Dr Jan Wright, the Par' />

Power companies have hit back at claims they are installing "dumb" electricity meters into hundreds of thousands of homes.

Dr Jan Wright, the Parliamentary Commissioner for the Environment, says a new wave of electricity meters is being rolled out without taking into account technology that could cut home power bills and reduce the need for new power stations.

Dr Wright wants power companies to install electricity meters that can "talk" to new fridges and dishwashers expected to become popular in the next five to 10 years.

The new appliances could save households money by doing non-urgent tasks when the meter indicates power prices are lowest.

Examples are dishwashers and washing machines that slow down wash cycles at peak times, and fridges that turn off auto-defrost cycles.

Power companies say manufacturers are working on the new appliances and adding the function to meters now would be pointless.

In a report out yesterday, Dr Wright said retailers were planning to install 800,000 "dumb" meters by 2012 that would benefit power companies but not their customers.

Dr Wright said it was possible companies had little incentive to help customers save power because that would reduce their profits - a statement disputed by Mercury Energy general manager James Munro.

For the "smart" system to work, any new appliance must be able to communicate with any "smart" meter.

Mr Munro said a standard communication system between meters and appliances had not been agreed. Picking a system now risked meters proving useless if global manufacturers chose a different standard.

Genesis Energy, Contact Energy and Mercury said new meters being installed were capable of having the appliance "talk" function added.

Dr Wright said adding the function later could cost $60 million.

She also wants the Government to look at whether power companies should have to install in-home devices that give half-hourly readings of power use, and offer cheaper power when demand for electricity is lowest.

Peak demand drives the need for new power stations because the network has to be able to meet maximum demand at any time.

Evidence suggests people use about 10 per cent less electricity when they can see how much they are using each hour, and up to 5 per cent less at peak times when they pay more.

Mercury, Genesis and Contact said they were looking at offering tariffs which reflected real-time energy costs to consumers.

Large industrial power users already pay a different rate depending on when they use their electricity.

Households use about a third of total electricity but about half at peak times - mostly heating homes on winter evenings, says Dr Wright's report.

She found households could save $25 million a year from a 1 per cent reduction in power use. A 5 per cent reduction would save $123 million and significantly reduce greenhouse gas emissions.

She said New Zealand's rollout of smart meters was unusual because it was driven solely by companies, with only "light" Government oversight.

What the commissioner wants:

* "Smart" meters that can talk to household appliances and tell them to carry out non-urgent tasks when power is cheapest to generate.

* A ministerial investigation into whether in-home displays should be required giving an instant reading of how much electricity was used each half-hour.

* An investigation into a tariff system that would reward customers for using electricity when it was cheapest to generate.

* If the tariff system is adopted, keeping the option of a flat rate so poorer households do not have to switch off the heater on winter evenings when electricity is more expensive.