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28 Nov 2019

Can you get a cheaper energy deal with a smart meter?

Plus what happens if you can't have a smart meter, or don't want one
Smart meter

More than 14 million smart meters are now installed in homes. Around 2.3m of them are second-generation meters which won't suffer from the same problems as earlier types, according to new government data published today.

Smart meters were installed at a faster rate between June and September than they were earlier in the year, although it's still slower than at the same time last year.

One reason for this may be the increasing number of cheaper deals which involve a smart meter. In fact, the cheapest tariff for several of the biggest companies is one that requires a smart meter.

One of these could save you £291 a year, if you switched from an out-of-contract tariff priced at the level of the price cap. The saving doesn't include any extra savings you might make from being more aware of your gas and electricity use.

But if you're not keen on getting a smart meter, you need to read the small print carefully before signing up to a tariff. One firm will charge you £70 in exit fees if you sign up to its smart meter deal but refuse to have one installed.

Been offered a smart meter and unsure whether to agree? Here's what you need to know about smart meters and the roll-out.

Energy tariffs and smart meters

Of the 11 big energy firms we approached, five told us that their current cheapest tariffs are exclusively for those who have smart meters or agree to get them fitted. These are British Gas, EDF Energy, Eon, Npower and Scottish Power.

Other firms, including Shell Energy, sell tariffs that encourage customers to get smart meters, but aren't their cheapest deals. SSE and Utility Warehouse's deals encourage customers to have smart meters, but you don't have to.

Companies are under pressure from the government to install smart meters - or face fines from energy regulator Ofgem - so you could see this as the latest approach to getting customers on board.

If your main reason for switching is to get cheaper prices, as it is for half of the people we surveyed in September 2019 who had switched in the past five years, then smart meter tariffs could help you achieve this with some companies.

Smart Energy GB, the marketing body for the smart meter roll-out, says that smart meter tariffs are priced differently because it costs suppliers less to supply these customers. For example, companies don't have to send meter readers, and billing enquiries tend to be easier to deal with.

The cheapest deals that don't require smart meters usually include other conditions, for example paying by direct debit, paying a month in advance, foregoing paper bills, or managing your account online.

You don't have to have smart meters fitted. They are not compulsory. However, you may end up paying a premium, just like those who prefer to pay when they receive a bill rather than by direct debit.

Find out more about smart meters, including whether you have to have one.

The cheapest gas and electricity tariffs for smart meters

The table below shows the names and prices of deals from the big companies whose cheapest tariffs currently require you to have a smart meter fitted.

We've also calculated how much you'd save compared with an out-of-contract tariff priced at the level of the price cap (presuming you use a medium amount of gas and electricity).

Octopus Energyhas developed some time-of-use tariffs specifically for smart meter customers, which it says can save you money if you adapt your usage to fit with off-peak hours, when energy is cheaper.

These tariffs include Octopus Agile and Octopus Go (for EV drivers). It explained that these tariffs are the cheapest if you're willing to use the bulk of your energy outside of peak times. However, its single-rate tariffs are priced the same regardless of whether you have a smart meter or not.

Ovo does not offer tariffs exclusively for smart meter customers, or those who are willing to get one.

Shell Energy's Fixed June 2021 Plus Smart includes a smart meter 'incentive', but it's not the firm's cheapest tariff. The incentive is £30 per smart meter installation if you book an appointment by 1 February and have smart meters fitted by 1 April. The incentive is paid at the end of the tariff.

SSE explained that some of its tariffs require customers to have a smart meter installed already, or register their interest, but that you don't actually have to have a smart meter fitted.

Utility Warehouse does not sell specific tariffs for smart meter customers. But customers joining the company who agree to have a smart meter will get £50 credit on their bill.

Avro Energy did not respond to our requests. We did not approach Bulb, as it sells only one tariff.

What if I can't have a smart meter?

Companies we spoke to said that if it's not possible to fit smart meters at your home, then you'll still be allowed to keep the tariff.

For example, EDF Energy said that if its customers are unable to have a smart meter fitted for technical reasons, they can remain on the tariff.

Scottish Power's terms and conditions explain: 'If we cannot install a smart meter for reasons outside of your control, you will be able to remain on this Tariff until the end of the Tariff term.'

Reasons you may not be able to have a smart meter can include your home having very thick walls, being in a remote area, or living in a high-rise block of flats where your meters are a long way from your home, among others. Find out more about smart meter installation.

Solutions are being developed for these, which will enable 96.5% of homes to be able to have smart meters.

Eon explained that customers who can't currently have smart meters would need to agree to be contacted about having one in future. It would then contact the customer when relevant.

With Shell Energy's tariffs, you won't be eligible for the incentive if it can't fit your smart meters.

What if I have a smart meter the energy firm can't operate?

If you switch energy supplier with a smart meter, it may stop working if it's a first-generation meter and the new company can't operate it.

In this case, companies told us they won't replace your meter, as it should be enrolled into the central wireless network in the coming year. This will enable all suppliers to read all smart meters. When this happens, it should regain its smart functions.

You'll still be eligible to remain on the smart tariff, however.

British Gas explained that it believes this is a fair approach to support customers at this time.

Npower said that customers in this situation will need to provide manual meter readings.

But EDF Energy said if, after enrolment and 'significant effort' to read the meter, it would aim to replace the smart meter with a second-generation (newer) version.

The exception is if you want to sign up to time-of-use tariff, such as the British Gas EV tariff. To be able to charge you correctly at different times of day, you need a working smart meter.

What if I don't want a smart meter?

If you don't want a smart meter fitted, check the details of a tariff carefully before you sign up, to make sure that it doesn't specify that you must have one.

If you sign up to a tariff which does, and then refuse to have smart meters fitted, then you will likely be in breach of the terms and conditions.

Usually this means that the energy firm can move you on to another of its tariffs, such as its out-of-contract (or standard variable) tariff, which don't require smart meters. This could mean that your prices increase.

Most tariffs set a timescale within which you should have your smart meters fitted after signing up to the tariff. British Gas, EDF Energy and Scottish Power all state within three months, Npower within four.

British Gas's terms and conditions explain that 'if you are eligible for smart meters, and don't already have them and don't book an appointment for installation [u2026] within 3 months of coming on supply or switching to this tariff, we may contact you and give you 30 days to choose a different tariff'. If you don't choose one, you can be moved to another similar tariff that doesn't require smart meters.

EDF Energy will also charge an exit fee of £35 per fuel to leave the tariff if you don't have smart meters fitted.

But Eon's tariff only requires you to 'agree to be contacted during the tariff term for the installation of a smart meter'. It does not stipulate a timescale within which you must have one.

Electricity pylons in the mist
Cheap energy deals which don't require smart meters

There is still a wide choice of gas and electricity deals that don't require you to have smart meters. Here are the cheapest three currently on sale.

Prices are for a year and based on a home using an average amount of electricity. We've only listed deals available in every region in England, Scotland and Wales.

Compare gas and electricity prices with Which? Switch.

Which? energy pricing research

Prices are based on a dual-fuel tariff available in the regions stated, paying by fixed monthly direct debit, with paperless bills.

Energy use is based on Ofgem's annual average figures for a medium user (12,000kWh gas and 3,100kWh electricity a year).

Data is from Energylinx. Prices given are averages across regions, rounded to the nearest whole pound and correct on 27 November 2019.