Government confirms new delay to smart-meter IT system

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The IT system, which is designed to link the nation's smart meters to energy providers, was due to be activated on Wednesday.

Instead, it's now scheduled to be operational by the end of September at the earliest, adding yet another entry to an already long list of setbacks.

A Government spokesperson said that this most recent extension was necessitated by "minor delays" in the testing phase of the infrastructure, which is being developed by the Data and Communications Company (DCC).

With this new delay - the third in 18 months - the Government's aim to have the entire UK fitted out with smart meters by 2020 is looking increasingly uncertain.

Savings at a price

Once installed, smart meters would send gas and electricity readings every half an hour to energy suppliers, removing the need for energy consumption to be checked manually.

A 2014 governmental impact assessment calculated that this would provide homes and business with over £6 billion in efficiency savings.

Yet despite this promise of efficiency, the project of actually equipping the nation with smart meters has been plagued with issues.

Without the centralised infrastructure currently being built by the DCC, the 3.6 million smart meters currently installed throughout Britain are often compatible only with the energy suppliers that fit them.

For example, when a household with a smart meter switches their provider, they can sometimes find that their meters begin acting as traditional 'dumb' meters.

This is why the DCC's centralised infrastructure is vitally important, yet so far its appearance has been continuously pushed back.

It was originally expected to go live in late 2015, while nationwide coverage for smart meters was projected for 2019.

However, after the DCC admitted that there's "no feasible way to maintain the timescales of the current... plan," it was delayed until April 2016. Correspondingly, the target for covering the nation with smart meters was reset to 2020.

Then the IT system was delayed until August 17th, at which date it was kicked further down the road again, even though the design and build phases of the project have been completed.

As a result of such teething problems, the cost of the nationwide smart meter programme has grown from an initial £5 billion to the £10.9 billion of today.

Costly failures

In light of the repeated delays and ballooning cost, there's a very real possibility that the system will be delayed again and that the price tag of £10.9 billion will rise even higher.

As for the £6 billion in projected efficiency savings, the Chairman of the British Energy Efficiency Federation, Andrew Warren, stated this April that there isn't even any guarantee that they'll actually be passed by energy companies onto their customers.

He wrote in an article that the "claimed net benefits are dependent upon these suppliers passing on to consumers practically all the enormous system savings they will be making ... Past experience suggests this may well prove insufficient on its own to protect consumers."

There are in fact some EU nations which believe that smart meters would actually have negative value for them if rolled out nationwide. Germany, for instance, conducted a cost-benefit analysis in 2014 that found there would be at best no net benefits if they were to replace traditional meters with smart ones.

Similarly, the Energy and Climate Change Committee warned in March 2015 that the plan to install 53 million meters in more than 30 million premises could end up being a "costly failure," especially if delays continued.

In September 2014, the Public Accounts Committee issued a similar warning when it expressed fears that the public "may end paying for obsolete smart meters that save little." Margaret Hodge, the chairwoman of the committee, affirmed that intelligent meters would provide energy users with a "saving of only 2% on the average annual bill."

Negligible benefits

Because the expected margins for saving on energy bills are potentially so slight, this latest delay to the communications infrastructure isn't good news for households.

This is because, if the £10.9 billion fee in preparing the IT system and the 53 million smart meters rises any further, it will ultimately be the energy-consuming public who'll foot the bill.

If this bill rises too high, then actually converting the nation to smart meters will bring negligible benefits, and in the worst-case scenario could actually end up costing rather than saving us money.

This is why it's paramount that the Government continues to follow the progress of the Data and Communications Company very carefully in the coming months. Without doing so, their smart meter roll-out may indeed end up being a "costly failure" for them and for the public.