The PAC risks harming Smart Meter roll-out

The Public Accounts Committee have made what could be an expensive mistake.

The Public Accounts Committee have done both energy consumers and the industry a great disservice on their recent analysis of smart metering costs and benefits which was based on information the members of the committee should have known was misleading.

As the BBC reported:

“Installing smart meters in every house in the UK will save consumers "only 2%" on their annual bills, a committee of MPs has warned.

The Public Accounts Committee (PAC) said that, on average, consumers will save just £26 a year.”

The facts of the matter are that in international studies of smart metering implementations, carried out by independent Finnish consultancy VaasaETT for ESMIG (The European Smart Metering Interest Group), savings made by consumers, who had both smart meters and an IHD (In-home device) installed, were on average 9% of their energy bills.

A back of the envelope calculation on the value delivered by Smart meter roll-out underlines the importance of this initiative in keeping household bills as low as possible.

The cost of the roll-out, according to DECC, is £10.9 billion or £360 per household. With the life of a meter expected to be between 10-15 years that means a cost of around £30 per year per household.

Average consumer bills are today £1400 per year – and rising towards the £2000 mark over the coming decade. So expected energy savings are £125 per year today, rising to £180 per year as energy costs rise.

On top of this there are industry savings on meter reading costs and customer queries on estimated bills – worth another £10-20 per year.

On top of this there are the savings that will be available through time of use tariffs.

So a cost of £30 a year versus a benefit of somewhere between £135 and £210 a year. Truly a no brainer.

To cast doubt in the public’s mind at this stage will only lead to increased implementation costs as convincing people to be at home to have the meter installation becomes more difficult if the benefits are not clear.

The benefits may be uncertain – but they are many times the cost of the programme. The Public Accounts Committee should read the ESMIG reports, re-do their calculations, and broadcast the good news to consumers.

Published by: Enstra Consulting

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