Smart meters ‘to add £500m to energy bills’

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November 27, 2018
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Consumers are being forced to pay higher energy bills thanks to the cost of installing smart meters – and things could still get worse, according to the spending watchdog.

An investigation by the National Audit Office (NAO) into the £11bn roll-out of the meters has suggested that energy bills could rise by more than £500m in total. It criticised the Government for allowing so many first-generation meters, which can “go dumb” after a switch of supplier, to be installed.

The costs of the roll-out are being added to energy bills and work out at around £374 per dual-fuel household. While there are said to be long-term benefits of having a smart meter, with the annual saving estimated at £18 a year by 2030, the NAO said the roll-out had had a negative impact on consumers’ bills so far.

The watchdog also warned that the savings estimates were based on the current budget for the roll-out. They do not factor in any cost increases if, say, first-generation meters need to be replaced. The Government’s bill-cutting estimates also assume that the industry passes on savings to consumers.

Lily Green of Look After My Bills, a switching service, said: “The smart meter roll-out has been an utter shambles. The endless delays, technical flaws and underestimating of costs to the taxpayer are no way to instill confidence in people that smart meters are a good choice.”

Claire Perry, the energy minister, described the roll-out as “world leading” and said it would bring benefits worth £40bn to consumers and the industry.

Smart meter rollout

Budget for rollout of smart meters – at risk of going over budget and past its deadline
£11bn
Installations still needed to hit 2020 target
40m
Monthly installations needed to meet target
1.3m
Current monthly installation capacity
420,000

Robert Cheesewright of Smart Energy GB, which promotes smart meters, said they were a “vital upgrade” to the national infrastructure. “They are paving the way to lower bills, a more flexible national grid and greener, more sustainable energy. The savings for customers will outweigh the costs and the country will save billions of pounds,” he said.

In another blow to the roll-out, the NAO report found that around 5pc of households, including those in high-rise blocks of flats, would be unable to have switchable smart meters for the foreseeable future.

Second-generation meters that retain their functions after a supplier switch are able to be installed in 70pc of houses. A technical fix expected in the spring will extend this, but even then between 3.5pc and 5pc of properties will be unable to benefit. Work on a solution is under way.

Government sources said the problem is that the network to connect an in-home display to the smart meter’s communication hub is not strong enough for some large blocks of flats, and needs to be extended.

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