘all reasonable steps’ to install meters in every home by 2020, but it hasn’t been made clear what this means. Suppliers need early guidance from Ofgem on what lengths they have to go to so that they can improve the efficiency of the roll-out and avoid disproportionate costs.

Get smart on smart meters

Smart meters can be a very good thing, giving you more accurate billing and control over the energy you use. But that doesn’t mean we should be writing a blank cheque to have them installed in our homes. The Government, energy suppliers and Ofgem must get to grips with the smart meter programme to ensure we’re not paying over the odds. Otherwise it’s in danger of spiralling out of control.

Have you had a smart meter installed? Has it led to more accurate bills, or made you think twice about how much energy you use?

237 comments

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John Ward

It seems that one of the reasons why the smart meter roll-out is stalling is that an entirely separate, and fairly complex, communication system is having to be installed across the country to enable every meter to transmit its data every day without reliance on other communications or data transmission systems. It is also necessary for the communications system to be compatible with whatever type of meter was installed at each property irrespective of supplier so that if people switch supplier their meter does not immediately go into dumb mode. Allegedly the government has been tweaking the specification for the interface and data transmission standards causing a hold-up in the roll-out. The chances that they will abort it despite all the objections are probably infinitessimally low because it is just not that kind of political issue; we seem to shrug our shoulders over £10+ billion being spent even though it is virtually impossible to find out what the pay-back on this expenditure is likely to be and when there are plenty of other good uses for that sort of money in all the fields of health, education, welfare, energy, and transport. £2 bn each would be a rough & ready way to allocate it and spread satisfaction far further.

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Whitwams

If the electricity supply industry was state owned, contributors to this forum would be howling for the blood of the incompetent bureaucrats who were failing to provide the energy. Smart meters enable the private owners of the industry to take their profits without investing in the power stations to meet the demand. Adjusting demand to suit supply. Marketing utopia.

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John Ward

There are very few advocates of state ownership; many of us remember the waste and inefficiency of the regional electricity and gas boards. However, private companies operating in a regulated environment should be a successful service meeting customer expectations. There are a lot of sensible state controls over the energy suppliers but the state has also heaped a number of obligations on the companies that distort the market and have inequitable consequences. Getting the balance right between free enterprise, consumer satisfaction and assurance of supply is the challenge. As mentioned previously, the product is standard and universal; delivery shouldn’t be such a problem.

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william

It’s a shame there’s no happy medium between the greed of corporations and the incompetence of government.

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malcolm r

Although I do not support the cost benefit of smart meters there is a benefit in them in conjunction with standing charges. They will, it is declared, reduce energy companies admin costs. So as soon as you have a smart meter installed your standing charge should be immediately reduced. You will then see a direct benefit.

However, if you have a unit-only tariff, this could all get lost amongst changing energy costs, distribution costs etc – so blurred you would never know if you were being short changed.

Is it worth £10.7 bn? I doubt it.

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Tennand

No mention is made of the way Solar and other locally generated electricity causes traditional analogue meters to go backwards, thus unfairly reducing the bill for some people/businesses. This is in addition to the legitimate payment for exporting.

These older meters should be prioritised for replacement by Smart Meters asap.

The meter disk can be seen going backwards and reducing previous usage when locally generated electricity exceeds requirements.

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Colin M

I had a SMART meter fitted a few weeks ago, and I am very unhappy about it!

Before it was fitted I was told by my supplier that I had to have it, and that they would supply an IHD (in house display) unit where I would be able to see my meter readings. That seemed fine to me. No more crawling under the stairs!

In fact I now find that it is not possible to see the meter readings on the IHD, so if I want to see the meter reading I still have to crawl under the stairs. However reading my SMART meter is not at all straightforward. To get a reading I have to interrogate the meter using a very small keypad. The meter then starts to cycle through a whole series of displays, pausing for less than a second at each one. I am told there is no way to stop the meter display cycling. If that is not long enough to get a reading, too bad!

I have asked for proper printed instructions on what these displays mean and how to read my meter, without success. I have had to make do with a series of replies to emails from different people, some contradictory.

My supplier seems to think that everything is alright because he can read my meter centrally. However, I do not think that is satisfactory. When I get an energy bill I want to be able to check my meters for my self. I think my supplier should be providing me with the instructions I need to be able to do that.

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Dave, Newcastle.

Colin,Our supplier, Ovo sent us intimidating emails stating that we had to have a smart meter fitted. It took a letter to their chief executive to establish that this was complete rubbish. It turned out that it is just the electricity meter that that needs replacing. It is a Siemens meter that is only 14 years old but has apparently passed its sell-by date .Ovo have now agreed to replace it with a traditional meter.
I am concerned that you have been brainwashed by your supplier. Government policy seems to have given the energy companies a free hand in feeding misleading information to the public.
It is completely unacceptable that you should be put in the position of having difficulty in reading your meter. If you have a labour MP go and see him( but perhaps don’t waste time on a Tory). Also consider changing supplier as soon as convenient if you can get written agreement from the new company that your smart meter will become “dumb”and will be easy to read.

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Colin M

Yes, my supplier is OVO too!

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MJ

I had a call from Siemens today wanting to fit a smart meter on behalf of First Utility. Reading comments here I find them to be overwhelmingly negative but I just don’t see any problems.
I am not being charged to fit the meter – if it saves me having to submit monthly readings then I am very happy. As for energy companies spying on how many times I boil my kettle for tea or having the ability to disconnect me at the flick of a switch I am really not concerned. They are not power hungry devices that are going to push my bills up, a faulty meter may give an inaccurate reading but that is the case whether it is smart or dumb and I really don’t think it will damage my health by sending a reading from a cupboard outside my house. Huge overall installation costs have been quoted for equipping every household but as I said they are not charging me for the installation. There will also be savings for the energy companies from reduced visits for meter readings and bills should be more accurate and up to date.

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Whitwams

The introduction of smart meters will enable suppliers to apply prohibitive prices when they have not contracted to buy enough electricity from the generators to meet the demand. It heralds a marketing utopia where demand can be adjusted to suit supply. Why should suppliers bother to forecast, plan and invest when demand can be throttled. And all of this will be agreeable to a government besotted by the absurd fiction of renewable energy from the winds and tides which are available for only 30% of the time.

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wiseoldelf

Just read which magazine and website articles on national smart meter roll-out; interesting data – can’t see how Which’s conclusion to support the roll-out is consistent with it;
“Estimated cost of roll-out £215 per home; estimated annual saving £26″ – that’s a 10 year pay-back time. And then meters will need replacing every 10 years…
So financially – no point.
Worse – it will cost those of us who are already energy savvy more (we’ll pay for the installation, but won’t save any further on bills because we have an IHD). This punishes those of us who have already made the effort.
The driving force for the roll-out seems to be ecological (help the country reduce its energy consumption), but there is no attempt to evaluate the total energy cost of the smart meter roll-out (ie to make [resources, factories] and install [vehicles driving all over] meters, running costs (radio transmission) etc) and its continuation (replacement every 10 years) against the energy cost of maintaining the existing meter system and the small annual energy consumption savings made. This looks like something that overall will make the environment worse off – does anyone know if there is any kind of life-cycle assessment/energy audit on this?
It also adds another (relatively) low-power, but constantly on energy device to the home – which will add a significant annual cost to the electricity bill – reasonable annual estimate to run device and radio transmission etc per set up – £25?
For me your article very firmly raises the question whether this roll-out is justified, financially or ecologically!
Please advise.
Many thanks

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