Smarting: Rollout of new energy meters behind schedule and over budget, auditor says

The spending watchdog has today called on the government to take responsibility as its scheme to put a smart metre in every home is by 2020 is set to fail.

The National Audit Office found that initial cost estimates have already overrun by half a billion pounds, while it warned that customers may not save as much as was originally forecast.

A three-year delay to the rollout of second generation smart meters, so-called Smets2, forced providers to install less advanced Smets1 meters in 7.1m more homes than intended, as the government pushed for a rapid rollout.

Most Smets1 meters turn dumb if households switch supplier, locking some customers into more expensive deals, the auditors found.

Almost a million Smets1 meters are currently operating in dumb mode.

The auditor also warned that the Department for Business, Energy & Industrial Strategy (BEIS) is not systematically monitoring savings, and has not updated its cost estimates since 2016.

Gillian Guy, chief executive of Citizens Advice, said rising costs and technology that does not work could turn customers away from the critical rollout of smart meters.

“If the costs of the rollout continue to rise, as the NAO suggests, it is households who will end up footing the bill. These costs may be offset if people benefit from savings in the long-term, but with no cost-benefit analysis conducted since 2016, it’s not clear that this will happen,” she said. 

However, the auditors said that despite issues, the programme was not fatally flawed.

Amyas Morse, the head of the NAO, said: “Costs are rising, and timescales slipping, but smart meters can still succeed over time. BEIS has taken most of the decisions that matter on the programme so far. They now need to take responsibility for getting it back on track and protecting the interests of consumers who will ultimately meet the bills.”

The report comes days after consumer group Which warned that energy suppliers needed to install a new smart meter every two seconds if they are to meet the government’s target.

Energy and clean growth minister Claire Perry said: “Millions have already chosen to have a smart meter and take control of their energy use to cut their bills. We’ve said everyone will be offered a smart meter by the end of 2020 to reap these benefits and we will meet that commitment.

“This world-leading upgrade to our national infrastructure is the cornerstone of our move to a smarter energy system of the future and will bring benefits to consumers and industry worth up to £40 billion.”