Secretary of State for Energy Ed Davey has called for smart meters to be rolled out for prepayment customers first. However, focus is just as important as speed, argues Richard St Clair from Elster solutions.
Prepayment meters (PPM) currently represent a bad deal for consumers and energy suppliers alike. PPM customers pay on average £105 more a year than credit customers, while the complexity of the PPM functionality also costs energy suppliers significantly more to manage and install. The smart meter rollout, therefore, is in the best interests of all parties and will give PPM customers, who often represent those from poor socio-economic backgrounds, the opportunity to save money through accessible energy usage data.
Despite these clear benefits, focusing the smart meter rollout on PPM customers first also presents a heightened risk. Energy customers that use PPM are logistically and technically one of the most difficult to manage. PPMs are expensive assets with complex functionality and are often found in homes in hard to reach areas. Rushing the smart meter rollout for complex PPM customers before any initial issues are ironed out could result in power outages and financial losses for these homes.
Energy suppliers paid five times more for the current pay-as-you-go meters compared with credit meters. Replacing these meters early will result in these parties losing substantially on their investment.
However, initiating the smart meter rollout with credit customers instead would allow sufficient time to account for a larger portion of the value of the old PPM meters. It would also give suppliers due time to resolve any inevitable logistical problems that come with mass projects such as this before tackling more vulnerable prepayment customers.
As pioneers of the idea of smart PPM metering in the UK, Elster is particularly pleased that this rollout standardises low cost and accessible pay-as-you-go smart metering solutions. As part of the Government’s plan, all smart meter assets will be available for pay as you go, which should help to remove the stigma of prepayment tariffs, offering customers more accessible data to better manage their energy usage. Furthermore, paying for energy usage upfront means that energy suppliers will save money by having their customer’s money before supplying energy. They can then pass these extra savings on to the end user.
The smart meter rollout can’t come soon enough, as it means reduced costs for both suppliers and consumers and a wider choice of tariffs for the latter. However, taking undue haste with PPM customers could not only jeopardise the smart mater rollout as a whole, but also risk power and financial losses. Rollout smart meters now – but don’t make it more difficult than it has to be.
