Smart energy meter rollout ‘will cost taxpayers £500m more than planned’

Plans to fit smart meters in every home by 2020 are doomed to fail – but will still cost families at least £500million more than expected, a report reveals today.

The rollout is running over budget and behind schedule, and the devices may not deliver promised energy bill savings, the spending watchdog said.

The National Audit Office (NAO) accused ministers of rushing the plan.

Smart meters show customers the cost of their energy in real time and allow suppliers to collect readings remotely, putting an end to estimated bills.

It is hoped they will save households money by encouraging them to reduce the power they use.

In 2016, ministers estimated the rollout would cost £11billion and bring benefits of £16.7billion.

However, the NAO found that the true cost of the scheme was at least £500million higher – an extra £17 per household, bringing the total cost for each home to £391 over the period to 2030.

Smart meters show customers the cost of their energy in real time. It is hoped they will save households money by encouraging them to reduce the power they use [File photo]

It added that this was a conservative estimate and did not include other costs such as replacing older meters with more up-to-date versions and extra marketing costs.

The report also said that if the cost of installing smart meters did not come down as the Government expected, the programme may cost a further £1.8billion. However, industry insiders said the smart meter programme could cost billions more than expected.

Under the scheme, energy firms must offer all homes and small businesses a smart meter by 2020. Customers can refuse them.

Energy firms only expect to install them in three-quarters of households and small businesses due to delays – and may not even achieve this, the report said.

Suppliers have been hindered by a three-year delay to the rollout of the newer, more advanced version of the gadget, known as Smets2.

They were supposed to start in 2014, but did not begin until 2017. By this month just 109,000 have been fitted, leaving suppliers having to install an extra 7.1million of the older meters during this time.

However, 70 per cent of the first-generation meters ‘go dumb’ when people change supplier because their new provider cannot communicate with their meter.

This forces people to choose between remaining with a more expensive tariff or losing the benefits of their smart meters. The Government plans to resolve this by connecting old meters to the system for new meters, but this has been repeatedly delayed.

The NAO also said the Government was not monitoring whether savings made by suppliers as a result of not having to send out meter readers, for example, were being passed to customers.

Plans to fit smart meters in every home by 2020 are doomed to fail – but will still cost families at least £500million more than expected, a report reveals today. The rollout is running over budget, the spending watchdog said [File photo]

On Monday, the Mail told how energy firms would have to install 30 smart meters a minute each day to hit the 2020 deadline, but just 9.7 a minute are being fitted.

The Government has also not developed the technology to install meters in high rise flats.

‘The programme is late, the costs are escalating, and in 2017 the cost of installing smart meters was 50 per cent higher than the Department assumed,’ the report said.

Gillian Guy, of Citizens Advice, said: ‘If the costs of the rollout continue to rise, it is households who will end up footing the bill.’

Lily Green, of the auto-switching service Look After My Bills, added: ‘The smart meter rollout has been an utter shambles.’ Energy minister Claire Perry said: ‘We’ve said everyone will be offered a smart meter by the end of 2020 to reap these benefits and we will meet that commitment.’