Parliament: Predicted Benefits of UK Smart Metering Program Overblown

Remember not too long ago, when smart meters' big selling points were the promise that they would save consumers money and help to prevent blackouts on hot summer days? Well, UK government officials are going public with claims that the country’s upcoming £11.7 billion smart metering program will be a boon to energy suppliers while the average consumer will see hardly any benefits. The five-year program, according to Computerworld UK, calls for 53 million existing smart electricity and gas meters to be replaced beginning in 2014. The ostensible aim is to let customers to control their usage (and therefore their energy costs) by providing detailed real-time information on energy rates.

But the drawbacks significantly outweigh the potential benefits, says a report from Parliament’s Public Accounts Committee. The upshot: The cost of installing the smart meters will be tacked onto consumers’ energy bills—most likely in a way that will not be transparent—making it easy for energy suppliers to gouge their customers. And worse for consumers, the report bluntly states:

“Energy suppliers will benefit significantly from smart metering, for example, through cost savings on staff associated with automated meter reading. We are skeptical that suppliers will pass on these benefits in full to consumers, given their track record and the failures of suppliers to reduce retail prices promptly when wholesale energy costs have fallen,”

The report follows another damning analysis of the program presented by the UK government’s National Audit Office last June. An article by Millicentmedia, which covers the nation’s electric power industry, reported comments made by Margaret Hodge, chair of Parliament’s committee of public accounts. Hodge noted that while smart meters might contribute to a modest reduction in energy consumption:

“For the money spent to provide value, we all have to change the way we behave. It is not clear how [the Department of Energy and Climate Change, which is in charge of the smart meter roll-out] will stimulate this behavior change. And, as technology changes, DECC will have to be properly flexible to respond with up-to-date technology for the smart meters. These uncertainties can drive up costs more than planned.”

Parliament is also looking with a jaundiced eye at the potential for the project’s IT costs to balloon in to the billions of pounds. Among its concerns is that the networking system needed to transfer of digitized usage data between consumers and suppliers will offer cyberthieves or terrorists a new target. 

Observers outside the government second those emotions. Anthony Miller, an analyst at TechMarketView, has taken a dim view of the metering project, telling Millicentmedia that the whole premise behind the program is fundamentally flawed. “It’s not that ‘smart meters’ are a bad thing—of course they aren’t,” says Miller.  “But the benefits of doing a big-bang, complete national replacement are simply pie-in-the-sky. At best, energy suppliers will gain – but even that I would call into question.”

Perhaps Miller would like to see the UK proceed in baby steps, with the performance of the smart grid demonstrated by smaller programs like those popping up here and there in the United States.

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