Smart Meters: Pros and Cons

The Pros and Cons of Smart Meters

The smart meter rollout, although over budget and behind schedule, will eventually bring 53 million next generation, digital, and wireless-enabled smart meters to 30 million premises in Britain. While the initial 2020 deadline will likely be exceeded, energy suppliers will eventually offer smart meters to every home and small business in the country.

But you’re not obligated to accept a smart meter from your supplier. While they can save you money, some customers may be concerned about privacy or worried they won’t be able to switch energy. Below, we run down the pros and cons of smart meters, to help you decide whether to accept one when your supplier comes knocking.

What are smart meters?

Smart meters are next generation, digital, and wireless-enabled gas and electric meters. They track your energy consumption like old meters, but rather than displaying it in a series of indecipherable numbers you must submit to your energy supplier, they display it digitally on a screen, in kilowatt hours and in pounds and pence.

This information is also shown on an in-home display, which presents your energy use in real time and over time, and in some cases on a smartphone app. This information is also automatically transmitted to your energy supplier each day, eliminating the need for manual meter readings and estimated bills.

What are the advantages of smart meters?

• free at point of installation: You won’t have to pay anything directly to have a smart meter installation.
• potential for savings: By giving you insight into your energy use and helping you modify behaviour to find savings, smart meters can help households trim their energy bills. A study commissioned by Smart Energy GB, the national campaign for the smart meter rollout, has suggested that the most engaged and proactive users of smart meter technology could trim up to £200, or 20%, from their energy bills.
• reduce your environmental impact: With greater insight in your energy consumption, you can change your habits, not just to see savings on your bills, but also to reduce your carbon footprint.
• see your energy spend in pounds: By displaying your energy use not just in kilowatt hours but also in pounds and pence, smart meters can help energy consumers understand how their energy habits translate into spending.
• no need to provide meter readings: Smart meters’ automatic transmission of information about your energy use eliminates the need for you to fumble in your meter cabinet, write down your meter readings, and submit them to your energy supplier, or to welcome in an engineer from your supplier to take a reading for you.
• no more estimated bills: With details about your energy consumption transmitted daily to your supplier, you will no longer receive estimated bills, based on your past use, if you fail to submit monthly readings. With accurate bills, you’ll only be charged for the energy you actually use.
• useful for customers on pre-payment meters: Smart prepayment meters and their in-home displays can help households on pay-as-you-go tariffs better keep track of their credit balances, even issuing alerts when meters are running low. They can also allow customers to top up their meters via a smartphone app, eliminating the need for them to run to a newsagent.
• make time of use tariffs more workable: Smart meters can also help customers with time of use tariffs like Economy 7 and Economy 10, who buy electricity at two separate rates, better monitor their energy use and stick to cheaper off-peak hours. There’s also potential for more bespoke time of use tariffs with smart meters, enabling consumers to watch gas and electricity prices rise and fall in real-time and adjust their activities accordingly.
• could facilitate auto-switching: in the future, smart meters could automatically and effortlessly switch energy suppliers for customers.
• high rates of consumer satisfaction: Among households which have already received smart meters, 80% are satisfied with them, according to a survey from consumer watchdog Citizens Advice.
• customers without may miss out on deals: In the future, some of the best energy deals, with the cheapest gas and electricity, will only be available to customers with smart meters. These may include personalised tariffs, tailored to your home’s specific energy needs and use.

What are the disadvantages of smart meters?

• cost spread across all our energy bills: The rollout was initially costed at £11 billion, an expenditure that will be spread across all our energy bills over the next few years. At that cost, the rollout would have added £374 to every household’s energy bills. But Citizens Advice has warned that the rollout will likely come in at least £1 billion over budget, pushing up bills by at least another £17.
• requires proactive use for savings: Smart meters don’t automatically deliver savings. Consumers have to actively engage with the meter and change their behaviour based on its information, or they won’t see their bills fall.
• smart meters may go dumb after switching: Most of the smart meters that have already been installed are first generation devices, which often ‘go dumb,’ or lose functionality, after consumers switch energy. The second generation of smart meters don’t have this fault but the rollout of them has been extremely limited. Customers with the earlier smart meters may be reluctant to compare energy and switch suppliers, perhaps mistakenly believing their smart meter prohibits this.
• not available to some consumers on prepayment and time of use tariffs: While smart meters technically exist for households on prepayment and time of use tariffs and can make these tariffs easier to manage and find savings with, the rollout of them is limited. Many suppliers aren’t offering smart meters to these consumers, yet.
• privacy concerns for some customers: Some customers may worry information about their energy use will be made available to third parties. However, UK law currently prohibits energy suppliers from passing on their information without the consumer’s explicit permission.