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Uncertainty over smart meter funding

The £11.3 billion budget for the national roll-out of smart meters could be blown, with extra costs passed on to consumers, the Government has warned.

It is also unclear whether householders will reap the full benefits of expected savings on their bills from having the new gas and electricity meters installed.

Smart meters, which are being rolled out to all homes and smaller non-domestic properties across the country between 2014 and 2019, provide customers with detailed information on their energy use and allow suppliers to collect readings remotely.

They also pave the way for “smart grids” in which demand could be managed remotely to save energy, for example by charging plugged-in electric cars at night when little power is being used or by powering down fridges during peak times.

The Department of Energy and Climate Change (Decc) which is managing the programme, has estimated it will cost £11.3 billion, mostly borne by energy companies who will pass on the costs to consumers in higher bills.

The programme to install 53 million new gas and electricity meters is expect to cost households an extra £6 a year in energy bills by 2015, but should deliver savings of £23 a year on average by 2020.

A report by the National Audit Office (NAO) is warning that it is uncertain whether the full benefits, expected to total some £18.6 billion over the next 20 years, will be realised.

Smart meters could deliver £6.2 billion savings by reducing demand for electricity, while £3.4 billion will be saved by reducing manual meter readings.

But the NAO report said it was not clear how much people would change their behaviour to save energy and money, and that lower bills would only materialise if companies passed on their savings to customers.