Smart meters, which will be rolled out to all domestic and smaller business energy consumers by the end of the decade, will be open to abuse by energy companies and could even lead to higher bills, according to a powerful committee of MPs.
The new and sophisticated meters, which give real-time readings of energy consumption, should be regulated more tightly, a report by the public administration committee has found.
Savings made by suppliers as a result of the installation of smart meters might not be passed on to business electricity and business gas customers, and the market could not be relied on to drive down prices, the report found.
All domestic consumers and small business energy customers will have smart meters installed by 2019, while large business will have ‘advanced’ smart meters installed by April 2014.
The report follows claims by consumer campaign group Which? that the government was not overseeing the installation of smart meters with enough vigour. It called for the rollout of the technology to be halted until the government could guarantee that bills for domestic and business energy customers would not skyrocket.
Margaret Hodge, chair of the public administration committee, said the government would have to do more to ensure that business energy customers benefited from the changeover to smart meters.
“Consumers will have to pay suppliers for the costs of installing and operating smart meters through their energy bills and no transparent mechanism presently exists for ensuring that savings to the supplier are passed on,” Mrs Hodge said.
“The track record of energy companies to date does not inspire confidence that this will happen.
“The government is relying on competition in the market to drive down prices. But, as has been previously reported by Ofgem, the energy market does not currently operate as an effective competitive market,” she said.
“The department [of energy and climate change] should clearly set out what energy suppliers’ responsibilities will be for engaging with consumers to deliver the benefits of smart meters; and how they will be held accountable to both the department and consumers,” she added.
Energy Minister Charles Hendry said there would be no further “dither and delay” to the rollout of smart meters despite the committee’s finding, saying the government would ensure that there would be sufficient “ministerial oversight and safeguards” built into the scheme.
Julian Morgan, managing director of the Energy Advice Line, the UK’s leading price comparison and switching service for businesses, renewed calls for a watchdog to ensure reforms to the energy market, such as the introduction of smart meters, actually benefited business energy customers.
“Suppliers do not have a great record for always acting in the best interests of their business energy customers, so the government needs to ensure that all reforms to the energy market, including the rollout of smart meters, have teeth.
”We believe a regulatory body is needed to oversee the introduction of this technology and ensure that business gas and business electricity customers benefit from any savings that suppliers make in the cost of delivering energy.”
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