Action needed to ensure smart meter scheme works

CSE review for Which? reveals weakness in Government plan

13 January 2012

There is a meaningful risk that, unless the Government makes changes to its plans, the UK smart metering programme will fail consumers. That is the conclusion of a major new review of the programme through the lens of consumer interests which the Centre for Sustainable Energy (CSE) has recently completed for consumer champions, Which?.

The introduction of smart meters into every home and business in the UK by 2019 has the potential to deliver significant benefits by engaging consumers with their energy use and enabling much more efficient operation of the electricity and gas systems.

However, as lead author of the report CSE’s Chief Executive Simon Roberts warns: “Without the support and involvement of consumers, the programme will not succeed. It is therefore imperative that the needs and interests of consumers are fully understood by those developing the programme and effectively embedded in its design and delivery.”

CSE’s review for Which? examined the current plans for the roll-out and operation of smart meters to take account of how they measured up against clear consumer-oriented objectives. These objectives include keeping costs as low as possible, a trustworthy and confidence-inspiring roll-out process, and a fair share of the benefits of smart meters.

“It’s clear from our review that the interests of consumers are neither well understood by Government nor well protected by the Government’s current plans,” said Simon Roberts.

The review concludes that, without remedy, the programme may run into deployment problems as a result of increasing consumer resistance – as experienced in other countries. Alternatively, without remedy the programme may fail to deliver a full share of its benefits to consumers, instead enabling energy suppliers and others in the energy market to gain at the expense of consumers.

A number of key issues emerge:

  • The reliance on “competitive pressures in the energy supply market” to control programme costs and to ensure the cost saving benefits accruing to energy suppliers are passed through to consumers appears naïve given official recognition of the currently limited nature of such pressures
  • The approach being taken to data privacy may conflict with the system’s need for data to optimise performance, thus undermining the full realisation of the anticipated benefits
  • The choice of energy suppliers as lead delivery agents for the programme builds in consumer distrust from the beginning and limits the potential for area-based programmes which are likely to be (a) more cost-effective and (b) more likely to enable social and community interventions which can involve consumers in the roll-out and establish positive social norms regarding reactions to smart meters
  • DECC’s understanding of consumer concerns is developing but it still appears to have a limited perspective on: (a) how these concerns might play out within the media and society more widely during the roll-out process and thus create delivery risks, and (b) what types of interventions (and by whom) might be required to mitigate these risks

“While the current plans aren’t right for consumers, there’s plenty the Government can do to improve them" added Simon. "Our report outlines 15 remedies which put the consumer at the heart of the smart meter programme and make it much more likely to be a success.”

Echoing CSE's concerns, the Public Accounts Committee has expressed concern that the smart-meter programme will fail to pass on savings to the consumer.

Speaking on 17 January, The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said: "Consumers will benefit from smart meters only if they understand the opportunity to reduce their energy bills and change their behaviour. So far the evidence on whether they will do so has been inconclusive. Otherwise, the only people who will benefit are the energy suppliers."

Our report can be downloaded here.


Photo: © emmgunn / istockphoto.com

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