Shocker: UK smart meter rollout is crap, late and £500m over budget

Parliamentarians are set to haul civil servants in for a grilling after the National Audit Office (NAO) confirmed the UK will miss its 2020 smart meter rollout target, piling an extra £500m onto the cost of the £11bn project.

The NAO said in a report issued this morning:

“The Department for Business, Energy and Industrial Strategy (BEIS) underestimated how long it would take to implement the infrastructure and technical standards for the second generation of Smart Meters (SMETS2).”

Postponements and cost increases far beyond the original budget, to the tune of half a billion pounds, are set to hinder the tech-focused rollout, which was intended by the EU (see below) to help reduce energy consumption across the political bloc. It was marketed by the British government as a cost-saving measure, though the net saving is marginal at best.

The audit office's report wailed: “Significant technical delays resulted in the first SMETS2 meters only being installed in July 2017, over three years later than first planned. In their absence, energy suppliers have installed 12.5 million SMETS1 meters, 7.1 million more than the Department’s planned 5.4 million.”

Smart meters come in two forms at the moment, SMETS1 and SMETS2. SMETS1 is the get-it-up-and-running spec. Most of these meters are operator-specific, a bit like having your mobile phone handset locked to a particular network, and, as the NAO noted, nearly 950,000 of these have already lost their smart features as a result of customers changing supplier. Full functionality came with the SMETS2 standard, which supported all of the data-broadcasting features that were supposed to make smart meters a viable economic prospect.

Cash sink

Costs have become a byword for Britain’s smart meter system. Last year we exclusively revealed how smart meter firm EDMI billed taxpayers £7m for changing a single component in its comms hub design. The hub wirelessly gathers energy usage data from a household’s smart meters and broadcasts them back to the operator. The University of Edinburgh’s Gordon Hughes, an economist, later branded the UK smart meter system “a dog’s breakfast”.

Part of the government’s obstinate drive to install the devices is because it is a requirement under EU law – namely Article 3 paragraph 11 of “Directive 2009/72/EC... concerning common rules for the internal market in electricity”. Brexit will not change that, at least in the short term. It appears, according to an EU monitoring page that the political bloc still believes the UK is on track to get 80 per cent of the country’s households fitted with smart meters, though those in charge of UK-EU relations have more urgent things to do at the moment than worry about smart meters.

Pressing on at full speed to get SMETS2 units installed by 2020 “is putting increasing timetable pressure on the programme” according to the NAO, risking “cost escalation and/or technology being rolled out before defects have been addressed.” However, the head of the NAO still appears to believe the government can get the whole project back on track.

Amyas Morse, the public sector audit body’s chief, 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 NAO calculated that savings to consumers will be a paltry £18 per year. Ten years ago, when the Cabinet Office was pondering whether to commit the country to the £11bn project, that per-household benefit was supposed to be £23 by 2020 – with estimates from the time reckoning that smart meters would cost around £390 per household, averaged across the country. That cost has now fallen slightly to £374.

Parliamentary grilling

Meanwhile, irate MPs are determined to be seen to be taking back control of the fiasco. Rachel Reeves MP, chairwoman of Parliament's Business, Energy and Industrial Strategy committee, vowed to drag civil servants into a public Q&A.

“As a Committee, we will be keen to examine in our evidence hearing in the New Year whether it is feasible, desirable and cost-effective to continue to plough ahead with the Government’s 2020 target," said Reeves in a statement.

The hearing will take place on Wednesday 9th January.

“The evidence session is expected to cover issues relating to the delays in installing smart meters, the management of costs by BEIS, the obligations placed on energy companies to deliver the roll-out, and issues relating to the roll-out of SMETS1 meters and their potential replacement by second-generation SMETS2 meters,” added Parliament in a statement. ®