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Not Too Smart an Innovation: Britain's Plans to Switch Consumers to Smart Electricity and Gas Meters

The high cost of meeting peak demand for electricity could be reduced if demand could be smoothed. Growth in the use of intermittent, renewable sources of energy will reinforce the need to be able reduce demand when necessary. “Smart” meters for electricity and gas could meet this need, and, by 2018, plans exist for all UK households to have them. However, the UK government's cost-benefit analyses of smart meters for electricity make little mention of their most powerful capability: To set prices in real time, so that consumers pay high prices when supply is tight. Without this, the benefits of smart meters may not be enough to repay the huge cost of their installation. Officialdom's silence on time-of-day pricing means that its impact on poor consumers is not addressed. With smart meters for gas, the case for introduction, even with time-of-day pricing, is equally unconvincing.