A good meter estimate is just not good enough

If we don’t know how much energy we burn, how can we hope to control it? The better information we have, the more likely we are to take rational decisions

Most householders never dream of bothering to read their gas or electricity meter from one year’s end to the next. The bills we receive will mostly be based on estimations as to how much fuel we might have consumed over the past quarter – rather than what has actually been burnt. Many of us will never need to reach for our chequebooks. The money will have been deducted by standing order from our bank accounts.

Effectively, we are being divorced from the cause-and-effect of most of our energy use. Consumer research invariably shows there is only the faintest awareness of what causes the meter to tick over most. Is it running the washing machine, or the iron? Is it the permanently blinking set-top box, or the mobile-telephone charger?

And if householders don’t know, how can we be expected to take rational economic decisions? Short of switching everything else in the home off, and sitting down in front of the meter whilst the relevant appliance is in operation, it really is a bit difficult to see how we can know precisely which is the worst gas-guzzler. There is growing evidence that business consumers are frequently simply not informed when their bills – even when officially recorded on a half-hourly basis – are estimated, rather than a true reflection of actual consumption levels. This can cause really serious cash flow problems, exacerbated by the failure of certain suppliers to notify customers when they have ceased providing accurate readings, and instead have reverted back to estimates.

This could shortly have further severe consequences. From next January all premises will start needing to be energy labelled, under the EU Energy Performance of Buildings directive. The certificates for commercial buildings will in part be based upon historical energy consumption data. So misleading consumption figures could result in inaccurate certificates being issued. These in turn could end up affecting the market value of individual buildings.

This month the UK government assumed the Presidency of the European Council of Ministers for the rest of 2005. As it happens, during these six months, our government will have a unique opportunity to push forward one of the most positive solutions around to this conundrum.

Over the past couple of years, no less than 30m so-called Smart Meters have been installed in Italian premises, both business and private. Such meters do away forever with the need for estimated bills. They avoid the problem of having to send out meter readers to read each meter at least once every 24 months – which is what is supposed to happen in the UK.

The powerful House of Commons Public Accounts Committee has been very scathing about the failure of the energy regulator OFGEM, to ensure even this minimal oversight occurs (see EiBI May 2005), a criticism echoed forcefully by environment minister Elliot Morley. Instead these modern meters provide accurate remote readings, and providing real-time customer information. Such a two-way communication system is revolutionising tariff management in Italy, and allowing such concepts as network demand side management, and White Certificates, to flourish.

One of the priorities of the UK Presidency is to negotiate a final agreement on the draft directive on Energy End-Use and Energy Services (see news pages). Article 13 of that directive concerns precisely such smart meters. The European Commission is rather keen to see the Italian experience replicated elsewhere. They are enthusiastically supported by the European Parliament. And also by quite a lot of Europe’s electricity and gas companies. Plus water companies, who envisage being able to co-operate with their metering needs.

The reason they wish to see the introduction of Smart Meters made mandatory is simple. They cost more than a conventional meter to make (£50, as opposed to £10), although not to install and certainly not to run: in fact, by making the entire system much more efficient, overall costs should be brought down.

The problem is that, in a competitive energy market, any supplier which installs such meters unilaterally runs the risk of having their customers stolen by others who appear to be “less expensive”. It is an obvious area for a mandatory requirement, ensuring at minimum that whenever a meter is replaced, something Smart goes in its place.

Inevitably some governments have baulked at sanctioning the initial capital costs, doubtless egged on by some of the more short-sighted suppliers. It will fall to the UK minister, Elliot Morley, to broker a deal between the three European institutions over the coming months. There is every reason to wish him uncompromising success in bringing Smart Meters to all Europe’s energy consumers.

* Details of the precise texts being proposed by each of the three European institutions for this Article can be found on www.euroace.org