Energy policy continues to be central to the political agenda and on consumers’ minds, with the average energy bill now topping £1300 and more than 2 million homes living in fuel poverty.
Research published this week by the Smart Meter Central Delivery Body shows the extent of current dissatisfaction with the way we buy energy. More than half of the 10,000 respondents to our independent survey said they do not trust any energy supplier, while 41% think they are paying for more energy that they consume. Worryingly, those in low income and vulnerable groups expressed the most anxiety about their bills.
But here’s the silver lining. The research showed that much of this dissatisfaction stems from the current metering systems most of us still have in our homes, based on increasingly out-of-date technologies. Current meters rely on physical meter readings, and very often consumers receive estimated bills. As people don’t have sight of what they’re spending day-by-day, it’s difficult to manage household budgets and can be a big shock when the bill drops onto the mat. More than a third of people (36%) do not understand their energy bills and a similar number (37%) do not think that the bills that they receive are accurate. Worse, many consumers even told us they will switch to pre-pay meters, in the full knowledge that they are more expensive, because they have no other way of managing what they spend.
The national smart meter roll-out will transform the current situation and put power back in the hands of consumers. Smart meters will accurately capture energy use and present the information clearly to consumers in pounds and pence. The information and knowledge provided by these connected devices will empower consumers to understand what they are consuming and what it costs, and so make quicker and easier decisions about the right tariff and supplier for them.
There are already nearly 400,000 smart meters in homes around the country, and the roll-out programme will accelerate during the course of this year and next.
One of the key objectives of this transformation is to ensure that low income and vulnerable individuals, those who face the greatest challenges with energy bills, benefit from smart meters as quickly as possible. Energy Secretary Ed Davey has called on energy suppliers to focus on pre-payment meter (PPM) customers during the roll-out, and to aim to start installing these ‘pay as you go’ smart meters by the end of 2016.
And smart meters will make it easier for everyone to keep a close eye on how much energy they’re using. In many areas of environmental policy there is a necessary payoff between tackling climate change and lowering consumers’ bills – not so for the smart meter roll-out. By 2019 the programme will ‘break even’ and be having a positive impact on consumer bills by making our energy infrastructure more efficient and helping avoid waste. No more necks craned under the stairs to read meters, and far fewer complaints about bills. It’s hard to see how any reform of the energy market can be fully effective without fully empowered consumers playing their part – smart meters will give them the information they need to take control.
‘The Independent View‘ is a slot on Lib Dem Voice which allows those from beyond the party to contribute to debates we believe are of interest to LDV’s readers. Please email [email protected] if you are interested in contributing.
* Sacha Deshmukh is the Chief Executive of the Smart Meter Central Delivery Body
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6 Comments
I’ve been waiting 5 years for a smart meter. I completely agree with the post , but we need millions of these things installed.
Another thing I’d love to see is the ability for me to buy my own energy direct from the wholesale market. This could be a ‘pay as you go’ variable system where whatever I use is charged at the wholesale rate that day, or if I wanted to ‘fix’ my prices like a day trader could log in to an ‘energy exchange’ and buy a large amount that I would use through the course of the year. I could choose between green and ‘dirty’ energy too.
I often daydream about setting up a company like that, I have no idea if this would be remotely possible with the regulatory systems and technology with currently have. Would love to hear your thoughts.
I switched energy 7 months ago thinking the supplier was going to install a smart meter still waiting. I understand some don’t want this tech but those who do might like it faster
“making our energy infrastructure more efficient”
This does not strike me as true. It is a meter, not a magic wand. And when you factor in the cost of installation, it make actually cost the consumer more.
People can choose to use less but they can do that now.
Smart meters do indeed promise a massive revolution in energy metering and purchase, but only if the suppliers are not allowed to ‘stitch up’, the methods of metering and paying.?
As part of the smart meter package, the onus needs to be shifted from the consumer having to work out ‘the best deal for them’, and instead, switching to the suppliers ‘pitching to provide’ energy, at best price.
One Example : Assume for a moment that energy is purchased by the consumer in £50 ‘chunks’? Thus, my meter feeds my usage ‘out there’, for all the suppliers to read. Each company is now in a kind of auction, to supply me in a £50 chunk of energy use. So as my units of energy climb, each company calculates whether they feel I have used £50 worth of energy at ‘their prices’ and ‘pitch to provide’, resetting my meter to zero and taking £50 direct debit. This would put the onus on all supply companies to fine tune their price structures in order to make a competitive £50 supply ‘bid’ and take the direct debit amount from my account.
Thus, from a consumers point of view, I can be sure that the company that took the £50 and reset my meter to zero, was the best competitive price. A competitive price which all the other providers now have to beat in order to get my custom?
Voter – is correct in that efficiency use, of energy is in my (consumer ) hands, but a synergy between consumer and provider could potentially develop, whereby I load my washing machine, and tell ‘the system’ when I want my clothes to be finished, or when I want my immersion heater tank of hot water to be provided, and allow the various suppliers to ‘Flick the switch’, when they can provide at cheapest cost.
This is potentially, a very exciting development in energy use, planning, and provision, and I have to admit I am very positive of the myriad of possibilities for the consumer to ‘take charge’, of their energy use.
Good luck with this Sacha.
” More than a third of people (36%) do not understand their energy bills…”
Not because of how modern the metre is but because the energy companies , the Secretary of State and the National Grid all conspire to talk in a language designed to confuse.
Why are gas bills and electricity bills constantly changing in format so that as soon one customer gets used to one format another equally opaque format replaces it?
Why the pretence that the electricity or has can be more expensive orless expensive if we “switch” to another company? — this is a nonsense it is all the same gas and the same electricity the only difference is how much each company can confuse and bamboozle the customer.
Why is a unit of energy called something different if it is gas as opposed to electricity?
The only SMART energy is renewable emerge. The really smart move would be to go off grid, generate your own electricity and have nothing whatsoever to do with the crooks and thieves of the energy companies .
But all of this discussion is probably designed to divert attention away from Ed Davey signing deals with Chinese dictators on new nuclear with subsidies.
Gareth – hopefully your wait for a smart meter will not go on too much longer! Around 50 million smart meters will be installed between now and 2020, and we aim to ensure that people understand what the technology will mean for how we buy gas and electricity in Great Britain. As smart meters create more transparency in the market and consumers are better able to shop around for the best deal, new services and tariffs may emerge. With easier switching, consumers will make more use of available options to secure the best deals.
Voter: the national smart meter roll-out will very quickly result in savings for all energy consumers, even taking into account the costs of installations. This is mainly due to the end of physical meter readings, and more accurate bills. There are some initial investments to be made by the energy suppliers, but by 2019 the savings generated will outweigh those investments and the smart meter programme will have a positive impact on bills.
JohnTilley, you’re right : A key aim of the project is to improve the transparency and accountability of the way we buy gas and electricity, and when the programme is completed all energy providers will be working with smart meter devices that will ensure that energy usage is easy to understand. Our recent research showed that 43% of consumers said they didn’t think they had the information they need in order to choose the right tariff.