The Public Accounts Committee (PAC) is responsible for overseeing government expenditures to ensure that they work in the public interest. The Smart Meter rollout is expected to cost £11.7 billion, and the PAC has published a set of 6 conclusions and recommendations that are summarised at the bottom of this page.

The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said:

“The idea of smart electricity and gas meters is a good one, but [the installation programme] is both challenging and subject to significant uncertainty.

Consumers will benefit from smart meters only if they understand the opportunity to reduce their energy bills and change their behaviour… Otherwise, the only people who will benefit are the energy suppliers.

Consumers will have to pay suppliers for the costs of installing and operating smart meters through their energy bills and no transparent mechanism presently exists for ensuring savings to the supplier are passed on. The track record of energy companies to date does not inspire confidence that this will happen.” (bold added)

Read the full statement by Margaret Hodge MP

Conclusions and recommendations

1. Consumers will have to pay energy suppliers for the costs of installing smart meters through their energy bills, but many of the benefits will pass in the first instance to the energy suppliers.
2. The benefits of smart meters can only be fully realised if there is widespread take-up and consumers use them to reduce their energy bills, yet the role of suppliers in helping to achieve this remains undefined.
3. The benefits from smart meters may not reach vulnerable consumers, those on low incomes and those who use prepayment meters.
4. Trials so far have been inconclusive about consumers’ willingness to cooperate with the installation process and to use smart meters to reduce their energy consumption.
5. The data communications service required to link smart meters to suppliers is a complex IT project that may cost as much as £3 billion.
6. The Department and energy suppliers face significant challenges to install smart meters in every home in the country.

Read the full text of the committee’s Conclusions & Recommendations

Links:
Public Accounts Committee
Margaret Hodge MP

Dial meters like this one will be replaced by Smart Meters with digital displays, but is forcing them on consumers too much?

As we reported back in March last year, the DECC has already set out its plans for a nationwide smart meter rollout during the years 2014 – 2019, calling it “a crucial step in delivering the UK’s energy security and low carbon future”.

Currently we are in the ‘foundation stage’, where domestic consumers and businesses have to choose to install a smart meter, with the costs of installation and hardware built in to their bills or paid for upfront. However, the government is planning a forced ‘mass rollout’ from 2014 – the proposed second stage.

The DECC said that during the foundation stage “the Government will work with industry, consumer groups and other stakeholders to ensure all the necessary groundwork is done for the second stage”. This has clearly failed so far if the largest consumer watchdog (Which?) is campaigning publicly to get the proposals looked at again.

“The government must not write a blank cheque on behalf of every energy customer, especially at a time when millions of people are struggling to pay their bills.” said Richard Lloyd, Executive Director of Which?

Cost effective?

Which? says the campaign was sparked due to consumers raising concerns about the cost effectiveness of programme. The DECC said back in March 2011 that the average household would save “around £23 per year on their energy bill as a result of smart metering”. All of the big six suppliers hiked their energy prices again this winter, by around 10-20% in most cases, pushing annual bills up towards the £1200 mark.

Business users will also be required to have smart meters installed after 2014. At Utilities Savings we have implemented many smart meter installations, but usually they are due to the business using enough energy to warrant the costs of installation – the savings are large enough and the payback period is reasonable, so the company chooses to do it for financial reasons.

If you are only spending £1,000 a year and it costs £500 to buy and install the meter, then most companies would rather just keep on top of their meter readings to prevent inaccurate estimated bills. What do you think?

Sources:
Which? – Time to stop and review the smart meter rollout
DECC – Press Release 31/03/2011
DECC – Smart Meters

The UK government announced on Tuesday that the UK’s energy infrastructure will need £110bn of investment to keep the lights on.

Chris Huhne told parliament that without reform and substantial financial investment, the country will be facing blackouts.

“Without reform, our reserve capacity will fall to uncomfortable levels and there is a much higher risk of blackouts by the end of the decade”, Huhne said.

With a quarter of the country’s generation capacity shutting down over the next decade, the quoted £110bn is intended to build 20 large new power stations, and upgrade the ageing national grid.

One part of the reform will see companies given long-term contracts on stable prices for energy generated from low carbon resources such as nuclear or renewables.

The deals are intended to give investors the certainty required to invest in the construction of low carbon generation such as nuclear plants or wind farms.

The DECC have predicted that the reforms will add around £160 to bills by 2030. They are set to come into effect by mid-2013.

In a press release published yesterday, The DECC has outlined the strategy and time scale for the introduction of smart meters in every UK home by 2019.

Starting in 2014, and taking 5 years to complete, 53 million smart meters are to be installed in over 30 million homes, costing an estimated £11 billion.

This is £2 billion more than the figure given in May 2009, when the plan was given the go-ahead, however The DECC expects the smart meter roll-out to have a benefit of £7.3 billion over the next 20 years.

Smart meters allow customers to see data on exactly how much electricity and gas they are using, helping to increase energy efficiency and save money. This information can be read remotely by your supplier, meaning there will be no need for estimated billing or staff employed to visit homes to read the meter.

It is clear that smart meters have the potential to be a very useful new technology in the energy industry, however home owners are going to have to pay higher bills to fund the roll-out, the DECC said.

It is estimated that suppliers will save around £11 billion from the benefits of not having to take meter readings, and having more accurate readings than on current meters. The suppliers should then pass on these savings to their customers.

The DECC has predicted this combined with increased energy efficiency in homes will end up saving the average consumer £23 per year on their energy bills by 2020.

The three companies include two major players: Scottish Hydro-Electric Power Distribution (owned by SSE), Central Networks (owned by E.ON) and a third smaller firm, Electricity North West.

The fines are for failure to connect customers to the national energy grid within the compulsory 3 month deadline.

SHEPD and Central Networks will have to pay £500,000 and £400,000 respectively. Whilst Electricity North West will receive a smaller fine of £100,000.

These grid companies hold a monopoly over their regions, leaving customers with no alternative should they receive bad service. This is why Ofgem deems it vital that customers receive a swift connection.

Ofgem have confirmed the fines have been reduced in recognition of co-operation by the firms.

The energy market regulator has also released a statement regarding smart meters.

Ofgem’s smart meter caution

Due to the government initiative of the “smart grid”, all homes will have a smart meter by 2020. The roll-out has started to some households already.

Ofgem have stated it is important that customers who receive smart meters are not faced with a barrier to switching supplier.

Ofgem have conceded however that should a customer switch supplier they may lose some services or benefits of the new technology.

There are concerns this could lead to suppliers discouraging their customers to seek a better service elsewhere.

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A report published on Monday by The Carbon Trust Advisory said the £1.6 billion total was due to large businesses neglecting energy efficiency measures.

The government-run Carbon Trust Advisory released the statement after analysing 1000 firms’ energy efficiency investments over the course of 3 years.

The report stated that a large firm can save an average of 15 percent on its annual energy bill through investment in heating and lighting upgrades, and training staff.

It also revealed that the finance directors for larger firms significantly underestimated the return of investing in energy efficiency, by almost 30 percent.

The report partly blames the landlord-tenant divide, whereby a landlord does not have much incentive to insulate or invest in making a building more energy efficient, as it is the tenant that will reap the benefit of lower energy bills.

Mostly, however the report warns that energy efficiency still remains a low priority to many businesses, when it can be beneficial.

If you are interested in exploring how being energy efficient could help your business, view our energy efficiency page.

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The UK Government have set a target of rolling out smart meters – energy meters which will enable suppliers to take meter readings via a wireless network – to every home in the UK by 2020.

Traditional meters like this one are being replaced

This is a plan that is estimated to cost over £7 billion, with almost 50 million smart meters being installed over the next decade in 28 million homes and small businesses.

IT and communications giant British Telecom have launched a bid to partner this project in conjunction with 2 other companies, Arqiva and Detica.

These three companies are hoping to provide the telecommunications that will link every smart meter together, via Arqiva’s radio network, which currently deals with TV and radio signals. Detica will then provide the security for the network and BT will manage the operation.

Are BT the right people for the job?

As you would expect from a bid estimated at over £7 billion, there is major competition to BT’s bid, namely from mobile companies Orange and Vodafone.

Energy suppliers are the ones responsible for the supply and installation of the smart meters, and there are already partnerships in place between Orange & Vodafone and some leading energy companies.

Vodafone is currently working with British Gas in installing two million smart meters by 2012, while Orange have teamed up with nPower and Scottish and Southern Energy.

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A smart meter like this one will most likely be installed in your home within the next few years

The government has given the go ahead to their smart meter plans for an estimated £8 billion roll out of smart meters to UK homes, with the main energy suppliers deemed responsible for installing the new technology in every UK household.

The cost of installing smart meters is thought to be as much as £340 per household, and as the energy suppliers will have to front this cash, it is expected that they will recoup this investment through higher bills or other upfront fees.

The suppliers themselves stand to make substantial savings, however, with the smart meters meaning there will be no need for them to employ teams of meter readers all across the country.

The Department of Energy and Climate Change (Decc) has announced that it would like to see 47 million smart meters in 26 million UK homes by 2020.

The scheme will hopefully help energy users save money and lower their consumption by using accurate real-time consumption data, rather than monthly or yearly estimates.

Early estimates say that the average household will save around £28 per year on their energy bills due to the new technology, but some households are expected to go beyond this amount.

The Government plans, which aim to reduce carbon emissions by more than a third, aim to install a smart meter in every one of Britain’s 26 million homes.

They expect this move to to reduce energy consumption and boost efficiency, by allowing homeowners to track exactly how much electricity and gas they are using.

The scheme aims to install smart meters in 2.6 million homes every year for a decade, a task that is expected to cost about £7 billion – £9 billion.

Analytics software will allow homeowners to obtain real time consumption and cost information, which will help to reduce both emissions and the amount they are spending on electricity and gas.

The Smart network will also change the way that the suppliers operate drastically. There will be no need for estimated bills due to the accuracy of the data the smart meter collects. This is beneficial for the customer who will no longer have the risk of overpayments due to an estimated charge. There will also be no more waiting at home for the meter reader to come, and suppliers will no longer have to employ them.

For more information on Smart Meters and how they can help your business, go to our Smart Meters page.

The company will be installing new equipment to monitor electricity and gas consumption, which will provide comprehensive information on when and where energy is used.

The new smart electricity and gas meters will also provide the company with all kinds of energy management reports and forecasts, as well as highlighting any abnormalities in the load profile of a particular meter or site.

The majority of existing electricity and gas meters are hidden from view and provide little or no information for the customer on energy usage.

Fuller’s are implementing smarter metering that offers greater awareness and influence over energy use than currently exists in the UK.  These metering systems have been rolled out with considerable success across a number of international marketplaces such as the US and Italy and more recently Australia and Sweden.

There is no single definition of smart metering, however all smart-meter systems comprise an electronic box and a communications link.  At its most basic, a smart meter measures electronically how much energy is used, and can communicate this information to another device which in turn allows the customer to view how much energy they are using and how much it is costing them.  There are also simpler alternatives that require a little more manual work, like clip-on energy monitors for companies or homes that want to try monitoring their usage in real-time.

“You simply can’t manage what you don’t measure”

- Colin Simpson, Group Systems Manager at Fuller’s

Fuller’s Colin Simpson said: “With the rise in utility costs and a company commitment to help combat climate change, managing energy consumption has now become essential.” “The smart meters will provide us with the necessary information to help reduce energy overheads and reduce the company’s CO2 emissions. As an environmentally responsible company, it helps to provide the best possible products and services to our customers and all stakeholders involved.”

A timely implementation

This announcement comes just as a European Smart Metering Guide has been published by the European Smart Metering Alliance (ESMA). The guide brings together the lessons learnt from smart metering systems and trials focusing on the promotion of end use energy efficiency, and is intended to assist utilities, service providers and other groups considering and/or implementing smart metering (partly) for this purpose and to maximize the benefits arising from those implementations.

To read about how your business can implement a smart metering program with minimum cost and hassle, visit our page on Smart Metering.