Government Smart Meter Benefits Called Into Question

Despite government plans to spend £11.7 billion folling out smart meters to every home and office in the UK, the project’s cost may over-run, and it may fail to deliver the expected benefits, an influential committee has warned.

The Public Accounts Committee of MPs, which scrutinises publis spending, will praise the plans, but will also warn that  the government mneeds to provide fuirther evidence that smart meters will really bring benefits to householders and business owners.

Supplier Suspicion

The government wants to see 53 million smart meters installed by 2019, starting from next year, but the Committee appears to be unsatisfied that the cost of the project will not exceed its budget, nor will there be an “effective education campaign” that will outline the benefits.

“Consumers will benefit from smart meters only if they understand the opportunity to reduce their energy bills and change their behaviour,” said Margaret Hodge MP, Chair of the Committee of Public Accounts. “So far the evidence on whether they will do so has been inconclusive. Otherwise, the only people who will benefit are the energy suppliers.”

Hodge warned that  a lack of public confidence in the energy suppliers who will carry out the project, could also harm its prospects, with no system in place to ensure that the savings made by suppliers will be passed on to the customer.

“The government is relying on competition in the market to drive down prices,” she added. “But, as has been previously reported by Ofgem, the energy market does not currently operate as an effective competitive market.”

Not so smart?

The report says that the Department of Energy and Climate Change (DECC) should instigate an effective communications programme to promote the meters’ benefits and ensure that people are using them to reduce their energy usage. It adds that the DECC should also conduct trials to identify the risks of such an expensive and ambitious project.

Finally, Hodge warns thate there is a possibility that some poorer households could find that the cost of installing the meters outweighs the potential savings to be made through their use.

“The department should set out how it intends to ensure vulnerable and low income consumers do not miss out on the benefits from smart metering,” she said.

The government first outlined its plans for the project in July 2010, with analysts predicting that the adoption of smart meters in Europe would reach 52 percent by 2016 as households seek to reduce their demand for energy in the face of increasing costs.

However, there have been claims that these smart meters could be successfully attacked by hackers and that the government and the industry had rushed to develop the technology without considering all of the possible security issues.