Not So Smart – The government should listen to criticism of its latest IT plan before it is too late – The Times

January 03, 2016
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“Ever since the collapse of the £20 billion NHS effort to digitise every patient’s medical records, it has been sensible to worry whenever government takes responsibility for a multibillion-pound IT project. It is sensible to worry now.

“Smart” meters that measure gas and electricity consumption every half an hour are scheduled to be installed in every household in the country, with the bulk of the work starting later this year. The total cost of the programme is put at £11 billion, to be met by consumers in a levy added to their energy bills and spread over at least five years. The Department of Energy and Climate Change (DECC) claims that the long-term savings will amount to nearly twice as much. If so, the project will have been a costly gamble but one worth taking in the end.

The signs are, however, that the risks may eclipse any reward. As we report today, a leading expert on Britain’s energy supply has written to the energy secretary and the chancellor to warn that the meters being installed have much shorter lifespans than those they are replacing, that the system adopted for installing them is the most complicated adopted by any country in the world, and that the cost per household is so inflated that Britons will be paying nearly four times as much as Italians for a comparable system.

The author of this analysis is Alex Henney, a former director of London Electricity who advised the Thatcher government on electricity privatisation and has spent more than three decades in the industry. He deserves a hearing. It is not too late to learn from the mistakes of previous IT fiascos and correct any that could doom this one….

In practice the scheme as currently envisaged could founder on cost, reliability and complexity. Ministers put the cost per meter at £214.50. If the savings for users were substantial this might be acceptable, but British Gas admits that those it has already installed are saving customers £26 a year, meaning that the meters will take nearly a decade to pay for themselves. There is no guarantee that they will last this long, or that a switch of supplier will not entail the installation of a new meter. Most worryingly, responsibility for installing 53 million meters has been handed to energy suppliers notorious for poor customer service rather than the operators of Britain’s energy infrastructure – National Grid and UK Power Networks.

The solution is not to scrap smart meters. Fewer than 4 per cent of the 53 million have so far been installed. The DECC should pause, simplify the rollout and ensure that meter manufacturers are not the only ones likely to profit. To press ahead regardless would be, quite simply, dumb.”