Energy firms and the Department for Energy and Climate Change (Decc) are not ready to implement the £11.7bn programme to install smart meters in the UK’s 53M homes, MPs said today.
The Public Accounts Committee report Preparations for the roll-out of smart meters said there are concerns over the way the programme has been planned and that the committee does not share Decc’s “optimism” that costs will be kept under control.
Under European Directives, all member states are required to install smart meters to at least 80% of domestic electricity users by 2020. Prior to the smart meter roll-out, which is due to take place between 2014 and 2019, the IT framework must be in place which could cost up to £3bn.
MPs are also concerned that there is “no transparent mechanism” to ensure savings to the energy supplier are passed back onto the customer. Decc insists that energy suppliers are best placed to install the smart meters and competition between them will return the savings back to the consumer, but “past performance” suggest “competition does not work effectively” in this market, says the report
Report’s conclusions and recommendations
- Consumers will have to pay energy suppliers for the costs of installing smart meters through their energy bills, but many of the benefits will pass in the first instance to the energy suppliers.
- The benefits of smart meters can only be fully realised if there is widespread takeup and consumers use them to reduce their energy bills, yet the role of suppliers in helping to achieve this remains undefined.
- The benefits from smart meters may not reach vulnerable consumers, those on low incomes and those who use prepayment meters.
- Trials so far have been inconclusive about consumers’ willingness to cooperate with the installation process and to use smart meters to reduce their energy consumption.
- The data communications service required to link smart meters to suppliers is a complex IT project that may cost as much as £3bn.
- Decc and energy suppliers face significant challenges to install smart meters in every home in the country.