With energy bills set to rise from 1 October, you may be looking at whether a smart meter could save you money on your gas and electricity?
Energy costs more than doubled at the height of the energy crisis in 2022. While they have come down from these record highs, they still remain hundreds of pounds higher than they were in 2019.
Most households are in line for another shock this autumn and winter, with a 10% increase coming in from October due to a rise in wholesale prices. The Ofgem energy price cap looks likely to go even higher in January. It means some of the fixed-rate deals currently on offer could be worth considering.
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Smart meters, which send readings at regular intervals to your supplier, can help you to closely track your energy usage and keep your costs down. But, do these meters really do what they say on the tin? If you currently have a regular meter, we look at whether you should move across to one?
The pros of smart meters
The first big benefit of a smart meter is that it could help make your bills more accurate. It will send readings to your supplier on a daily or half hourly basis, depending on what sort of deal you opt for.
For example, you will have to have half hourly readings if you wish to sign up for tariffs with off-peak rates - like EV tariffs - or want to take part in energy saving events. These tariffs/events could save you money.
Your smart meter will also save you from having to manually send meter readings to your supplier, as you would with a standard meter. If you don't send readings in on a regular basis (i.e. at least once a month), your supplier will estimate your bills. This could mean you end up paying more than you have to.
Another useful benefit of smart meters is the in-house display you'll get alongside your smart meter. This small monitor will show you your energy use to the penny.
The gadget can help you to figure out how much energy you use when you turn on certain appliances, and which habits and chores are costing you the most. It means you can adjust your usage to cut your bills.
Shifting your energy use may also allow you to be greener. During off-peak hours (typically weekends, working hours and overnight), the national grid tends to rely more on renewable energy production. Meanwhile, peak times usually see a larger reliance on fossil fuels - especially during the winter.
Finally, when it comes to switching, a smart meter can make life easier. It means you won't have to submit a final reading to your old supplier – although, it's always worth making a note in case something goes wrong with the automatic readings.
And, when significant alterations to the Ofgem energy price cap occur, you won't have to send readings in ahead of the changes to unit rates. It is still good practice to do so, as it will ensure you do not pay over the odds for your energy.
The cons of smart meters
The government had been aiming to offer a smart meter to every home by mid-2025. However, figures released by the Department for Energy Security and Net Zero (DESNZ) on 29 August showed 36% of homes were still yet to have one fitted by the end of June 2024.
With the rate of domestic installations in Q2 falling 11% quarter-on-quarter, and 15% year-on-year to 663,200, it suggests it may be getting harder to get an installation booked in.
That's not to say all homes want one fitted. Many people have refused over concerns about the amount of insight this gives energy suppliers. There have also been concerns around smart meters being targeted by hackers. But there is no evidence that this has happened.
For households with a smart meter, the biggest issue comes when the meter malfunctions. According to government data, 4.3 million smart meters weren't working properly by March 2024. This was up from the three million malfunctioning devices recorded the previous year. However, data from MoneySavingExpert suggests this could be an underestimate.
Common issues included suppliers not receiving readings, the meters not displaying information to consumers, or both. Some have not been working because they haven't been commissioned properly at the point of installation.
Many of the other meters had malfunctioned because they were first generation smart meters (known in the industry as SMETS1), and therefore couldn't connect properly to the centralised infrastructure suppliers use to get readings. If you have a first generation meter, you will need to get a new one installed.
The situation has led MoneySavingExpert founder Martin Lewis to write to Energy Secretary Ed Miliband in a bid to get him to change course on the government's smart meter rollout targets. The campaigner said he wanted to more resources given over to repairs instead of installations.
He wrote: "Shifting the target to 'working' smart meters could help give firms some wiggle room to get people back 'online', and in the long run, the hopefully improved word of mouth will lead more smart-meter-sceptics to decide they want to give it a go."
The pros of traditional meters
Many people choose to remain on traditional meters. This could be because they want to control the information they hand over to their energy supplier.
It could also be down to the type of meter you have. For example, economy 7 and economy 10 meters have cheaper rates than standard meters, if you live in a single fuel household. Suppliers no longer fit these meters, and only a few offer tariffs for them.
If your meter is accessible and you're willing to submit readings every month, then it there will be no extra expense than if you had a smart meter (although you won't get the same insights into your usage).
The cons of a traditional meter
Of course, the flipside is that if your meter is quite hard to get to, you may not be able to submit readings to your supplier. In this instance, you may end up being charged extra for your usage, as your supplier will have to go off estimates rather than your actual usage data.
You can get your money back if you can show you've overpaid. But it may take weeks or even months for the compensation to come through. Having estimated bills could also lead to you underpaying, which might result in a hefty future bill.
Should I go for a smart meter?
Smart meters might not be guaranteed to work seamlessly, but they do mean you're more likely than not to get access to some of the cheapest deals on the energy market. You will often find suppliers stipulating that you have to have one to access certain favourable tariffs.
For example, if you have enough flexibility to be able to shift your energy use to off-peak times of the day, you could reduce your bills. But the type of energy deal that allows you to access these cheaper rates requires a smart meter because it tracks wholesale prices on a half-hourly basis.
So, from a price perspective, it makes sense to opt for a smart meter. However, they may not be easy to install in certain homes - especially older properties. If you live in such a household, it may be best to stick with your existing meter.
