British Gas to install 'bill cutting' smart meters in two million homes

British Gas is to install two million smart meters in customers' homes by 2012 in a project that could see bills cut by £1 billion over 10 years, the energy supplier said today.

It is hoped smart meters will encourage people to cut their power use and fuel bills by showing householders how much energy they are using in real time as well as giving details of their carbon emissions and how much it is costing them.

The smart meters, which also enable power companies to take readings remotely, will spell the end of estimated billing.

British Gas said the programme will see around one million families receive the meters this year.

It said it was hoping to take the lead in the roll out, which was announced by the Government late last year.

Under Department of Energy and Climate Change (DECC) plans, energy suppliers will be required to install smart meters for gas and electricity in all homes by 2020.

Installing 47 million of the meters in 26 million homes by 2020 will cost between £7 billion and £9 billion, or around £340 per household.

DECC estimates people could save around £28 a year by 2020 on domestic bills - although householders who use the standalone display units to help them use energy more efficiently could save more, for example by putting on appliances such as washing machines at night when electricity is cheaper.

British Gas said it planned to beat the Government's timetable for the roll out.

Managing director Phil Bentley said: "At British Gas, we already have the largest smart meter trial in the country.

"We want all our customers to have smart meters as soon as possible, so they can take advantage of this technology and use it to help them cut their energy use, carbon emissions and fuel bills."

The firm estimates the roll out of smart meters will create 2,600 jobs in the company by 2012, including 2,100 experts in the field, 400 support staff and 100 managerial jobs.

It had joined up with other companies - including mobile phone giant Vodafone, billing systems firm SAP and global smart meter manufacturer Landis+Gyr - to assemble the systems.

British Gas said it would share its technical standards with the rest of the industry amid efforts to ensure customers are able to switch supplier easily.

Consumer Focus said that, while the new meter technology could bring "real benefits", it would also introduce potential risks.

It said measures to moderate how companies use new customer data and how they disconnect and switch householders were not yet in place.

"The regulator needs to be ahead of the game rather than playing catch-up to the market," the group said.

"We have known for years that British Gas and other suppliers were looking to roll out early.

"Ofgem must now urgently set the ground rules for early movers to help protect consumers."