How does the smart meter rollout affect households in fuel poverty?
Millions of households across Great Britain are living in fuel poverty, struggling to pay their energy bills. Each nation has its own fuel poverty strategy, or plan, to alleviate this problem, each of them rightly focussing on the energy efficiency of a currently poor housing stock. There are lots of other things that must be done to help those who struggle the most to pay their bills, and NEA believes that a successful smart meter rollout is one of them. That is why we have been working with Smart Energy GB, on their "Smart Energy GB in Communities" programme, partnering with regional organisations from the voluntary and public sectors. This means we're able to work with trusted, expert organisations across the country to ensure people understand the benefits of smart meters and know how to get one.
Smart meters give struggling households new insight into the way that they use energy, meaning that they can better understand what appliances are costing them the most on their energy bills, which can help identify actions which could lead to a reduction in their energy costs. A smart meter install is also a rare touchpoint in the relationship between a supplier and their vulnerable customers where households can receive tailored energy advice, safety advice and eligibility checks for Government schemes to ensure that their home can be kept warm and safe.
We at NEA believe that the rollout is critical for one group in particular - those that currently pay for their energy through a prepayment meter. Coupling fuel poverty with prepayment meters can lead to dire consequences due to self-disconnection or self-rationing. This is where the credit on a meter runs to zero, and the household cannot top the meter up, for one of a number of reasons or a customer limits their usage with unhealthy consequences such as avoiding using heating or hot water during cold spells or avoiding using lighting or cooking facilities to the detriment of their physical and mental wellbeing. Citizens Advice estimate that 140,000 households1 disconnect each year due to affordability issues alone. This often occurs in relation to a gas meter, which can build up debt over the summer because of the accumulation of daily standing charges. If people self-disconnect and cannot afford to top up their meter in the winter, they may not be able to heat their home, increasing the risk of serious health issues occurring.
Although smart meters cannot solve this problem, they can facilitate solutions to help alleviate it. Suppliers can offer more ways to top up a smart meter. Through smart prepay tariffs, customers will have the ability to top up online, meaning that there is less chance of long periods of self-disconnection occurring due to forgetfulness (perhaps due to a medical condition), or where mobility issues mean that the customer finds it hard to get to a place where they can top up, or even to access the meter in their own home.
In addition to this, and very importantly, suppliers stand a much better chance of spotting when a customer has self-disconnected (something that Ofgem are looking to mandate them to do within licence conditions). If suppliers know that a customer has self-disconnected, they can offer support to try and get them back on supply through offering emergency, friendly or discretionary credit. There is also the potential for suppliers to offer more services, such as guidance towards the benefits entitlement checks, which can lead to a life changing increase in income.
The benefits of smart prepay are clear and there is a need to ensure that prepayment customers can receive them as soon as possible, not only to ensure that they are gaining the benefit of a rollout that they are contributing towards, but also to maximise the total benefits of the rollout. Put simply, the later they receive meter upgrades, the lower the overall social benefit of the rollout. As of September, only 7,000 SMETS2 meters were in prepayment mode. There is a long journey to ensure that all prepayment customers, of which there are approximately four million, receive a smart meter. In order to make this happen, NEA believes that BEIS should send a signal to suppliers that they expect the rollout to prioritise customers with smart prepay meters. this will take careful engagement with recipients to ensure that the benefits are understood. We believe that this prioritisation is a crucial element in the rollout, helping to ensure a fair, equitable transition to a low carbon energy system.