Can Smart Meters really cut energy costs?
Victoria was due to be the first state to roll-out smart meters to all businesses and households, that was until the state government temporarily pulled the plug on the roll-out late last month.
The Age reported that the Energy Minister Peter Bachelor announced an "indefinite moratorium on the rollout of the new technology to every home across the state - because of concerns pensioners and the poor would be hardest hit by higher electricity prices".
The concern is valid. Smart meters themselves cost money, it costs money to install them and get them working properly and delivering meter read information to the customer energy retailer. The simple issue is who pays for them? And the current answer seems to be homeowners and businesses.
At this stage, the government and the energy retailer seem unclear on where the benefits really lie.
In the UK, the largest retailer British Gas has recently announced a roll-out of 2 million smart meters to its customer base. They are estimating that this could save those customers a combined £1 billion over 10 years, which works out as £500 per household over the same period, or£50 per year.
British Gas, working with energy metering firm Landis+Gyr, have the right idea. The costs of the smart meter is subsidised, but eventually the consumer will pay. But the critical part is the benefit.
The benefits from a consumer perspective are simple:
1) Lower energy bills
2) Lower energy usage
The benefits from a retailer's perspective are also pretty straightforward:
1) Removal of the cost to read the current set of 'dumb' meters manually
2) Ability to monitor and control energy usage
3) Ability to deliver energy at a price that holds a fairer reflection of the costs incurred to generate and deliver it to the end consumer
The benefits from a government perspective are also very simple:
1) Customers can switch supplier without any hassle - currently it takes anywhere from one week to 14 weeks, this is only due to the new retailer waiting for the next meter read. With smart meters, you can sign a new deal today and switch today (assuming the consumer waives their right to a cool off period). The efficiency would be immense.
2) Creates accountability in terms of a) energy usage - driving it down (monitored on a business by business, household by household basis) encouraging consumers to become more efficient in their usage, and b) in terms of fairer pricing structures from suppliers.
This doesn't feel like a 'maybe' decision, it feels like a 'must', but the government and retailers must get better at educating the consumer of the real benefits.