Smart meter installation programme could cost energy bill payers an extra £1.8 billion
The governmentís initiative to have smart meters installed in every household in the UK by 2020 may ironically end up costing bill payers an extra £1.8 billion on their energy, three of the countryís largest providers have warned.
Energy Giants EDF, Scottish Power and Npower have all emphatically identified that the costs of sending people out and installing the new meters could potentially add more to consumer energy bills than the savings that the meters will bring, and have called for the government to evaluate the merits of the monumental £12 billion rollout scheme.
The government had previously claimed that bill payers would see a substantial reduction in the costs of their bills with the installation of the meters as they automatically take accurate readings that are transmitted to providers for fairer billing. Furthermore, the meters enable users to monitor their usage in real-time, which is hoped will help them to save money by prompting them to reduce their usage when live readings are particularly high.
However, the announcement that consumer bill costs will increase due to the current nature of the installation programme has prompted EDF to call for a full review of it in a move that they believe could save bill payers up to £1.8 billion. EDF have identified that scaling down the programme so that 80% rather than 100% of households have smart meters installed by 2020 would ensure greater savings for those who acquire them, and have argued that the current initiative is too ambitious and financially burdening for providers to deliver on at the present time.
In an isolated study of the meters in London, EDF found that only 15% of the sample actually wished for a smart meter to be set up. The impact of this was that the first 80% of households acquired a meter for £70 each, but that the final 20% had to pay a far larger £120, due to the fact that they were uninterested and hard to get into contact with.
And the energy giant have argued that re-designing the initiative so that meter readings could be read online or through mobile apps would be a far better way of saving consumers money than charging them up to £40 each time for having the live reading panel set up in their homes.
This view has been shared by EDFís energy counterparts Scottish Power and Npower, who have cited that undertaking a review of the installation programme could dramatically decrease the costs of obtaining a smart meter for customers.
Simon Stacey, director of Npower said: ìThe Smart programme is an essential one, but we need to always look to keep its cost down because this cost is ultimately borne by the consumer.
"Now that we finally have clear guidance of the technology platform that is to be used, we need a more flexible deployment model that allows for current and future technologies to keep costs down.î
ë£12 billion luxury that cannot currently be affordedí
Another of the countryís so called ëbig sixí, British Gas, have been one of the most involved suppliers in the ongoing smart meter programme, and are thought to have set up over 1 million in the past few years for customers to use.
However, it is believed that a monumental 600,000 of these will have to be re-installed as they are not advanced enough under current rules, and British Gas are privately thought to be in favour of switching live meter displays with a mobile or online alternative.
Nevertheless, the company has issued its full support for the current campaign, and have pledged to carry on installing smart meters until a viable alternative is formulated.
A spokesperson said: ìBritish Gas continues to fully support the roll-out of smart meters. The in-home display plays a crucial role in giving people, for the first time, a clear and real-time understanding of how theyíre using their energy and encouraging greater engagement."
However, the chief executive of customer franchise Which?, has urged the government to freeze the current campaign until changes are made to make it more cost effective, arguing that it is ì a £12 billion luxury we cannot currently affordî.
Richard Lloyd said: "With energy prices one of the top financial concerns for consumers, the Government needs to keep a tight rein on the smart meter roll out so that the £12bn cost doesn't spiral out of control. Relying on competition to keep costs in check is simply not credible when it is clear that competition in energy is failing."
However, the effectiveness of the live meter panels have been defended by the Department for Energy and Climate Change, who have said that they will help bring an end to unfair bills, and will help people use their energy more efficiently and prudently.
A spokesman for the Department of Energy and Climate Change said: ìSmart meters will put consumers in control of their energy use, bringing an end to estimated bills and helping people to save money and switch supplier.
ìThe Government's vision is for every home and smaller business in Great Britain to have smart electricity and gas meters by 2020. Energy suppliers have the job of installing smart meters in peopleís homes, but it is the benefits to individual consumers that are our focus.î
The fate of the current smart meter installation programme is well in the balance at the moment, and there will likely be a number of meetings between energy companies and the government in the next few months in order to ascertain the best course of action.
The big question will be whether a live reading panel is necessary to install in homes, with the £40 per head cost potentially being eradicated by a new plan that involves mobile and online reading monitoring.
The merits of the meters are clear for everyone to see, but whether there extensive costs are necessary during a time where energy bills are so far in the media spotlight is yet to be seen indeed.
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