The roll out of smart meters is well on its way in the UK. In this article it is claimed that smart meters will cost each household 420 pounds. Apparently, this money will be taken from each customers energy bill. In the article I couldn't understand how exactly this charge is calculated and in what way it is added to the bill.
Will smart meters cost each UK household 420 pounds?
The UK smart meter programme is likely to cost households hundreds of pounds
The cost of the smart meter programme in the UK is supposed to be paid for by increased electricity costs in general not by a specific levy for meters added to their bills.
The Daily Mail report is not as sensationalist as one might expect of that typically sensationalist tabloid. Previous sources have similar but slightly lower estimates (for example this report in 2016 from The Register).
However, this cost is the cost of installing the meters and ignores any possible benefits from their use. The controversy over them has come because the estimated benefits are much more uncertain than the installation costs (and, possibly, because some of the benefits accrue to the suppliers not the consumer).
A 2017 update from The Register says the following:
Cost-benefit estimates for the British smart meter programme vary hugely, with figures ranging from modest savings of around £26 a year (as we reported last year) to the Mail on Sunday’s latest guess [less than £10/year] coming from Gordon Hughes, an economist at the University of Edinburgh.
The introduction of the smart meter is a dog's breakfast. At best it is misconceived and an astonishingly expensive project. For those claiming it will bring major savings, I say they need to grow up,” Hughes dutifully raged for the Sunday newspaper...
...Four years ago a British report revealed that the cost of installing smart meters in the UK is £390 per household, while more recent estimates are that the benefits are now as low as £11 per household, agreeing with the University of Edinburgh’s Hughes’ estimates to the Mail on Sunday. All costs for installing the UK smart meter network, from the backend systems to the consumer unit in your home, are met by hiking up your gas and electricity bills.
Just before the rollout started one advisor to the government (Alex Henney) wrote this (quoted on thisismoney.co.uk, a Daily Mail site:
In a written statement to the Parliamentary Energy and Climate Change Committee four years ago – a year before smart meters started to be installed – he wrote: 'The British roll-out of smart meters is one of the most incompetent, one of the most expensive, and definitely the most complex.
'The project is likely to be a shambles with negligible consumer benefit.'
Henney stated civil servants 'cooked the books' to give meters a net benefit of almost £5billion – but independent analysis found it would end up costing the nation at least £4billion.
So the Daily Mail are not grossly out in saying the cost is £420/household but have ignored the benefits. On the other hand there is a very significant controversy over what the benefits are, hence the heated debate (see this question: Do "smart meters" bring about any significant savings?). Whether consumers are better off in the long term is unclear and whether the UK rollout plans are focussing on the things that will maximise the benefits for consumers is a significant part of that uncertainty.
An official estimate for households with meters that support both electricity and gas is 7% lower than the unsourced estimate.
Given different estimation techniques might lead to different figures, I consider the answer to the questions to be "Yes, close enough for a tabloid article" but opinions on accuracy might differ.
In November 2018, the UK's National Audit Office (NAO) released a report, Rolling out smart meters that took a critical look at the progress of the deployment.
(This snippet is from the press release, but very similar text appears in the report.)
In 2016 the Department expected the cost of the programme to be £11 billion and estimated it would bring economic benefits of £16.7 billion. The costs are equivalent to £374 per dual fuel household (in total, rather than annually). The NAO has, however, found the £11 billion figure underestimates the true cost of rolling out smart meters, which has since increased by at least £0.5 billion, equivalent to an extra £17 per household. The Department expects these costs to be more than offset by cost savings for industry and consumers.
£374 + £17 = £391, which is slightly less than the claimed £420.
