New smart meter plan is unveiled
By John Moylan
The government has unveiled plans for every home in Britain to be equipped with smart meters by the end of 2020.
Smart meters allow suppliers to remotely record customers' gas and electricity use, and let consumers see how much energy they are using.
Some 26 million electricity and 22 million gas meters will need to be fitted at a cost of £7bn.
Smart meters end the need to dispatch meter readers, meaning huge savings for energy firms who hope bills will fall.
It is also hoped that smart meters will mean an end to estimated bills and call centre staff who deal with related complaints.
British Gas said the move would reduce the UK's energy use, cut carbon emissions and save customers money.
Energy providers will have the responsibility to fit the meters in what amounts to the biggest programme of work since British Gas converted appliances in 17 million homes to natural gas back in the 1970s.
Industry sources say that the £7bn cost amounts to around £15 per household per year between 2010 and 2020.
I've managed to save about a tenth, both on energy and gas, since having the smart meter because its made me conscious of the energy I'm using
Smart reader user Lloyd Matthews
But £10 of that will be accounted for in cost savings by the suppliers. That leaves the customer picking up the other £5.
But the average consumer is also likely to save 2% to 3% off their energy use each year, and thus cut £25 to £35 off their bills.
So overall, households could be better off to the tune of more than £20 a year.
The government believes we could all save around 2% of our energy use. That would cut £100m from our bills by 2020. It could also reduce our C02 emissions by 2.6m tonnes.
A new industry-backed Central Communications body will be established to handle all the meter reading data.
One of the smaller energy companies, First Utility, has already installed smart meters in the homes of its 10,000 customers.
The firm's chief executive Mark Daeche says the lower running costs allow the company to offer competitive prices.
"Of course it is a benefit to us," he said.
"We can provide lower prices as we don't have the overheads of supporting a customer with lots of customer service."
Lloyd Matthews and his wife Susanna live in East London. They are EDF Energy customers and they have been using a smart meter for the past two years.
The meter comes with a display unit that shows Mr Matthews exactly how much electricity and gas he is using. He can also compare his energy use on a daily, weekly or monthly basis.
Mr Matthews says that knowledge has enabled him to reduce his energy bills without hampering his lifestyle
"I've managed to save about a tenth, both on energy and gas since having the smart meter, because its made me conscious of the energy I'm using," he said.
The government is to launch a three-month consultation process on the plans.
The government is unveiling plans for every home in Britain to be equipped with smart meters by the end of 2020.
The move has been met by a chorus of approval from the energy industry and by a consumer watchdog.
But how will this affect householders, and will it cost or save them money?
What is expected to happen?
The government wants every home in Britain to be installed with smart meters - a device that shows exactly how much gas and electricity is being used.
This should bring an end to estimated bills, because the technology could send back an accurate meter reading to your energy company every day.
According to the Energy Retail Association, which represents the energy companies, the technological advance would be the equivalent of using wireless broadband instead of sending a telegram.
No more estimates. Will that mean they get my bill correct?
There have been thousands of complaints from householders who claim they have been overcharged on direct debit bills.
Consumer groups said this meant energy suppliers were getting free loans from customers. In March, regulator Ofgem told the companies to make charges clearer but said there was no "systematic" abuse of the direct debit system.
Smart meters should put this debate to bed, and would mean that householders no longer need to let the gasman in to read the meter.
People might even by able to check their usage on the internet, or share tips for cutting bills on social networking websites.
But installing these meters will be a big job. Some 26 million electricity and 22 million gas meters will need to be fitted.
That sounds expensive. Who pays?
You will not receive a bill from your energy company for installing a new meter, but you will pick up some of the cost.
Cannot play media.You do not have the correct version of the flash player. Download the correct version
Industry estimates suggest that the total installation bill will be £7bn.
That amounts to about £15 per household per year between 2010 and 2020, but £10 of this will be covered from savings made by companies who no longer need to pay people to read meters, and the cost of dealing with complaints should fall.
That leaves £5 a year that would be put onto bills, but the industry thinks that - by keeping an eye on the meter - householders will cut their energy use and so reduce their annual bill by between £25 and £35.
These savings might come by changing habits such as switching off the television, rather than leaving it on standby.
Consumer groups are keen to see all the savings made by energy companies are passed on to the consumer, rather than just boosting their profits.
How do I get one of these meters?
There are trials of smart meters going on at the moment, so some householders have already got them.
There will be three months of consultation and, if the scheme is given the final go-ahead, it will be a huge job to replace the UK's meters.
"Government should show leadership and make sure that this roll-out is joined up and the opportunity is not wasted," said a spokesman for Consumer Focus, the consumer watchdog.
Under the plans, each home would get a new smart gas meter and a new electricity meter. One is the "host" meter, that will communicate with you and the supplier.
Will this make it more difficult to switch supplier to save on bills?
Your new smart meter might have your current supplier's branding on it, but don't be fooled.
They might look different, but all the meters should have the same specifications so if you want to switch suppliers you will not need to get a new meter installed.
Switching suppliers to get a better deal should be as easy as it is now.
You will not get a different meter if you pay in different ways - such as pre-payment or quarterly by cheque.
What about bills at business properties?
Large businesses should have smart meters within five years, according to the government.
Small businesses should get smart meters in the same timeframe as consumers.