How the smart meter rollout could send your energy bills skyward
The government’s smart meter rollout risks sending energy prices rocketing, UK suppliers have warned.
Rising smart meter installation costs may force suppliers to increase tariffs for households.
Under the government-backed scheme, smart meters must be installed in every home by 2020.
To date, 7 million have been installed, costing suppliers about £100 per household.
Further reading: smart meters - everything you need to know.
Why would increased costs mean bills going up?
However, customer apathy means that £100 figure could jump to £130 in 2018 as companies spend more time and money trying to get through to more disengaged customers.
This increase in cost could, and likely would, be passed on to consumers.
It takes an engineer roughly four hours to swap an old gas and electricity meter, so the property owner or tenant will typically need to take a day off work.
With 53m devices still to be installed, the rollout is due to kick up a notch in 2018.
Have smart meters already caused bills to rise?
In the first four months of this year, five of the so-called Big Six raised energy prices.
Several pointed to the cost of the smart meter rollout as a reason for the price hike.
EDF, who raised standard gas and electricity prices by 7.2% in April, cited “obligations” and said the hike was so it could “invest in innovation and smart metering”.
Scottish Power was more explicit.
It said “costs to deliver government obligations, such as the smart meter rollout”, were behind the bill increase that hit millions of customers in March.
The smart meter programme accounted for £10 of the £86 hike.
British Gas, which has frozen prices until August, has installed half of all the 7m meters.
It’s believed to be under pressure to raise prices soon to meet the increased costs.
Ofgem warned in January that rising wholesale costs did not justify rampant price hikes.
But critics have pointed out the energy regulator did not include smart meter costs.
Suppliers have suggested it was omitted under pressure from the government.
Ofgem denies the claim.
There has been speculation that the Tories had quietly rowed back on the smart meter rollout.
But a spokesperson insisted the official target remains to have a meter installed in every home by 2020.
The Department for Business, Energy and Industrial Strategy said: “Ofgem is an independent regulator and BEIS cannot influence what is included in its Supplier Cost Index. Energy suppliers do have to make upfront investments to purchase and fit smart meters but once installed they will then help reduce energy bills. Smart meters will take £300 million off bills in 2020 alone.”
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