New rules mean £40 could be claimed by people with smart meters

From next year, households will be entitled to compensation from energy suppliers for delays in smart meter installations or if their meters are left in "dumb" mode, Ofgem has declared. The regulator is setting out plans that would entitle customers to a £40 payout if they experience more than a six-week delay for a smart meter fitting, as well as for malfunctioning meters and those not functioning in smart mode which aren't rectified within 90 days.

This move is part of a wider initiative targeting malfunctioning smart meters, with the watchdog having facilitated the repair or replacement of over 600,000 defective units since July last year. MoneySavingExpert.com's founder Martin Lewis has praised the proposals, noting that "likely one in five" smart meters are not working correctly.

Many smart meters are believed to be stuck in so-called dumb mode, where they either have poor connectivity or fail to send readings automatically. By broadening the regulations to include poor connectivity issues, Ofgem aims to ensure a greater number of consumers can receive compensation.

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Ofgem's director of retail pricing and systems, Charlotte Friel, said: "Millions of consumers rely on their smart meter every day for accurate billing, cheaper tariffs, automatic meter readings and real-time data to help keep track of spending. But we know many customers that want a smart meter wait too long to get one installed or face delays on repairs when it stops working – this needs to change."

She added: "These new rules are about setting clear expectations of suppliers, incentivising them to boost smart meter standards, and protecting consumers from poor service if things go wrong."

Ofgem's plans dictate that from early 2026, energy suppliers must enhance smart meter performance or face financial penalties.

Mr Lewis highlighted the widespread issue with smart meters, saying: "Far too many smart meters, likely one in five, don't work as they should – a problem not just for all the homes with broken ones, but for the smart meter rollout. With so many dissatisfied customers, word-of-mouth is bad, so people tell their friends and neighbours not to get one.

"We need to shift firms' focus from just installing smart meters to promptly fixing those that are broken – not just meters that go into dumb mode, but crucially all elements, including in-home displays that stop working."

The updated regulations will also allow micro-businesses to receive compensation for smart meter problems.

Energy consumers minister Miatta Fahnbulleh said: "Consumers are at the heart of our mission to deliver an energy retail market that works for everyone, as we accelerate towards a clean, homegrown power system to protect households against global fossil fuel price spikes. That's why the Government is taking action, alongside Ofgem, to ensure families are better protected when they get a smart meter installed."

U-switch has revealed that their research indicates one in five households with a malfunctioning smart meter have been left waiting over two years for repairs.

Richard Neudegg, director of regulation at Uswitch.com, said: "Building consumer confidence is key to convincing the remaining households to get a smart meter. These proposals by Ofgem bring more focus on getting faulty smart meters fixed, and give consumers the confidence to take the plunge."