Smart Meters – Are They Worth the Hassle?

What is a smart meter?

Smart meters are electronic devices which track as well as record electricity consumption in customer’s homes. Electric utility companies in the UK have been replacing old meters (analog meters) which require manual reading with new high-tech smart meters. The meters capture electricity consumption information automatically and then transmit this information back to electric companies. Some of their most notable benefits of smart meters are; speed and accuracy. Smart meters eliminate the need to estimate monthly electricity bills. Furthermore, there is no need for the power company to send staff to conduct home visits to take meter readings. Smart meters are expected to save homeowners money as well as reduce carbon emissions. The UK government plans to roll out smart meters this year in a 4-million pilot project. But is it worth it?

Is it worth fitting a smart meter?

According to a Public Accounts Committee report on smart meters published recently, the £11.7 billion smart meter scheme will cost every household at least £350 to install yet the same report projects a household savings of £23 per year in reduced fuel costs. What’s more interesting is the savings is dependent on a number of factors such as changed behaviour since the meters are expected to offer useful information on reducing energy costs. Households which don’t use this information prudently may not enjoy any savings.

On the other hand, energy companies have guaranteed savings of approximately £9 billion per year from getting accurate meter readings. Consumer savings aren’t guaranteed by any means. According to many industry experts such as consumer policy expert, Zoe McLeod, UK households which have already taken steps to reduce energy consumption, i.e., households which have switched to energy efficient appliances won’t enjoy significant benefits.

It’s worth noting that similar poorly executed smart meter schemes introduced in countries like Australia and the Netherlands have been rejected because they proved to be a waste of money. In Australia for instance, the Australian Energy Regulator findings showing that Australian households would endure a £61 to £149 increase in their yearly bill between years 2011 and 2015 to cater for smart meter costs sparked public outrage.

A survey carried out by British Gas also paints a negative picture. Out of 700 customers who already have smart meters, 25% expressed concerns about effectiveness after using the meters for a year. Consumer groups have also expressed concerns about the smart meter scheme with some of them (consumer group like, ”WHICH”) calling for the scheme to be stopped.

Other concerns include privacy. The DECC (Department of Energy & Climate Change) can’t guarantee the privacy of UK households which install the meters. Under current plans, UK household energy data is pulsed electronically to utility companies on an hourly basis. There are privacy concerns if third parties have access to this information which highlights daily habits, shows when there is no one in a household, etc.

There are concerns that UK households may start receiving energy offers like those received in Japan after the implementation of a similar scheme. Will UK households be receiving offers from utility companies making use of their commercial data? such as offers to get more energy efficient appliances. What are the regulations regarding the use or sale of energy consumption data?

Also, will it be easy to switch suppliers? According to WHICH energy campaigner, Jenny Driscoll, there is evidence that households may find it difficult to switch energy suppliers after installing smart meters. This information has been acquired from the early smart meter roll-out phase. If such concerns have a basis, it will obviously be unacceptable to many.

Also, there is no mechanism currently for capping energy bills if the cost of the scheme spirals out of control. There should be protections in place according to the Public Accounts Committee to protect consumers since they are expected to shoulder the £11.7 billion smart meter installation cost. There is also need to make smart meter complaints public. Currently, all the public knows is that complaints are registered with Ofgem. No complaints data has been published yet.

Verdict

Although smart meters are set to offer advantages to electricity companies in the UK, electricity users and the environment, there are obvious shortfalls like cost. UK electricity consumers must make an expensive long-term commitment under the smart meter scheme. Public perception is also an issue. There are issues around privacy and restrictions. UK households with smart meters have already expressed issues on flexibility. Smart meter issues have also been kept a secret. Before all the current smart meter concerns are addressed, including policy issues and smart meter reading verification, it may not be a good idea to fit a smart meter in your home.

 

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

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