Smart meters could save households at least £23 a year, according to a report published by the Department of Energy and Climate Change.
The smart meter system, usually a small box that sits in the house that sends real-time information to the utility company, monitors energy consumption and collates data for individual houses.
However, concerns have been raised about how customer data will be used. If leaked, the information could put householders at risk of burglary or at least direct mail campaigns.
The UK Government wants smart meters in all homes by 2020, but who sees the collected information and how it is to be used remains unclear.
Frank Hyldmar, executive vice president at Electricity International, Elster, said: "Data privacy is an absolutely critical issue to address in the move towards a smart and sustainable energy society. Smart Grid players need to win consumer’s trust legitimately in order to deliver new services than genuinely help people.”
The information (based on monitored energy consumption) could reveal what time householders get home from work, what time the time they leave, how many people live in the house.
Richard St Clair, Managing Director for Elster Metering Systems UK said: "We must ensure that only authorized parties are granted access to smart meter data, and that this data is encrypted when it is transmitted between the smart meter and the utility. Once transmitted, those responsible for managing that data will also need to be crystal clear on who subsequently will have access to it. For example, billing departments need only a final consumption figure, not a full breakdown of their customer’s usage patterns."
Elster's comments follow Chris Huhne's call for transparent bills that compare similar households to keep costs down.
Richard Postance, an advisory partner at Ernst & Young, said: “The roll out of smart meters in the UK provides a challenge to utility companies to transform their relationship with consumers. The desire of the UK Government to open the energy market to new entrants and the findings of this report should act as a wake up call to the UK’s leading energy firms"
"The companies that aggregate consumer trust, consumption data and energy services are the ones who will win this new opportunity," he said.