As well as putting meter readers out of work, the government’s plans to install smart meters to remotely monitor every household’s gas and electricity use by 2020 may hit other snags.

Neither Whitehall mandarins nor the utility companies have yet outlined how they plan to pull off this ambitious project, preferring to muse on the potential reduction in the average household’s bills and national carbon footprint.

Smart metering works by replacing existing meters with equivalent devices that are able to transmit data about customer use to a central office via a communications network.

That network can be wired or wireless. Existing schemes use cellular GPRS and SMS communications, for example, which is unlucky for those living in areas with no reliable mobile phone signal.

Network transmission based on Wi-Fi, WiMax and other licensed and unlicensed radio wavebands is being explored, and there are wired alternatives such as analogue modems (dial-up over PSTN), broadband, and power line communication (PLC) where the electricity supply cable carries data.

Electricity supplier First Utility, which says it has already provided smart meters to more than 10,000 households in London, uses PLC, GPRS, SMS, PSTN and low-power radio (pagers).

The suppliers hope that, somehow, every household ­ even if they are halfway up a mountain where no existing phone or broadband operator offers a service ­ will be able to get their smart meter connected to head office one way or another.

The biggest winners are the electricity and gas companies, which get to remove a substantial part of their expenditure on the engineers who currently come out to read our existing meters.

And with so much consumption information at their fingertips, suppliers also get to match supply more closely to generation. So they know in advance when to deliver additional capacity in busy periods, and slow down supply at other times, and negotiate the best wholesale price accordingly.

So far there is nothing to suggest these private firms will be duty bound to pass on opex savings to consumers in the form of lower prices. Even then, only those with smart meters may benefit.

For those in deadspots, the traditional method of billing may continue, effectively creating a two-tier utility pricing system. Those living where smart meters work might get lower-cost power – ­ those who don’t could pay a premium.