U.K. Smart-Meters May Fail Older People, Poor, Lawmakers Say

The U.K.’s 11.7 billion-pound ($18 billion) plan to install so-called smart meters to measure gas and electricity use in every home may disadvantage poor and elderly people, a panel of lawmakers said.

The meters, designed to show consumers how much energy they’re using and at what tariff, will make it easier for utilities to cut off a home’s gas and power supplies, the Public Accounts Committee said today in an e-mailed report. It urged the government to set clear rules for an industry that’s dominated by six companies, including EON AG and Centrica Plc. (CNA)

“Smart meters will allow energy companies to disconnect customers without entering the property,” Margaret Hodge, chairwoman of the multiparty panel, said in a statement. Officials must “ensure that there are proper safeguards to protect the vulnerable, elderly and those on low incomes to ensure they benefit from the program.”

Britain plans to install 53 million smart meters in homes and businesses by 2020 to cut electricity use and lower carbon emissions. Meter-makers including General Electric Co. (GE), SAP AG (SAP), Toshiba Corp. (6502)’s Landis+Gyr unit and Elster Group SE (ELT) are lining up to grab a slice of the market, and have formed an alliance to develop common standards.

“The benefits of smart meters are 18.7 billion pounds from an 11.7 billion-pound investment,” Energy Minister Charles Hendry said in an e-mailed response to today’s report. “Smart meters will mean more accurate information and an end to estimated billing, so no more nasty surprises for consumers.”

Mass Roll-out

A mass roll-out of meters is due to start in 2014, with the installation and running costs paid for by consumers through their utility bills, largely with the “Big Six” utilities: Electricite de France SA, EON, SSE Plc, Centrica, RWE AG (RWE)’s Npower unit and Iberdrola SA (IBE)’s Scottish Power division.

Those suppliers are likely to benefit from reduced costs as a result of the meters because fewer staff will be needed to take manual readings, according to the panel.

“No transparent mechanism presently exists for ensuring savings to the supplier are passed on,” Hodge said. “The track record of energy companies to date does not inspire confidence that this will happen.”

The lawmakers also said in today’s report that the Department of Energy and Climate Change must conduct proper trials of a planned 3 billion-pound computing system designed to transmit and process data from the meters, and clarify suppliers’ responsibility for ensuring people know how to use the devices to cut energy costs.

Energy Savings

The devices will give consumers more control over how they use energy at home and at work, cutting energy waste and saving money, Hendry said.

“It’s impossible to get transparency without smart meters,” Chris King, Chief Regulatory Officer at Siemens AG (SIE)’s eMeter unit, said in a telephone interview from San Mateo, California today. “All bills are based on estimates and so savings are also estimates.”

Smart metering will make it easier to bill consumers more accurately and help them save energy when prices are at their highest, he said. eMeter manages software for about 40 million meters globally and is looking to offer its systems in Britain, according to King.

“Past performance suggests that competition does not work effectively in this market and should not be relied on to keep prices low,” the panel said.

“The Department needs to ensure that the vulnerable, those on low incomes and those who use prepayment meters also benefit from smart meters. It would be unacceptable if these consumers bore the costs of smart meters through higher charges without getting a share of the potential benefits.”

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Catherine Airlie in London at cairlie@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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