Every home in the UK is being offered a smart meter in a multi-billion pound rollout that is changing the way we consume and pay for energy.
The devices, which replace traditional meters that have to be read manually, provide real-time readings that detail how much gas and electricity you are using, and how much it is costing you.
But the rollout has been controversial, with plans afoot to use the devices to charge households more to use power at peak times, with cheaper rates available when demand is lower.
They also allow energy providers to remotely switch those who fall behind on bills over to pre-payment meters.
So will a smart meter help you save energy, or add to your bills?
How do smart meters work?
Smart meters come with a display device to track how much energy is being used more accurately. It sends readings automatically to suppliers, meaning customers are less likely to underpay or overpay for gas and electricity.
Some energy suppliers offer specialist tariffs which vary the cost of electricity throughout the day. Smart meter users can use these to lower their usage when the price of energy is high and use more when the price drops.
However, for most users, tariffs operate in the same way as a traditional meter. Champions of smart meters claim that the ability for a household to see how much energy it uses will change habits.
The rollout has been plagued by problems
The smart meter rollout has been vastly expensive and repeatedly delayed.
Some owners of early models have also received a nasty shock when they switched energy provider and their modern meter turned "dumb" – rendering it no better than a traditional meter.
This is because some "first generation" smart meters became incompatible with the communications network and were unable to send their automatic meter readings.
Households with a “dumb” smart meter can ask their supplier to replace it with a modern one. However, a loophole means providers are not obligated to do so, as the rule set by Ofgem only requires that all smart meters be operational by 2025.
Though these issues should not affect new smart meter users, they are indicative of the problems that have plagued the rollout.
And while such stories are rare, smart meters have been known to suffer glitches, resulting in comical instances of households told they are paying tens of thousands for power. In one case, a homeowner’s home display accidentally showed that he had used £40,000 worth of electricity in a single day. You should contact your provider immediately if you believe your smart meter to be faulty.
Another issue is that hardware associated with the devices will need to be upgraded in central and southern England, after the Government and mobile phone providers announced plans to phase out 2G and 3G mobile networks by 2033.
Smart meter users could get cheaper energy deals
Energy firms are expected to introduce more smart meter tariffs that vary electricity costs throughout the day. “Time of use” tariffs drop the price of electricity when demand is low and increase it in times of high usage.
Some of these deals are more complex than others: British Gas’s Economy 7 tariff, for instance, charges a lower rate overnight, which is half the cost of the daytime rate. However, its daytime rate is higher than a standard variable tariff. Overnight tariffs are handy for charging electric cars, and some providers offer specific tariffs for that purpose.
Octopus Energy, meanwhile, offers a tariff which updates rates every half an hour depending on wholesale prices, which can be a double-edged sword in periods of high volatility, though this rate is capped if it goes beyond 35p/kWh.
The policy on smart meters was first championed by former Labour leader Ed Miliband – and later by the Tories – as a way of reducing Britain's energy use. They had been popular in Europe for this reason.
Data privacy concerns still weigh heavy
The chief concern of smart meter critics, besides the cost, is the potential privacy concerns that come with a household’s data being transmitted to a supplier.
Although smart meters send meter readings to your energy supplier, they do not store your name, address or bank details. Energy firms are adamant that only they can see your data and that information cannot be passed on to a third party without the customer’s explicit permission.
According to Octopus Energy, not even the network operator can read a customer’s electricity data as it is encrypted before it reaches them.
A Privacy Charter drawn up by the Energy UK trade body, however, states that organisations with which your supplier has a contract may be given access to the information collected from your meter.
It also stated in certain circumstances the police or other organisations, including industry bodies involved in preventing and detecting theft or fraud, could be given access to your data in accordance with data protection law.
Direct debit customers who fall into energy debt also risk having their smart meters switched to prepayment mode – effectively cutting off their energy supply – without a provider needing to enter a home.
In the past, providers chasing customers who had failed to meet bill payments could secure a warrant to enter a home and “force-fit” a prepayment meter, which must be topped up before any energy can be used.
However, smart meters can be switched to a prepayment setting remotely, allowing energy companies to bypass the courts.
Ofgem maintains that it expects suppliers to “use the remote switching facility fairly and appropriately” and is monitoring how suppliers closely.
Can you refuse a smart meter?
Smart meters are not mandatory and billpayers can refuse to have the devices installed, and you can do this indefinitely.
However, energy companies can force customers to replace their current meter if it is deemed a safety hazard or is no longer functioning correctly.
Consumers who already have a smart meter can ask for the device to be removed at any time. However, suppliers can charge customers a fee to cover this cost.
How much energy am I wasting?
Many do not realise how much it costs to leave appliances on standby, according to British Gas. Households waste up to £147 a year by leaving their appliances on standby, the provider warned.
“Vampire devices” such as microwaves, TVs and washing machines drain energy, and bank accounts, when left switched on at the mains.
Leaving a TV on standby costs £24.61 a year, while leaving a Freeview box plugged in at the mains adds £23.10 to annual bills, research by British Gas found. The luxury of leaving a microwave on standby costs households an average of £16.37 a year, while a washing machine and tumble dryer add £4.73 and £4.79.
Bigger families tend to lose more to “vampire devices”. Computers left on standby add £11.22 to annual bills, while game consoles and printers cost £12.17 and £3.81 respectively.
Even phone chargers left connected to the mains cost households £1.26 a year, a sum that can quickly multiply for bigger households.
Smart meters give households more accurate data on how much their own home is using. Proponents of the devices claim that gives customers more information on usage and ultimately saves money and energy.
This article is kept updated with the latest information.
Will you be saying no to a smart meter? Let us know in the comments section below
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