Smart meters set to cost households £215 in return for minor savings

A key peg in Government plans to help reduce soaring domestic energy bills is set to cost consumers more than they save, and land many with costly out of date technology, MPs have warned.

In a damning report published today, the Public Accounts Committee warns that the mass roll-out of smart meters due to begin next year will cost consumers £10.6bn by the time it is due to be completed in 2020.

“The costs of installing 53m smart meters will be borne by consumers,” said Margaret Hodge, who chairs the Committee. “It will cost around £215 per home or small business over the next five years – an additional cost people can ill-afford.” She said that despite consumers footing the bill, they will on average save just two per cent on the average energy bill by the completion of the project.

Even those savings will be conditional on people changing their behaviour and reducing their home energy use, she said. The Committee said that the Government is relying too much on its hope that consumers will become more savvy and therefore save cash through using smart meters. It also warned that the process puts too much reliance on the energy giants, which have consistently let consumers down in the past.

“The Department of Energy and Climate Change is depending heavily on assumed competition in the energy industry to control costs and deliver benefits. But relying on market forces to keep costs down may not be enough on its own to protect consumers,” said Ms Hodge. “It is something energy companies don’t have a great track record on.”

The committee also said that evolving technology could soon make smart meters redundant with people receiving real-time energy use information on their mobile phones instead. “Consumers will have to pay for smart meters even though they might already be out of date,” Ms Hodge said.

The smart meter roll-out is a key part of the Government’s attempts to tackle the problem of soaring consumer energy bills.

Responding to the criticism in the PAC report, Under Secretary for Energy and Climate Change, Baroness Verma said: “Smart meters put power into the hands of consumers, bringing an end to estimated billing and helping people understand their energy use.

“The nationwide roll-out is part of the Government’s complete overhaul of the UK’s energy infrastructure which will revolutionise the market and support the development of smarter electricity grids. It will help reduce consumer bills, enable faster, easier switching and give households control at the touch of a button.”

Her message was underlined by the energy watchdog Ofgem, which said: “Smart meters will give consumers much greater visibility and control over their energy use and help customers engage far more in the energy market. “They also create opportunities for innovative new services to be developed. As such, smart meters will help make the market more competitive.”

The watchdog referred the energy market to the Competition and Markets Authority for investigation earlier this year.