Smart meter roll-out - MPs report

26 July 2013

Smart meters have the potential to bring great benefits to consumers, suppliers and the UK energy infrastructure more widely, but roll-out must be managed carefully if all these benefits are to be achieved and costs are to be kept under control. Consumers must get accurate, real-time billing data from their smart meter as soon as possible after it is installed if they are to gain the savings projected by DECC.

Sir Robert Smith MP, on behalf of the Energy and Climate Change Committee, commented:  

“We support the Government’s ambitious roll-out programme, but there are several key issues that must be addressed to ensure the scheme is a success.

The benefit of smart meters arises through their ability to provide more information to both consumers and suppliers.  For them to generate their expected benefits consumers must actively and positively engage with them, and there are several steps that DECC and Ofgem should take to ensure this.  First, it is crucial that the aims and potential benefits of roll-out are clear and that public concerns about smart meters are addressed. We welcome the action that DECC is taking to respond to the concerns that have been raised about health, data protection and privacy, and we urge it to outline what further action it will take to address such concerns. 

Secondly, positive consumer interaction with smart meters will be aided by the use of In-Home Displays (IHDs). The accurate, real-time consumption and billing data provided by IHDs is expected to help consumers to understand, reduce and alter their energy consumption habits. Thus, we think that households and small businesses should be offered free IHDs. We also welcome the growth in other applications that will allow consumers to manage their energy use.

Thirdly, it is important that the first experience consumers have with smart meters is positive.  As such we believe smart meters should only be installed when versions are available that give the best consumer experience and when the necessary communications coverage is available. It is better to delay installation until consumers can have smart meters that they can engage with straight away rather than risk alienating consumers with initial installation of ‘dumb’ meters.

In addition to making switching between suppliers easier and providing more accurate bills, smart meters may play a critical role in facilitating a smart grid that will help to deliver a secure, affordable and low-carbon energy system.  Smart grids have the potential to use ‘demand side response’ to smooth out peaks and troughs in electricity supply and demand by encouraging consumers to use less electricity during peak demand times.  Not enough has been done to quantify the benefits of a smart grid or the role of smart meters in facilitating a smart grid.

Finally, DECC and Ofgem must ensure that costs do not spiral.  The roll-out of smart meters will be expensive – DECC estimates it will cost around £12.1 billion – and smart meters are expected to achieve savings in the order of £18.8 billion.  If UK consumers and businesses are to see the £6.7 billion benefit, DECC and Ofgem must retain responsibility for ensuring that costs are kept under control until there is sufficient competition in the market to do this.

Sir Robert added

We welcome the decision to push back the timetable for roll-out, and we hope that future timescales will be driven by engineering and infrastructure requirements. There is now a welcome opportunity to ensure that public engagement strategies are well under way before mass roll-out begins and that a range of messengers, including charities, local authorities and other trusted third parties, will be involved.

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