Smart meter savings 'uncertain' says audit office

Smart meters will mean the end of meter readings as the information will be available remotely

Uncertainty surrounds the extent to which householders will change their behaviour when new smart meters are introduced, a report has concluded.

By 2020, every home in Britain will be fitted with a smart meter - a device that shows exactly how much gas and electricity is being used.

The Department of Energy estimates that the meters will help the average customer save £23 a year.

But the National Audit Office said current evidence left this in doubt.

Estimates

Installation of the devices has already begun in some areas, in the hope that householders will be more savvy about when they use electricity or gas and the cost of energy use becomes clearer.

They are also set to bring an end to estimated bills, because the technology sends back an accurate meter reading to the energy company every day.

The benefits are estimated to equate to £18.6bn over the next 20 years.

But the National Audit Office (NAO) report said that lower bills would come about only if these savings were passed on to customers from the energy companies.

Various security concerns have been raised regarding the technology, including the amount of personal data held on the devices.

The NAO said more work was needed on the security of the system.

Budget

The initial cost to the taxpayer was also expected to be exceeded, according to Margaret Hodge, who chairs the Common's Public Accounts Committee.

The budget for the project is £11.3bn, but most of this is borne by the energy suppliers who will pay for the installation costs of the meters. Householders will see an extra £6 a year added to bills by 2015 to pay for this.

The Department of Energy and Climate Change will pick up the bill for "programme management" and "consumer engagement".

"Smart meters could help us all cut our energy consumption but government's track record on delivering large programmes is patchy at best," said Mrs Hodge.

"At the moment the estimated cost is £11.3bn but all our experience suggests this budget will be blown."

Consumer groups have urged the government to keep these costs under control.

"With clear benefits for industry and estimated cost savings to consumers of only £23 per year, government must take a hands-on approach to keep costs under control and ensure that consumers see the benefits of this billion-pound initiative," said Richard Lloyd, chief executive of Which?.

Zoe McLeod, from watchdog Consumer Focus, said: "This is a welcome spotlight on the cost of this scheme and the importance on getting it right. Smart meters have significant potential benefits for consumers but only if the risks are addressed properly.

"Consumers will end up footing the bill for this multi-billion-pound scheme. Success will be measured by whether it delivers real improvements, such as helping people to cut their energy use, switch more easily and get better customer service.

"The government cannot assume that the competitive market alone will deliver for customers. Government needs a detailed strategy and should produce an annual report on the costs and the benefits delivered, to make sure all consumers get value for money and to provide trust and transparency."