Business Reporter

SMART meters will be the biggest revolution in the power industry since North Sea gas was discovered, and legislation enabling their use should be pushed through parliament before the general election, says the head of the Energy Retail Association (ERA).

Garry Felgate said he expects an announcement on the roll-out of smart meters for residential customers to accompany next month's pre-budget report from Chancellor Alistair Darling.

All six major energy companies – represented by the ERA – are in agreement over the need to fit smart meters as soon as possible but Felgate said the UK government still needed to outline the legislative framework for a roll-out to take place.

Smart meters send details about the amount of gas or electricity used by a household to the utility company using the same technology employed by mobile phones.

Felgate said the smart meters would replace existing gas and electricity meters dating from as far back as the 1930s and would lead to more accurate energy bills by cutting out the need for estimated bills.

He said bills might also be reduced because utility companies would be able to save money on administration and postage costs associated with sending out amended bills when customers are unhappy with estimated amounts.

Felgate told Scotland on Sunday: "Smart metering will be the most significant change to the industry since the discovery of North Sea gas.

"Before North Sea gas only very rich people had central heating but the emergence of the gas meant that central heating was rolled out across Britain.

"Rolling out smart metering is an enormous task – fitting meters to 26 million households before the UK government's target of 2020.

"The most important service for customers will be that their bills will be accurate."

Felgate – who was in Edinburgh to brief MSPs on the Home Heat Helpline, which offers advice to customers who are unable to pay their energy bills – said that he didn't expect new energy companies to enter the market due to smart metering but he did think that other companies might become involved.

He highlighted the spread of loyalty schemes – such as E.On offering Tesco clubcard points to its customers – and predicted that more services could be linked with smart metering.

Companies may offer incentives – such as more loyalty points or cheaper tariffs – to encourage customers to switch on dishwashers or washing machines during off-peak periods, Felgate said.

He also suggested that smart meters could be programmed to charge electric-car batteries during off-peak periods; or that the reverse could happen and televisions or lights could be run from the car battery during peak periods.

Finlay MacDonald, who is leading the smart metering programme at ScottishPower, said: "There is no doubt that smart electricity and gas meters will have a major positive impact on all of our energy habits and consumption, not only helping to reduce bills, but also cutting overall carbon emissions.

"The new meter technology will streamline a lot of our internal procedures, helping to improve account handling and turnaround times for processes like a change of tenancy or a change of supplier. Fundamentally, they will make it easier for our customers to do business with us."

MacDonald added that ScottishPower is in consultation with the UK government and the other energy suppliers on the technicalities of the upgrade, and that the company supported "turning the proposals into firm policy as quickly as possible".

Darling's pre-budget report is also expected to be accompanied by an outline for the UK government's "social pricing support" under which the ERA expects Westminster to define which customers need support.

Felgate added: "It's not for the energy companies to identify which groups are in need – that's a job for the UK government."

Source: Scotland On Sunday
Location: Scotland

http://business.scotsman.com

By Peter Ranscombe