Millions of homes with broken or redundant smart meters will miss out on a scheme that rewards those who use less power at peak times.
National Grid, which administers Britain’s gas and electricity network, is proposing to pay households up to £10 a day from November if they cut back their usage.
The payments will be made by suppliers such as British Gas and Octopus, but only those with the most up to date smart meters will be able to take part. The ultimate cost of the scheme will be added to all customers’ bills.
At the end of last year there were 23.52 million smart meters that will work with the rewards scheme — 11.1 million second generation smart meters that use Smets 2 technology and 11.12 million older Smets 1 meters that have had a software upgrade. A further 1.3 million advanced meters, used by businesses, can also benefit.
That leaves 32.48 million meters that will not work with the scheme, including 4.18 million Smets 1 smart meters that operate in “dumb” mode. This means they do not communicate with suppliers and homeowners have to send meter readings. About 370,000 dumb meters have been upgraded this year.
Being excluded from the rewards scheme, which could earn some households up to £120, will be the latest in a line of problems with the smart meter scheme, whose cost has risen from an estimated £11 billion in 2016 to £13.5 billion today.
Thousands of householders have had the meters installed only to find that they stopped working and their supplier refused to fix them.
Steve Herbert, 63, had smart meters installed by British Gas in March. It was only when he contacted the supplier because he thought it owed him £400 that he realised that the meters had never actually worked properly.
Herbert, a retired musician who was with the Royal Marines Band Service, noticed that his account credit was based on estimated bills. British Gas said he needed to provide readings and then told him he was £200 in debt. He is now waiting for the meters to be upgraded at his home in Exminster in Devon.
He said: “The point of these meters was to save me money but they have ended up costing me more by giving me incorrect information.
“I also now find that I will be excluded from government money-saving ventures and at a time of rising costs this is somewhat annoying. We live in a former hospital which is a listed building with single-glazed windows so any help with our rising fuel bills would be greatly appreciated.”
British Gas said: “We have contacted Mr Herbert to apologise and applied the correct settings for his meters, which are now working as they should.”
● Smart meter problems: what you need to know
It is hoped that the energy reward scheme will help to avoid blackouts this winter as gas supplies around the world dry up due to the conflict in Ukraine.
It may also help those struggling with bills that have gone up 96 per cent for the average household since January.
The smart meter programme began in 2014 and has been beset by delays and cost overruns.
It was meant to be completed by 2020 but the deadline has been extended to the end of 2025 and only about half the old meters have been upgraded so far.
Unlike in Norway and Portugal, where network operators carried out upgrades, it was decided that suppliers would install the new meters. Different suppliers used different technologies and many people found that their meters did not work if they switched supplier.
● How smart meters failed when we needed them mostBenjamin Sovacool, professor of energy policy at the University of Sussex Business School, said: “Some suppliers have gone bust over the life of the programme, each has different technological specifications for their smart meters, and early meters stopped working when households switched.
“Now is the time when people can actually benefit from the technology, so suppliers need to step up. With the cost of living crisis, now is more important than ever to have an effective smart meter that lowers energy consumption and empowers consumers.”
How will the rewards scheme work?
The National Grid scheme will be administered via suppliers. For now, it will only apply to electricity usage for domestic customers.
If you want to take part you must agree to your supplier getting half-hourly updates about your usage. There will be a 12-day trial sometime between November and March and suppliers will invite customers to sign up. A text message will be sent to participating households the day before a stress event and they may be asked to not use their washing machine or dishwasher during peak periods.
You will be paid based on how much you reduce your usage.
Between February and March Octopus Energy offered 100,000 customers free energy if they hit certain energy reduction targets in peak periods. They saved an average of 23p for each peak period during the two-month trial but some people saved £4.35, the company said.
Under the National Grid scheme, customers will be paid an average of £4 per kilowatt-hour (kWh) of energy saved during what Octopus calls a “saving session”. For example, if you normally use 5kWh of electricity in a four-hour window but manage to cut that to 3kWh, Octopus would pay you £8 for the 2kWh you saved.
How smart is your meter?
• If you have a non-smart meter you can ask for it to be replaced. Your supplier may have already suggested this — they have to install a set number each year.
• If you have a Smets 1 device, a software upgrade will automatically connect it to a central computer so that it will work like a Smets 2 and still function if you switch supplier.
• There were 374,337 fewer Smets 1 meters operating in dumb mode this year compared with 2021.
• The energy regulator Ofgem said that suppliers are responsible for ensuring that meters are “accurate and in proper working order’’.
• If your supplier fails to respond to a complaint within eight weeks or you are unhappy with its response, phone the energy ombudsman on 0330 440 1624 or write to Ombudsman Services, Energy, PO Box 966, Warrington WA4 9DF.
• You cannot have a new meter replaced with an old-style device. You can, however, ask a supplier to turn off the smart functions so it runs like a traditional meter.