Will we really benefit from the roll out of smart meters?

By 2019 the government hopes to have installed 53 million smart meters across the UK at a cost of £12.7 billion.

Unfortunately, according to a recent report from the Commons Public Accounts Committee, the government's plans for this roll out are flawed.

The report says that, at the moment, evidence on whether consumers will see the reductions in energy bills and changes in behaviour needed to make smart meters a success is 'inconclusive'. Smart meters should also put an end to consumers paying more through estimated bills.

And if smart meters are not a success for consumers, then the only ones who will benefit are the energy suppliers.

MP Margaret Hodge, chair of the committee, described the programme as being 'challenging and subject to significant uncertainty' – with the cost of the system being one of the concerns high up on the list.

"Consumers will have to pay suppliers for the costs of installing and operating smart meters through their energy bills, and no transparent mechanism presently exists for ensuring savings to the supplier are passed on. The track record of energy companies to date does not inspire confidence that this will happen," she explained.

Indeed, the report highlights that initially most of the benefits of the smart meter programme will be received by suppliers.  The government admits that even if people engage fully with the initiative they will not see a 'net benefit' until 2017.

The Department of Energy and Climate Change is placing a lot of responsibility on suppliers for rolling out the programme and ensuring customers see the necessary savings, both through passing them on via energy bills and educating them on how they can use smart meters to their advantage.

One of the key ways in which it sees this happening is through competition in the energy market placing an obligation on suppliers to make sure they are all giving consumers a similar deal.

As the recent price cuts show, if one member of the Big Six makes a move to slash bills, then the pressure on the others means they will likely follow suit.

But Ofgem has highlighted that currently 'the energy market does not currently operate as an effective competitive market'  - as can be seen through the complex tariffs currently available, and the speed at which price rises are passed on to customers.

"The department should clearly set out what energy suppliers' responsibilities will be for engaging with consumers to deliver the benefits of smart meters; and how they will be held accountable to both the department and consumers," Ms Hodge said.

For those most vulnerable consumers, smart meters present an additional worry. As well as the chances of them benefiting from the programme being lower, smart meters also mean it is possible for an energy company to cut off their supply without even visiting the property.

Consumer Focus has issued its own calls for the government following the release of the report. It says a clear strategy is needed on how benefits will be delivered to the consumer, more community based initiatives to educate people on the benefits of smart meters and extra help for those on low incomes and vulnerable consumers.

It also recommended the publication of an annual report on the costs and benefits to consumers.

As for the energy suppliers, they remain confident that the roll out of the smart meter programme will work as planned.

Gearóid Lane, managing director of British Gas New Markets, said: "Our customers have told us loud and clear about how they are benefiting from smart meters.

"Smart meters put an end to the frustration of estimated bills, give customers more direct control over their energy use and open the door to new energy saving technologies."

The government has also pledged to do as much as possible to ensure that the 'smart meter roll-out doesn't cost consumers more than it needs to', energy secretary Caroline Flint said, but it may simply be a case of only time telling whether smart meters bring with them the benefits they promise.