Preparations for the roll-out of smart meters : sixty-third report of session 2010-12, report, together with formal minutes, oral and written evidence

Under European Directives, all member states are required to install 'intelligent metering systems' - smart meters - to at least 80% of domestic electricity consumers by 2020.

The UK Government has opted for a more challenging programme, with plans for energy suppliers to install smart electricity and gas meters in all homes and smaller non-domestic premises in Great Britain by 2019.

The Department estimates that the smart meters programme will cost some GBP11.7 billion.

This large complex programme requires replacing around 53 million gas and electricity meters, with significant uncertainties over the estimated costs and benefits involved.

Installation costs will be borne by consumers through their energy bills, but many of the benefits accrue in the first instance to energy suppliers.

No transparent mechanism presently exists for ensuring savings to the supplier are passed on to consumers, and the track record of energy companies to date does not inspire confidence that this will happen. There remain significant uncertainties in a number of key areas in the programme and the Department needs to address these by conducting proper trials to identify and manage the risks associated with an IT project involving such a substantial amount of money which is financed by individuals as consumers.

The Department needs to ensure that the vulnerable, those on low incomes and those who use prepayment meters also benefit from smart meters.

It would be unacceptable if these consumers bore the costs of smart meters through higher charges without getting a share of the potential benefits.