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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

I moved into a house with smart meters in 2016 and switched supplier late in 2017, when my contract ended. The smart meters and display were changed shortly after because the ones installed by e.on were not compatible with the system used by Ovo. The contractor told me that the new meters would be compatible with the new standard but old meters were still being installed on behalf of energy companies.

The deadline for ending installation of old-style (SMETS1) smart meters has been extended until October 2018, so meters that may lose functionality when switching supplier will continue to be installed for the time being and replacement will increase the bills of every customer, including those struggling to pay their bills. https://utilityweek.co.uk/beis-extends-installation-deadline-smets1/

Why has Which? not looked at this issue before? The linked report pays more attention to the smart meter roll out meeting the deadline than the increased costs that continuing to install obsolescent smart meters will affect the consumer. Is Which? still representing the consumer or moving to disseminate information on behalf of government?

There is still the chance for Which? to oppose the switch-off of FM radio on behalf of the majority of consumers who use it.

As is often the case, the Government launched an “initiative” without a proper understanding of what they were doing and without control of the costs involved.

I don’t doubt the potential benefits of smart meters,“. On the basis of them making cost savings, as originally envisaged, by us looking at what energy we use, I do doubt this. Most people cannot even be bothered to change from an expensive tariff, so how likely are they to continually monitor their meter, day in day out, analyse what energy is being used, work out where it is being used, and then plan a strategy to use less?

The only “advantages” I can see for smart meters are 1. eliminating manual meter readings (so jobs lost) and 2. variable charging will be applied when half-hourly settlement is imposed on domestic consumers. What the latter means is that at peak times you will be charged a lot more for your energy than off peak (meal times vs. middle of the night, for example) So if you do cook, wash and heat when most other people do it you could see a substantial increase in your bills. Will you then be able to organise your life to use energy when it is “off peak”? You don’t want to leave some appliances unattended while you sleep and you may like to have meals at the same civilised times as others. So I wonder whether “smart” meters might be a “smart” way to improve profits? Maybe it is the consumer who will “smart”.

I’m in a cynical mood today, but an intro like this does not fill me with much faith in the competence of this country’s governments, past and present.

This is a distorted case I make, I accept, but worth looking at what smart meters really mean for us. I’d rather they spent the money on upgrading the insulation of homes so we would actually need to use less energy. But that would have been too simple perhaps.

Brian Witcombe says:
17 March 2018

I totally agree; you are not being cynical, you are being realistic. I certainly will not have a smart meter until they force it on me.
As for the time schedule,my neighbour had a SM installed 2 days ago; the installer (e.on) was here the whole afternoon (at least) and I overheard the supervisor apologising for the time it had taken, the loss of power meantime, and giving a number to call in case of problems. So much for the installation timetable!

Wow, shame on Which? for allowing Labour propaganda here.

Smart meters were introduced by the then Labour Energy Secretary Ed Miliband when Labour were in government, so a Labour minister trying to score brownie points on Which? by holding the current government to account over them is unacceptable here.

The roll-out cost of a reported £11billion that could save households an average of £47 a year (12 pence a day) in 12 years’ time is a joke.

When our other vital services need funding, spending billions on technology that will be out of date in 5-10 years is scandalous. Who will foot the bill for all the replacements? Who pays when they malfunction?

I think my honourable friend is mostly muttering darkly about DCC – of whom I’d not heard, so I investigated…

“The Department of Business, Energy and Industrial Strategy (BEIS) formerly known as DECC granted Smart DCC Ltd a licence in September 2013 to establish and manage the data and communications network to connect smart meters to the business systems of energy suppliers, network operators and other authorised service users of the network.

Smart DCC Ltd is a wholly owned subsidiary of Capita plc.”

so while I don’t doubt the honourable gentleman is attempting to score tawny points, that to which he doth object was not a labour initiative as and of itself.

As for the roll out in principle, we’ve had ours changed back to a normal meter. Governments of any shade seem to know nothing at all about computers and the internet and should really steer clear of both. Capita in particular has a long and dishonourable reputation. which is highlighted repeatedly by Private Eye.

And the MAYBE cost savings today are £11/annum, as confirmed by the Government in December last, so thats less than 3&1/2 pence per day.
How much time is each customer supposed to spend looking at the monitor to be able to decide what to do to MAYBE save this piddling amount when the unit of electricity costs well over 12p/kw?

And are we to deduce from all of this that in 12 years time energy costs will ahev rissen by 427%?

The few people I know that have these smart meters never bothered looking at them or have just stuck them in a cupboard out of the way.

Consumers are not going to sit looking at a digital display to see how much energy they are using to work out how much they can save, if it is cold the heating goes on and when it is warm the heating is turned down or off, when it is dark in a room you enter you put the light on and when you leave you switch it off.

All this isn’t rocket science and a smart meter won’t make any difference, the only people who will benefit are the meter suppliers and the energy supplier who will find it financially rewarding to their profits as they employ less people for meter reading and easily increase the tariffs remotely from their computer systems.

This is going to be a completely unnecessary very expensive mess which will cost the consumer dearly as usual, and the people responsible for all this will come out with all sorts of excuses to justify their incompetence.

Do people look at their old type meters to check what has been used many do not even send meter readings even when they agreed to just to get a cost reduction They accept estimated bills without complaint With smart meters no more estimated bills no more meter reader unable to gain entry to read meters There are both advantages and some disadvantages Usually the one who do not want the are the ones who want everything just to remain as they are now and will then find themselves living in the past although some parts of living in the past are worthwhile to keep and should be kept

Phil says:
14 March 2018

A recent Which? article confirmed that once the novelty wore off, usually under a year, consumers stopped looking at the monitor. A friend whose meters are in a box on the outside wall has to take his monitor into the basement and stand close to the inside of the wall.

RogerS says:
17 March 2018

We had a smart meter installed a few days prior to Christmas (2017), quite frankly, it’s not made a blind bit of difference to the way that we use energy. We have always been careful with energy use, having previously lived for many years with oil fired heating where prices fluctuated alarmingly and you could see changes in the amount remaining in the tank.
We did however observe the smart meter during the first few days to see the colours change and usage alter as appliances were switched on and off, I did suggest to my wife that see puts clothes to be ironed on the floor and roll on then and we could put a candle under the saucepan today for next weeks dinner, the reply was not very polite!!!!!

Sue Cox says:
19 March 2018

We check our meter reading every Sunday to keep track of weekly use. I’m sure we’re not the only ones who are sensible enough to monitor usage and we certainly don’t need an expensive ‘smart’ meter to do it for us!

I think it’s a great way for meter suppliers to make money but put simply it’s too fast and too soon. Issues such as compatibility when changing suppliers, safety of installation in a small number of cases and future proofing (what happens as WiFi standards improve backwards compatibility is not guaranteed) have been addressed. Until then I will only switch when forced to.

the choice is yours ! With smart meters nothing is forced upon you not like some other things?

The article reads like you’re surprised this has been a shambles. I knew it would be. And I’ve been paying a higher bill every month for the privilege of it being a shambles. And as to cost savings. I really don’t see it. Should I be estimating the cost for me doing my own meter readings, I’m just glad I only charge in chunks of a day regardless of how much time it took. And I use the fees my old company would charge me out at, without adjusting for inflation (maybe I should) . Cos on that basis I’d be saving £1500 a month, not bad for 5 mins work. I just wish I knew where the money went ?

I’m just waiting for the huge refund I’ll be due for paying (without choice) into this poorly thought thru, badly managed project, for the R&D, training and roll out.

And don’t get me started on OFGEM I have zero faith in them, as they’re allowing price rises by stealth in the way they’re allowing companies to quote fictitious savings when doing a comparison. How can I save £170 a year when standing charges and unit prices for both gas and leccy as higher than I’m currently paying, And yes, they’re being allowed to quote that saving. These will affect everyone not already on a standard variable tariff.

Maybe Which? should shine a light on that little gem next.

To be honest 1) personally i don’t see most households changing their habits and friends who have these meters say meters are saying ‘the only things you really notice any benefit, were all pretty much clued up and turn things off as it is… you tend to watch how often you put the kettle on but otherwise…. useless. as for me, with led lights, turning things off rather than standby etc. one would not benefit me at all. 2) hidden costs concern me and the ability to ‘cut off’ someone’s supply just like that is unacceptable ( what charges involved there?) 3) can see people who don’t have them being put on higher tariffs as a punishment after 2020. 4) why are they not all ‘universal’? now its this works with this company but not that? WHY that’s no only ruddy stupid but unacceptable, and no valid excuse for it being so.
As with most things these days, its looking more and more like a scam to rob the people to make profits for the companies and with fewer controls to safe guard people or prices, I’m looking to change provider now and the different tariffs are ridiculous, one company has 15+ with 10 different standing charges from £62 to £84 per month, would seem between juggling kwh and standing charges the companies are being ‘creative’ and no real saving to be had… so smart meters will give them even more power ….. NO THANK YOU

So is their only real use the ability to introduce charging for energy at different rates every half hour – high prices at peak times, lower off peak?

Since the later smart meter displays show the actual daily expenditure, smart meters could help those who live in fear of the next bill. I would have been happier if they were offered to those who were struggling to make ends meet. Many of us are perfectly capable of reading meters and submitting readings.

I wonder if current smart meters are capable of coping with variable rate charging or whether that would require yet another generation of smart meters.

People will still need to heat their homes and cook, whatever their display shows them. Perhaps much better if the money (£11bn and climbing) had helped them insulate their homes so they did not have to use so much energy in the first place.

If smart meters had been given only to those who are struggling to make ends meet, more money would be available to help insulate homes.

Or without smart meters at all, even more money might have been available to help with insulation and promoting good behaviours for avoiding excessive energy consumption.

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Colin says:
12 March 2018

Yes I do want to know how much smart meters are costing me, especially as I am never having one, because I recognise it for the (at best) pointless nonsense that it is. But I know I am obviously paying for everyone who thinks they need one.

I should like to thank Steve McCabe for bringing this Conversation to us and shedding some light on the background issues that have not been raised previously in our Conversations.

The incompatibility of meters between different suppliers’ systems, the opportunity to adjust the tariffs through time bands, the lack of popular demand for smart meters, and the doubts about their value, have all been raised before so it is interesting to see that there has been virtually no progress on resolving these issues; in fact some of them have got worse.

I am not concerned over whether the roll-out will be completed within the artificial timetable set by the government. The important thing is to ensure that all those customers who do want one can have one within a short period.

The spiralling costs of this programme are a major concern. We criticise the cost of aircraft carriers or war planes or high-speed railways yet we can say good-bye to many billions on this project with highly dubious returns and a real risk that it will be used by the industry to milk consumers while having little effect on consumption.

I strongly support Malcolm’s and Wavechange’s call for investment in insulation and other strategic energy efficiency measures. We have been saying this for years to no avail, probably because it is regarded as ‘too difficult’. Nothing is too difficult if there is the will to do it. I would hazard a guess that much less energy is wasted in the domestic sector than in the commercial sector where it actually feeds directly into inflation and the price of goods and services [and at a higher level too because commercial tariffs are higher than domestic ones].

There is no requirement for anyone to accept a smart meter: https://www.which.co.uk/consumer-rights/advice/do-i-have-to-accept-a-smart-meter Has anyone seen this mentioned in advertising or is it conveniently forgotten?

I certainly have not seen any reference to the option of abstaining; indeed the emphasis seems to be all on “we are in your area installing smart meters – book your appointment now”, or ‘get your smart meter installed now before the winter season”.

The government and the industry seem to be obsessed with a timetable that has now been proved to be totally unachievable.

I notice that the Gaz and Leccy advertising campaign seems to have come to a halt; perhaps it wasn’t working and was costing more than it’s worth. I have an awful fear that if consumers don’t apply for smart meters at the required then some form of compulsion will be introduced; indeed, voluntary installation might already have peaked.

I’m very glad that the article is on the Which? website but it’s undated and I have no idea how long it has been available. 🙁

John, they are optional.

When contacted recently by Scottish Power, they did make it clear that I could opt out of having smart meters installed.

As the current meters may impede switching suppliers, I decided to opt out.

Thank you, Malcolm – I know that and pointed it out a long time ago, but who is to say that the government won’t change the rules as the deadline approaches if the uptake has been inadequate?

The government is putting heavy pressure on the suppliers to push the roll-out because it can see policy failure looming with a lot of cost and little to show for it. While the deadline is not absolutely critical there is a risk that technological change will overtake the programme and mean they will have to start all over again.

We inherited a smart electricity meter which had been installed by E.On and the developer before we bought our new house five years ago. I have never used the monitor and I supply my own readings. We have never been approached about installing a smart meter for gas which is actually the more significant fuel as our electricity consumption is relatively low.

Although we blame government I believe it is the EU who require us to have them gradually installed. Perhaps we could stop if Brexit happens? As usual we seem to be doing it rather badly, if this article is to be believed. Why do we have such incompetent administrators?

Although the European Union in its Third Electricity Package committed member states to an (electrical) smart meter roll out target of 80% by 2020, actual installation in Europe is proceeding in fits and starts, beset by doubts over the most future-proof solutions, fitness-for-purpose concerns, the right approach to using big data, and an unexpectedly cautious (not to say suspicious) reaction from householders.
…….
Slow in the UK
In the UK the problems have been weak policy, and customer disengagement. The well-known economics analyst Dieter Helm neatly summed up the situation in his March 2017 paper ‘Not so smart – what has gone wrong with the smart meter programme and how to fix it’.

In it, he says: ‘The smart meter programme started out as a good idea, but has been badly implemented … with hard targets and overhyped claims about the benefits. £11 bn costs are supposed to produce £18 bn in benefits, and be paid for by the lucky customers who are assumed to get all these benefits………….

‘It has not turned out as planned………………

‘It was decided that smart meters would be the responsibility of supply companies, not distributors. This was a fundamental mistake, which no other major European country made……………….

http://www.modernpowersystems.com/features/featureeuropean-smart-metering-rollout-progresses-slowly-5886908/

EU control ? one of the reasons we have to leave All decisions are make by a computer ,computers have no common sense so mistakes are made only to be rectified when a human uses common sense to see what is wrong

If they go on making Dr Who, I guess we can look forward to an episode in which, after being taken over by enemy aliens, all the smart meters turn on us, requiring the Doctor to leap in at the last minute and save the day.

It is a fundamental law that there is no policy or action that government intervention cannot make worse.

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Alan. S says:
17 March 2018

I have very little faith in authorities.
I do not want a ‘smart meter’ as they are only good for the supplier not the consumer.
I do not have a water meter simply because I do not trust the water company to charge me less than their standard charge.
They all tell me that these meters will save my money but if as expected it costs me more with the meters they do not offer to refund the difference to me.

I’m opposed to government and energy suppliers pushing us to have smart meters but perhaps it is worth looking at how these meters can benefit some customers.

Conventional meters are sometimes in awkward places to read, such as under the stairs or in the garden, just above ground level. That’s not much fun if you are old and arthritic and maybe have poor eyesight.

Many are concerned about what their energy bills will be because they have to budget so that they can pay quarterly bills. Some have even requested pre-payment meters, even though this has traditionally been a more expensive way of paying for energy. While some of us can do simple calculations to work out costs from meter readings and standing charges, I guess we are in the minority.

Smart meters and a smart display make it all so simple. Inspecting my display I can see that yesterday’s cost were £3.50 and I can see cumulative costs for gas and electricity. Had smart meters not been installed in my home I would have rejected offers to fit them, as I did in my previous home, on the basis that I was happy to take my own meter readings at the start of each month.

Are they worth us spending £11bn – and more? A recent article http://www.thisismoney.co.uk/money/bills/article-5442371/The-9bn-extra-cost-smart-meters.html
suggest the roll out will in fact cost nearer £20bn. Assuming there are 29 million households in the UK that is over £700 each. The predicted savings – that assume we use the meters to reduce our energy consumption, a very shaky assumption – are £11 in 2020, £47 in 2030 – an average of £29 a year. so it will take 25 years at the very least to see any pay back. Putting loft insulation in a terraced house will really save energy and pay back in 2-3 years. Topping up your existing insulation will also save energy, and money, particularly if you lay it yourself (or friend or family).

Meters in my house are in easy-to-reach places as are the rest of my families and acquaintances.

I’d like to be convinced that knowing how much you spent yesterday on energy will affect how much you spend today, and how you reduce it – unless you turn down the heating, don’t cook, leave washing till tomorrow (when you’ll pay for it), for example. I just questioning the premise that people will somehow juggle their usage to keep control of their energy bill. Perhaps some independent research shows this?

It returns to two/three advantages that I can see
– automatic meter reading so you should get no more estimated bills (but if your usage increases so will your direct debit)
– the means to charge you for how much you use at different times of the day – half hourly charging. It is coming and means the energy you use at peak times will cost you more than that used off peak. I wonder how many consumers will be able to optimise their usage to minimise their peak time usage? Or will it just mean higher bills for many? I wonder, again, what research might tell us.
– a possible third is that it can be possible to selectively disconnect consumers when an unusual demand occurs for electricity that is beyond the system capacity. This would mean that vulnerable customers who depend upon electricity – users of home medical equipment for example – could be selectively left connected.

Your figures or perhaps I should say industry/government figures assume the same meters will still be in use in 2030 which is highly unlikely malcolm, so the predicted costs and savings will actually be much worse.

I agree that the meters will have to be changed, in fact probably every 10 years. The cost of the changes will be a continuous burden on the consumer.

I would like to see the utilities pay for the installation and NOT the consumer!

You’re just making it worse, alfa 🙁 I wonder who really is making the money out of this.
I don’t know what credence to attach to this publication but if true, smart meters are a profit-earner in their own right:
Energy salesmen are being offered commissions of up to £50,000 a year to convince homeowners to install smart energy meters.

Read more: http://www.thisismoney.co.uk/money/news/article-5331729/The-doorstep-salesmen-paid-flog-smart-meter.html#ixzz59cjopIIU
Follow us: @MailOnline on Twitter | DailyMail on Facebook

In another Convo last year (sorry, can’t find it for now) I did post that one of the smaller energy companies had sold its smart meter portfolio to a company that specialised in supplying and maintaining them for, from memory, £30-40 million, a sale that formed the major proportion of its profits. So there is clearly money in them – but probably not for consumers.

daver22, the trouble is, the consumer will repay the utilities.

As the aim is to install 53 million meters, and maybe 9 million seem to have been installed so far, there must be a ruddy great mountain of them piled up somewhere.

I have tried to find out who has the contract(s) to supply them but that info is staying well hidden.

But with the installation cost per meter so high, money is being made out of them somewhere.

We might be able to choose whether or not to have a smart meter, but I bet if we needed a new one, the only ones available will be the smart ones.

I understand that companies can contract out the work in the same way that they do with routine meter replacement. Here is one example: https://www.businessgreen.com/bg/news/2442123/smart-metering-systems-bags-five-smart-meter-contracts

After I switched supplier a local chap arrived to replace my smart meters that were not compliant with my new supplier’s equipment.

Alan. S says:
17 March 2018

I hate to burst your bubble but where do you think the utilities get their money from ?
All companies get their money from the person who buys their goods and that is the consumer. The only exception to this is the Government who get money from taxpayers even if the taxpayer does not want to buy what they offer.

Does anyone know how much the advertising of smart meters has cost? I do my best to avoid adverts but I have seen more than enough of them.

SMART METERS ! My wife is our Smart meter ! SWITCH THAT LIGHT OFF IF YOU ARE NOT IN THE ROOM!!!

Phil says:
14 March 2018

The biggest savings will be made by the energy suppliers. They are under no obligation to pass these savings on to consumers.

I have no wish to have a smart meter. It is sold as a way to save (consumers) money. This is a falsehood as the mechanism for this ‘saving’ is that you can more easily see the cost of what is being used in real time. All this information is already available, by simply checking meter readings and being aware for example that items consuming power for heat are far more energy-hungry than those that merely provide light. Common sense says if you are not using something turn it off, and only turn it on when you need it.

The falsehood is compounded by claiming that savings will come from no more estimated bills (which in truth can underestimate as well as overestimate bills). Again this can be eradicated by providing power companies with regular actual customer readings.

So the claims for customer savings are at the least disingenuous. Smart meters will save the power companies money as they no longer need an army of meter readers which have to be paid. I see no reference to this saving being passed on to consumers.

Existing smart meters (1st generation) installed in many cases lose their ‘smart’ functionality when the consumer switches suppliers (something we are constantly encouraged to do). This has been known for sometime but in many cases 1st generation smart meters are still being installed. For the system to work as envisaged these 1st generation installations will have to be replaced by 2nd generation meters – a further fillip to what is already a very expensive project. In some cases smart meter installation is a bar to switching (a fair restraints of trade?)

The costs of all this fall to the consumer who has no control over the costs, is mis-sold the benefits and is in many cases less free to access the market than they were before. Such benefits as may exist fall to the energy companies. This is the economics of the madhouse.

It is not just GAS & ELECTRICITY suppliers that they are trying to roll out Smart Meters. Do not forget that the suppliers of your water and sewage disposal are also starting to compulsory fit smart meters, I have had a letter from my supplier Affinity Water.

Colin says:
17 March 2018

They are NOT compulsory in the UK. I suggest report them to Ofgem.