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UK consumers could be forced to foot the bill for the government’s planned £11 billion smart meter rollout which may bring savings of just 2 per cent on the average annual bill, the Public Accounts Committee (PAC) has warned.
PAC chair Margaret Hodge warned that consumers could be set to pay £215 per home over the next five years to install the meters because the government is depending “heavily” on its assumption that competition in the energy industry will control costs and deliver benefits.
“Relying on market forces to keep costs down may not be enough on its own to protect consumers,” Hodge warned.
In the PAC report published 10 September she urged the Department of Energy and Climate Change to monitor the progress, costs and benefits during the rollout to identify whether changes could be made to deliver the 53 million smart meters at the lowest cost to consumers.
She added that the government should require suppliers to provide a clear breakdown for consumers of the cost of smart meters, the possible cost savings and whether consumers are achieving the expected reductions in energy consumption.
In addition to implementation costs the government should be aware that technology may evolve between now and the completion of the project which is slated for 2020, the report said.
For example, customers could receive energy use information on their smart phones, making the in-home display redundant, but because energy suppliers will be required to offer in-home displays under government rules consumers may have to pay for them despite not wanting or needing the option.
On September 9 Scottish Power Energy Networks chief executive Frank Mitchell said the rollout could be more efficient and cost-effective if it was handled by the distribution networks rather than the suppliers.
“Every other country worldwide has done that through the distribution networks to get a geographical mass and economy of scale that reduced the cost of implementation [but] the decision was made by Ofgem to put that in the hands of the retailers. I think that’s the wrong decision and will end up costing consumers more,” Mitchell said.
He added: “Ultimately we’ve not learned the lessons from other countries that have deployed this technology ahead of us.”
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