Smart meters are only going to save people around two per cent on their bills, but will cost each home or business £215 over five years to roll out, MPs have warned.
The Public Accounts Committee said that the cost of installing 53 million smart meters would be paid for by customers in their energy bills, but they would only be saving a fraction of their annual bills.
Even measly savings of two per cent on the average bill, which would amount to £26 a year, would only be possible if consumers changed their behaviour based on what the smart meters were telling them.
The MPs are also concerned that by the time the government finishes rolling out smart meters, they might be obsolete anyway, making the whole thing a complete waste of time and money.
“Evolving technology suggests that customers could receive the information on their smartphones, making the in-home display redundant,” committee chair Margaret Hodge pointed out.
“[But] energy suppliers will be required to offer in-home displays, even though customers may not want or use them. Consumers will have to pay for them even though they might already be out of date.”
The Department of Energy and Climate Change (DECC) has said that using smart meters in homes will make it easier for consumers to switch providers and help people to reduce their energy consumption and switch their usage away from peak times.
But MPs said that the expected savings of £26 per household had to be set against the £10.6bn cost of rolling out the smart meters.
“The Department is depending heavily on assumed competition in the energy industry to control costs and deliver benefits. Relying on market forces to keep costs down may not be enough on its own to protect consumers,” said Hodge.
“This is something energy companies don’t have a great track record on. Ofgem’s referral of the energy market to the Competition and Markets Authority reflected serious concerns about the lack of real competition in the industry.”
The committee said it was particularly worried about the impact on low-income households that were using prepaid meters, since there was no requirement on suppliers to give them prepaid smart meters in the rollout.
“DECC should require suppliers to provide a clear breakdown for consumers of the cost of smart meters, their operational cost savings from stopping meter readings and whether consumers are achieving the expected reductions in energy consumption,” Hodge urged.
“The lack of clarity on the impact of smart meters on vulnerable and low income consumers is particularly concerning. DECC must ensure vulnerable and low income households get the benefits available from smart meters.
“DECC also needs to ensure that smart meters are fully interoperable so that customers can switch easily between suppliers and that suppliers don’t replace meters unnecessarily when customers switch,” she added.
The regulatory framework and infrastructure for smart meters is already in place and the mass rollout of smart meters is expected to start late next year. Energy suppliers will be required, under the terms of their licences, to try to get smart meters into all households and small businesses by the end of 2020.
MPs said that the government needed to keep an eye on both the design and cost of the project to avoid rolling out a service that would prove to be a bad bargain for customers, costing more than it saves and sticking obsolete tech in homes. ®