Dr. Paul McGowan:

I will not answer all of those questions myself but will pass some of them on to my colleagues. The five-year timeline for smart metering is based on the fact that we will be installing meters in 2.2 million households. Phase one is all about learning and understanding the best way to deploy the meters to ensure maximum take up. Subsequent phases will see a significant ramp up in the volume of smart meters that will be rolled out. The Chairman asked about the benefits of smart meters. The original cost-benefit analysis for smart meters made it quite clear that initial savings would be identified by households both in terms of how much energy they consume and the amount they consume at peak times. This benefits the consumers in terms of reduced electricity bills as well as a reduction in the amount of carbon emissions their energy consumption contributes towards. It is also of benefit to the system in terms of reducing peak consumption. We are confident that there are many more advantages and benefits to be accrued from the roll-out of smart meters. Smart meters themselves are broadly cost neutral. The overall cost of deploying smart meters is roughly equivalent to the benefits we have identified but there are many other benefits that we have not been able to quantify but which we are confident will derive from the roll-out of smart meters, not least enabling the deployment of microgeneration and the active participation of citizens in the energy market. The benefits of that are very difficult to quantify but we see it as an integral part of the energy future.

I will ask Mr. Melvin to address the question on the pay-as-you-save model.