By 2020, the Government wants every household in the UK to have smart meters for gas and electricity. At a time when bills are spiralling up, smart meters and the in-home displays that come with them should help people think about how much energy they are using and whether they can cut down.
With energy prices consistently the top financial worry for consumers, moves to help people save energy are welcome - but not at any cost. Starting at the end of 2015, and coming in at an expected £10.9 billion, consumers will pick up the tab for smart meters yet the costs are not capped.
Without immediate action we fear the final bill is in danger of spiralling out of control. That is why Which? has today written to Energy Secretary, Ed Davey, calling on the Government to reduce the cost of the smart meter roll-out and ensure it provides the maximum value for money to consumers.
As part of our Fix the Big Six campaign, we have identified three measures to reduce costs.
First, we want consideration of centralised procurement of the new meters. One of the biggest smart meter programme costs is the meters themselves, yet currently each supplier has its own purchasing plan, with no central assistance. We believe the Government should urgently assess the benefits of a more co-ordinated approach to drive down costs.
Secondly, we want to see a co-ordinated and more efficient approach to the purchase and installation of the infrastructure to support smart meters in multi-occupancy buildings such as flats or high-rise buildings. Without central co-ordination, there could be installation visits from multiple suppliers or incompatible equipment installed meaning an unnecessary duplication of equipment and effort.
Finally, suppliers are being required to take 'all reasonable steps' to install smart meters in all homes by 2020, but there is no guidance as to what that means in practice. This is causing uncertainty among some suppliers which could lead to inconsistent approaches. We are calling on the Government to conduct a cost-benefit analysis of installing in difficult properties and work with Ofgem to define guidance for suppliers so they are not required to install in some homes at disproportionate cost.
The Government says that competition between suppliers will keep down the cost of smart meters, but with the energy market undergoing a full scale investigation by the Competition and Markets Authority, we're not convinced. It seems wildly unrealistic to expect competition alone to keep costs under control, and consumers can little afford the risk to be taken for them.
We believe it is possible to keep energy costs under control for consumers but this will take major reforms and a restoration of trust in the broken energy market. Installing smart meters in every home by 2020 is an ambitious target. But at a time when energy bills continue to squeeze household budgets, the Government must urgently get to grips with its smart meter programme to ensure UK consumers get value for their money.