Centrica holds back smart meter rollout until government plans clear

Centrica has said it is refraining from making a full-scale rollout of smart meters until the government clarifies its smart meter plans.

The company, which is the parent group of British Gas, has rolled out 400,000 meters for homes and businesses so far. It said it has also insourced the work.

But it told investors today: “We await confirmation from [the] government of the smart meter national implementation programme, and from the regulator regarding its plans for Retail Market Reform, before we proceed to full scale roll-out.”

The company also reported an annual profit of £2.4 billion, describing it as a "tough year".

In a programme costing an estimated £11.7 billion, and covering all suppliers, the government is planning to replace 53 million smart electricity and gas meters in all homes and small businesses during a five-year period from 2014.

The rollout is ostensibly aimed at helping customers to control their usage by providing detailed real-time information on what their consumption is costing, and will see an end to estimated bills. It is also seen as an important step towards smart grids, which will target better management of demand.

Last September, Centrica said it was starting the rollout of easier-to-use touch screen versions of the smart meters, and other energy suppliers also announced their plans.

The government is planning to spend up to £4.58 billion on building three wide area networks to link the smart meters to the smart grids.

But the government’s exact smart metering plan has still not been set, and MPs have warned of impending serious risks with the programme.

A National Audit Office report last year said there were “major risks”, questioning how much energy usage will change and how clearly the government had set any sort of benefits realisation plan or strategy for engaging consumers.

The Public Accounts Committee also said last month that the energy suppliers would be the real beneficiaries of the programme, by automating meter reading processes. The committee said that given energy suppliers’ history of fast-rising prices, it was unlikely that the savings would be passed onto consumers.

Veteran IT analyst Antony Miller of TechMarketView has also rubbished the programme, likening the scale of the rollout to the disastrous £12.7 billion cancelled NHS National Programme for IT, and questioning how much the scheme would end up costing in the end.

“Like the NPfIT, the whole premise behind the programme is fundamentally flawed. It’s not that ‘smart meters’ are a bad thing (neither are electronic patient records), of course they aren’t,” he said last month. “But the benefits of doing a big-bang, complete national replacement are simply pie-in-the-sky. At best, energy suppliers will gain – but even that I would call into question.”

Copyright © 2012 IDG Communications, Inc.

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