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How much are smart meters costing you?

smart meters

Which? research shows that energy companies would need to work round the clock – installing 24 smart meters per minute – in order to meet the 2020 roll-out target. Guest author Steve McCabe MP tells us why this isn’t good enough…

I was interested to read the investigation into smart meters in the last month’s edition of Which? magazine. It outlined concerns about delays in the development of the Data and Communications Company (DCC) wireless network – a key part of the UK’s smart metering network.

However, claims made by the DCC and government ministers that the problems are all behind them, were left unchallenged. My view is that their reassurances are less than convincing.

Slow progress, spiralling costs

Back in November, the Chief Executive of the DCC told the parliamentary committee responsible for scrutiny of smart meters legislation (which I sat on) that real progress was being made.

We were led to believe that 250 second-generation meters had been connected to the network, only for a freedom of information request to reveal that just 80 had been connected and that most of these were in the properties of staff members!

I’m becoming increasingly concerned about the DCC’s costs, which have risen by 56% over the last three years. Other than intervention for costs that can’t reasonably be shown to be developmental or administrative, there seems to be little the government or Ofgem can do to control these costs.

It’s equally important to recognise the role of Meter Asset Providers. They are the ‘middle men’ who provide smart meter asset management to energy suppliers and they have a vested interest in driving up the rental costs energy suppliers pay for their meters. The market they operate in is a significant factor in the loss of functionality customers experience when switching and their role in the roll-out programme is deserving of closer attention.

Are smart meters increasing energy bills?

The government estimates the roll-out of smart meters will produce economic benefits of £16.7 billion, with savings of £47 on the average domestic annual bill by 2030, through using less energy.

I don’t doubt the potential benefits of smart meters, but I worry that what the government is selling as cost saving for consumers is fast turning into an unnecessarily expensive project – one that will increase energy bills in the short to medium term.

A growing number of energy suppliers are already blaming increases in energy bills on the cost of installing smart meters, including Scottish Power, SSE and Centrica.

Be clear about the costs

I recently argued that the government should require energy suppliers to include on every household’s energy bill the amount they pay for the smart meter roll-out. Without this information, how are we to know that we aren’t being fleeced?

We deserve to know whether there are still cost savings for consumers and how the functionality issues surrounding the DCC’s network are going to be resolved.

I’ll be continuing my fight for greater transparency and consumer protections, and I encourage those of you who are concerned about your energy bills to ask your supplier how much the smart meter roll-out is costing you.

This is a guest contribution by Steve McCabe MP. All views expressed here are Steve’s and not necessarily those shared by Which?.

What do you think?

Are you concerned about the cost of your energy bills? Do you think energy suppliers should tell you how much the smart meters roll-out is costing you?

Comments

Today’s Which? press release about smart meter states that more than half of energy customers have a problem when they switch supplier: https://press.which.co.uk/whichpressreleases/more-than-half-of-energy-customers-with-smart-meters-have-problems-when-they-switch/

I was one of those affected and the new company arranged that the existing smart meters were removed and replaced with new ones, and I was given a new display unit too. This is payed for by all customers.

There should be an enquiry to establish why this problem occurred and why companies were allowed to carry on fitting the old-style (SMETS1) meters. Apparently there is a software fix for this expensive problem but I do not know if this is being implemented.

Many people switch suppliers because their company has dumped them on a more expensive standard variable tariff at the end of a contract. It’s high time that energy companies stopped treating their customers in this way.

I find the Which? enthusiasm for smart meters confusing, if not contradictory. They claim they are a huge potential benefit for consumers.

“A smart future
So far we’ve seen just the tip of the smart iceberg. Smart meters bring huge potential for you, your energy company, and the wider energy system.

https://www.which.co.uk/reviews/smart-meters/article/smart-meters-explained/smart-meter-roll-out

Yet it seems consumers will be paying around £400 each to support the installation programme, but are unlikely to benefit by more than £11 a year (so about 36 years to recover the cost, assuming the meter lives that long). That does not seem much of a potential financial benefit to consumers.

Which? also, quite rightly, tell consumers that switching supplier is by far the best way initially to save money on their energy bills. But if they do, their smart meter is likely to stop working, with all the potential benefits lost.

“More than half of energy customers with smart meters have problems when they switch
8 March 2019
New Which? research reveals more than half of people are finding their devices turn “dumb” when they switch, raising serious concerns about the effectiveness of the Government’s smart meter rollout programme.
Switching energy deals is the most effective way for customers to save money on gas and electricity or find a supplier that provides better customer service.

https://press.which.co.uk/whichpressreleases/more-than-half-of-energy-customers-with-smart-meters-have-problems-when-they-switch/

It would be useful if Which? pulled all this together and told us exactly why they are worthwhile, or whether they are an expensive “initiative”, started too soon before we were properly prepared with the right products and communications. There are doubtless some potential benefits, but not available yet. And I remain to be convinced that they have any real impact on most people’s energy use, especially when the novelty wears off.

I have to admit that I cannot fathom why Which is being so positive, perhaps someone from Which can explain?

Or is it that they have been coerced into support either by EU subsidy or energy suppliers subsidy, I do not think Which has the consumers position at the forefront of their thinking.

I wish Which? would explain why it has nailed its colours so firmly to the smart meter mast.

I don’t recall any consultation with members and contributors over whether or not smart meters are a good thing economically when the costs of implementation are taken into account. Those costs are imposed on all energy consumers and are particularly regressive in respect of people on low incomes who might need to use more energy for heating.

I don’t believe Which? has ever answered this point which has certainly been raised in Which? Conversation from time to time. It is that deliberate abdication from engagement that I find so annoying, and recent attempts to encourage a better relationship with ‘the community’ do not make up for those deeply-embedded dismissive behaviours.

Well put, John. Speaking as one who exercised their right to have their smart meter removed, I think I, too, am concerned about this apparently uncritical support for the smart meter roll out. In fact, I am now certain my smart meter was flawed in several ways and have the figures to show that I was being charged around 40% more for our use during the period it was working.

And this, really, is the point: I am now back to reading my meter once a month, from which I can glean my usage. If I want more detailed stats I can buy one of the many devices that fit in the meter cupboard and send info, wirelessly, to a receiver.

So no; no signs of the ‘huge potential’ Which? seems to believe they offer, a very ropey system – at best – that relied on mobile ‘phone signals (we have no mobile coverage) and at the suggested cost per person I don’t see how they can possible be worth the investment. Unless the government has ideas involving control of the supply which it hasn’t shared…

When smart meters were first discussed, I don’t remember Which? explaining that there is no need to allow them to be installed. Now it is made clear on this undated page: https://www.which.co.uk/consumer-rights/advice/do-i-have-to-accept-a-smart-meter

I try to avoid advertising but I am not aware that the companies pushing smart meters have explained that they are needed. This could have been worth a press release to draw attention to how the government and companies are manipulating the public at their expense.

DerekP says:
9 March 2019

I have refused to be “upgraded” to a smart meter.

I have been using “customer supplied” clip-on-ammeter style electricity monitors for years, so a fully smart electricity meter would not greatly benefit me.

I have gas central heating, but I think I can already control and minimise my usage by means such as appropriate settings of master and radiator thermostats.

Hence I tend to think that anyone who wants to save energy can easily do so without a smart meter and that also smart meters won’t benefit those who don’t either care about saving energy or simply don’t have a clue.

It would appear most of us cannot understand the dire need for smart meters or why Which? is so behind them when there are such obvious disadvantages.

We read our old meters daily and submit the readings for billing once a month. A smart meter isn’t going to change the way we use our energy. We use what we want but at the same time try not to be wasteful and turn most things off when not in use.

Amongst many of its statements on installing smart meters, Smart Energy GB states:
Gas and electricity suppliers are responsible for providing and fitting smart meters for everyone in Britain by the end of 2020.
https://www.smartenergygb.org/en/get-a-smart-meter/how-to-get-a-smart-meter

No wonder people are confused over whether they must have them installed or not.

I think it is the Government who are driving the push for smart meters, not “companies”. They, as usual, seem anxious to comply with any EU directive going, unlike the Germans, and pass the cost onto us.

Who is Smart Energy GB?
Smart Energy GB is a not-for-profit company created to provide an independent voice for consumers. Our task is to support the rollout of smart meters so that everyone has the opportunity to share in the benefits that they bring for households, our economy and our environment.”

I think the ASA might take issue with the “independent voice” bit. They have presented distorted and untrue adverts and I doubt they are independent; certainly not impartial.

We should be able to rely on Which? to provide an independent voice of the consumer. Instead of that they issue press releases in support of the roll out program:
https://press.which.co.uk/whichstatements/which-responds-to-latest-government-smart-meter-installation-statistics/
No apparent wish to critically examine the value of smart meters to consumers.

Have a look at the advertising produced by the energy companies, Malcolm. I don’t doubt that the Government is driving this too.

The government’s remit is to roll out smart electricity meters to 80% of consumers by 2020 in a bid to meet the EU’s requirement. Smart Energy GB was set up by law to assist that remit. Of course energy companies will be doing their bit to comply but it is Smart Energy GB who have been putting out misleading and dishonest advertising, as the ASA has determined.

Smart Energy list the following consumer representatives on their board:
Nominated by Citizens Advice:
• Dhara Vyas (also Head of Future Energy Systems at Citizens Advice)
• James Taylor (also Head of Policy & Public Affairs, Scope)
Representing the interests of energy consumers:
• Penny Shepherd
• Chris MacLeod

Is anyone there from Which? Are these representatives not looking critically at claims made?

However, the question initially raised is why Which? have been putting their voice behind the smart meter roll out when it may not be financially a good option for consumers, not technically a good option at present.

One thing regarding the content of your link – “If you really don’t want a smart meter, make this clear to your supplier and they may be able to set up a smart meter to work in ‘dumb’ mode, with all the communications switched off.” – this implies that a dumb meter is still a smart meter and can be reprogrammed remotely to be active.

Try this link – https://www.facebook.com/groups/SmartMetersHealthProblemsUK/ – and join the club!

REFUSE A SMART METER WHETHER DUMB OR NOT!!

With just over nine months to go before the ‘by 2020’ deadline arrives this looks like being one of the most expensive policy failures ever, counting not just the implementation costs but also [a] the absence of financially quantifiable benefits to consumers generally, and [b] the unrelieved financial hardship imposed on many consumers on low incomes. At what point is there any review of whether to keep throwing good money after bad?

I presume it is a licence obligation for energy suppliers to have to cooperate actively with the government’s policy and deliver the unrealistic installation programme without challenge or demur.

With the government’s new house-building programme also stalling, the percentage of homes fitted with a smart meter will only creep up slowly despite the misleading advertising. The percentage of consumers in homes fitted with them who actively use them also appears to be low although, of course, where compatible they do benefit the suppliers through automatic metering and billing. Is a surcharge for dumb metering on the horizon?

The EU required the implementation of a programme by member states to install smart electricity meters.

Smart metering
The EU Directives concerning common rules for the internal market for electricty and gas (2009/72/EC and 2009/73/EC) and the EU Directive on energy efficiency (2012/27/EU) require Member States to ensure the implementation of ‘intelligent metering systems’ that shall assist the active participation of consumers in the energy market. Regarding electricity, where there was a positive assessment of the long-term costs and benefits, then at least 80% of the households should be equipped with smart metering systems by 2020.

One claimed benefit – at least by the UK – was that by letting people see a screen with their energy usage they would (somehow) use significantly less energy. Quite why this would come about I am not sure. When my smart meter worked I do admit that on a couple of occasions it reminded me I had left the oven on, but that was it.

As it is, a current prediction is it might save £11 a year, for a £400 installation cost per consumer, but quite how is unclear.
A radio advert by Smart Energy GB has been banned for making ‘misleading’ claims that consumers could save money simply by getting a smart meter installed.
Read more: https://www.which.co.uk/news/2019/03/smart-meter-advert-banned-for-misleading-consumers/ – Which?

Another objective was to get better control of the use of electricity – the so-called smart grid. However, this 2016 article casts doubt on the need for smart meters to achieve that.

“A transition to an intelligent electricity grid in Europe can take place without smart meters, industry players have said, in comments that will embarrass the European Commission, which pushed a Europe-wide plan to roll out smart meters years ago.

There are other more efficient ways than smart meters to help develop intelligent power grids, said industry delegates at the annual convention of Europe’s electricity association Eurelectric, held in Vilnius last week.
These include quicker integration of renewables, the development of energy storage and energy demand response solutions, said the industry representatives.

The actual benefits of smart meters were also questioned at the conference, as several member states have done previously. Germany, for instance, has decided not to have a national roll-out plan at all, running counter to requirements laid out in EU legislation.
https://www.euractiv.com/section/energy/news/smart-meters-not-needed-after-all-for-european-power-grid/

The smart grid requires consumers to use smart appliances. Then, when electricity demand becomes excessive – all of us cooking at the same time, or making a cuppa when the adverts are on – “they” can switch off our appliances remotely, and restore them later (when the dinner is spoiled and you’ve had a beer instead of a coffee). Well, I don’t intend equipping my house with smart appliances or, if they must be smart, I probably won’t connect them.
Or, of course, “they” can switch off my supply totally when it suits them.
I don’t want my supply meddled with; I want a secure supply with enough capacity for our needs. The £12 bn cost of rollout could have provided a very handy tidal storage generator.

“Smart appliances connected to the grid in future could be used to help manage surges in demand (for example, millions boiling the kettle at half time during the FA cup final) by switching off momentarily. https://www.which.co.uk/reviews/smart-meters/article/smart-meters-explained/smart-meter-roll-out

The adverse comments on Which?’s enthusiasm for smart meters is a good illustration of why they should interact with and consult their membership. They might have been advised to look more diligently into the cost and utility of smart meters, check the technology (which was not ready), investigate just how consumers in practice would really achieve the large savings claimed, and put a more balanced appraisal together.

Looks like Smart Energy are still misleading consumers.

Surges in demand are nothing new. Years ago, I watched a TV documentary where a power station employee explained how they had to provide extra electricity for the surge during the commercial break of Coronation Street when everyone put the kettle on.

With recordings, catch-up, internet TV or a pause button for viewing these days, TV surges should need a lot less management.

The key point is “Regarding electricity, where there was a positive assessment of the long-term costs and benefits, then at least 80% of the households should be equipped with smart metering systems by 2020”, Germany assessed this and said it wasn’t cost effective so abandoned a full rollout.

I suspect at £11 for an investment of £400 per household is not cost effective. On top of that the technology is such that replacement meters will be required at least every 10 years so that will mean an added £400/household/decade, totally cancelling out the £11 benefit!!!

In terms of smart appliances with an interruptible supply which can override consumer requirements, there are not many suitable items and I doubt whether it is worth investing in such technology. We don’t want the fridge, freezer, washing machine, iron, oven and hob, food mixer, central heating pump, portable phone, computers, printers, lighting, extractor fans, power tools, battery chargers, and televisions and recorders to stop running, which just leaves the kettle and similar gadgets – which would be daft because the peak demand period is just when people want to have a cuppa. Since most of the country’s industry is shut down or in low demand mode during the great national occasions these surges are capable of being easily managed. The days when the entire nation wanted to see the marriage of Crewe Alexandra to Accrington Stanley are long past.

While I remain opposed to the current roll out of smart meters to all households, they are helpful to those who live in fear of not being able to pay for their next energy bill. They let consumers see how much they are being charged on a daily basis. It’s perfectly possible to monitor use by looking at the meters if you can access them easily but unlike smart meters, they don’t show usage in pounds and pence. Perhaps it would have been better install smart meters where there is most need.

You might wonder whether where there is most need, those who live in fear of their bills, would be better helped by some of the £12bn being spent on the roll out and some of Smart Energy GB’s annual spend of £47m, largely on advertising and the like? An annual saving predicted of £11 is hardly a great help to these people.

As I have said many times I am opposed to the roll out, but providing those who are struggling with smart meters (and anyone else who would like to pay for them) makes sense to me. The cost would be much smaller. For those who make use of smart meters rather than ignore them the savings could be considerably greater than £11.

DerekP says:
10 March 2019

Yes wouldn’t it be great to have a smart meter indicate that you’ve left lights on or heaters or the cooker on. I mean there aren’t any other means by which you’d notice that… 😉

If you look at the display unit you can easily see how much gas and electricity you are using. When I moved into my present home I wondered why the display was showing high electricity consumption when the immersion heater etc. were switched off. A quick investigation showed that the previous occupants had turned on an electric heater in the conservatory, which had been off each time I had visited with the estate agent. The display occasionally reminds me that I have left a fan heater on in the garage/workshop.

I know your comment was light-hearted, Derek, but leaving a heater or the oven on is easier than it ought to be. A lot of newer ovens, particularly, subscribe to the ‘small and discrete’ school of labelling, so it’s often rather difficult to see if the oven’s been left on accidentally, and awaiting the tell-tale smell as its contents are slowly incinerated isn’t ideal.

Our very new kitchen has a lovely stainless steel gas hob, and within the first few months the printed-on labels – minute as they were – had almost completely disappeared. Turning on the gas hob, now, is something of a fiery game of chance.

Immersion heater switches are often inside airing cupboards and if one of the kids turns on the immersion you might not be aware that the water is being heated by expensive electricity rather than cheap gas. A glance at the smart meter display would make this obvious.

There is no doubt that there are some advantages in smart meters but I suspect that warning a small number of people who might occassionally leave their immersion heaters or their ovens on does not justify a £400 cost to every household in the UK. The issue at the heart of this is whether they give value for money – at least that is where I am viewing this.

Agreed, as a small clip-on gadget for far less would suffice. It is the total cost which seems disproportionate to me.

Which? responds to latest Government smart meter installation statistics
28 March 2019
All parties involved should be focusing their resources on ensuring the rollout delivers on the promise to bring greater convenience and a more competitive energy market – not just hassle and soaring costs for customers, funded by their very own bills.“.

I’d still like Which? to explain hew consumers can benefit from the £400 it costs each of them to have a smart meter. The latest average (notional) benefit is quoted as £11 a year and as has been pointed out, smart meters will need replacing when they reach end of life – another £400 a pop?

“Another £400 pound a pop” – at approx every 10 years for ever!

In today’s Which? news there is what I think is a well put-together piece on smart meters by Amelia Wade.
https://www.which.co.uk/news/2019/04/your-smart-meter-questions-answered/

One criticism is the link to “smart meters might cost us money due to the cost of the roll-out.”. The guide https://www.which.co.uk/reviews/smart-meters/article/smart-meters-explained/what-is-a-smart-meter#money says the potential saving is £47 a year, now discredited I believe and the claim is in fact it is likely to be £11 a year. Even more costly.

This illustrates the need for all Which? publications online to be dated. I couldn’t see a date on this one. Did I miss it 🙁

The article is dated – 4 Apr 2019

Which? response to latest BEIS smart meter installation statistics
30 May 2019
Natalie Hitchins, Which? Head of Home Products and Services, said:

“It’s disappointing that the industry continues to drag its heels when it comes to smart meter installations.

This seems to ignore the fact that while the consumer is paying around £400 per smart meter the payback (their usefulness is reckoned as, at best, £11 a year). They are not cost effective so why promote them?

Kevin says:
30 May 2019

The real benefit accrues to the grid through better management, arguably a community/social benefit through improved reliability and efficiency.

The risk is that this will be swallowed up by better returns to the Energy company executives through generous bonuses, and possibly to shareholders if the CEO is feeling generous that day.

The initial risk and cost will fall on the consumer, with a longer term cost through the surge pricing which will inevitably result once the infrastructure is in place.

Grid management is the principal benefit (including the ability to selectively shed load) and charging by half hourly tariffs. How many consumers are likely to reap any benefit from that is debatable. The problem I have is the way in which smart meters are promoted – as directly saving the consumer money and therefore they should accept the cost as worthwhile. We should be honest about the benefits.

We had smart meters fitted and our electricity readings have increased between 50 and 100%. We have daily readings going back a few years so we have some evidence of increased readings. We also have solar panels so we can see what that generates too.

We had an electrician check the wiring, it’s OK.

We called various departments in British Gas, keep getting passed round from department who maybe able to help to those who really can’t. They can see our bills have increased but can’t tell why. We haven’t had new equipment installed or changed how we use what we do have. Heating, water and cooking is gas except electric shower.

There are cases of the output from solar panels being registered as usage; have you had this checked?