Page last updated at 09:24 GMT, Monday, 11 May 2009 10:24 UK

Q&A: Smart meters

By Kevin Peachey
Consumer affairs reporter, BBC News

Smart meter display next to a gas hob
The government is planning for every home to have smart meters

The government is unveiling plans for every home in Britain to be equipped with smart meters by the end of 2020.

It said that energy suppliers will be responsible for installing the meters in millions of homes.

So how will this affect householders, and will it cost or save them money?

What is expected to happen?

The government wants every home in Britain to be installed with smart meters - a device that shows exactly how much gas and electricity is being used.

This should bring an end to estimated bills, because the technology could send back an accurate meter reading to your energy company every day.

According to the Energy Retail Association, which represents the energy companies, the technological advance would be the equivalent of using wireless broadband instead of sending a telegram.

No more estimates. Will that mean they get my bill correct?

There have been thousands of complaints from householders who claim they have been overcharged on direct debit bills.

Consumer groups said this meant energy suppliers were getting free loans from customers. In March, regulator Ofgem told the companies to make charges clearer but said there was no "systematic" abuse of the direct debit system.

Smart meters should put this debate to bed, and would mean that householders no longer need to let the gasman in to read the meter.

People might even by able to check their usage on the internet, or share tips for cutting bills on social networking websites.

But installing these meters will be a big job. Some 26 million electricity and 22 million gas meters will need to be fitted.

That sounds expensive. Who pays?

You will not receive a bill from your energy company for installing a new meter, but you will pick up some of the cost.

A look at how the meter works

Industry estimates suggest that the total installation bill will be £7bn.

That amounts to about £15 per household per year between 2010 and 2020, but £10 of this will be covered from savings made by companies who no longer need to pay people to read meters, and the cost of dealing with complaints should fall.

That leaves £5 a year that would be put onto bills, but the industry thinks that - by keeping an eye on the meter - householders will cut their energy use and so reduce their annual bill by between £25 and £35.

These savings might come by changing habits such as switching off the television, rather than leaving it on standby.

Consumer groups are keen to see all the savings made by energy companies are passed on to the consumer, rather than just boosting their profits.

How do I get one of these meters?

There are trials of smart meters going on at the moment, so some householders have already got them.

Under the plans, each home would get a new smart gas meter and a new electricity meter. One is the "host" meter, that will communicate with you and the supplier.

The responsibility to install them will fall to the energy suppliers, rather than the distribution networks.

Will this make it more difficult to switch supplier to save on bills?

Your new smart meter might have your current supplier's branding on it, but don't be fooled.

They might look different, but all the meters should have the same specifications so if you want to switch suppliers you will not need to get a new meter installed.

Switching suppliers to get a better deal should be as easy as it is now.

You will not get a different meter if you pay in different ways - such as pre-payment or quarterly by cheque.

What about bills at business properties?

Large businesses should have smart meters within five years, according to the government.

Small businesses should get smart meters in the same timeframe as consumers.

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