Energy regulator Ofgem has proposed new measures that would see customers receive £40 compensation if their smart meters fail to send readings to suppliers for more than 90 days.
The compensation scheme is part of a broader package of proposals aimed at putting more pressure on energy suppliers to resolve smart meter issues.
Under the plans, suppliers would also be required to offer quicker fixes when customers report problems with their smart meters.
The proposals come amid growing concerns about the number of smart meters operating in "dumb mode" across Great Britain.
The compensation scheme is part of a broader package of proposals aimed at putting more pressure on energy suppliers to resolve smart meter issues
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The £40 compensation will apply specifically when smart meters aren't operating in "smart mode" - meaning they fail to automatically send readings to suppliers.
The Government estimates this affects around 10 per cent of meters, though research suggests the actual number of broken smart meters may be higher.
It remains unclear whether customers will receive automatic payments or need to complain if their meters have already been in "dumb mode" for over 90 days.
Ofgem is also considering whether customers should receive £80 total compensation if both gas and electricity meters aren't working.
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Beyond the compensation scheme, suppliers will be required to provide a "resolution plan" within five working days when customers report smart meter problems.
Customers requesting a new smart meter will be offered an installation appointment within six weeks, though this likely applies only to new or first-time appointments rather than repairs.
The proposals also include compensation for failed smart meter installations due to faults "within the supplier's control", though Ofgem has not yet clarified what this means in practice or who will make such determinations.
Despite the new proposals, MoneySavingExpert.com founder Martin Lewis has raised concerns about the underlying causes of faulty smart meters.
Lewis has formally requested Energy Secretary Ed Miliband change the rules around smart meter targets.
Currently, suppliers are fined if they don't meet installation targets, but fixing broken meters doesn't count towards these targets.
On The Martin Lewis Podcast, Octopus Energy boss Greg Jackson explained the dilemma: "That engineer [visit] is a cost that we are happy to pay to make a customer happy, but ultimately we get a regulatory penalty for fixing it."
The proposals will now be consulted on until May, following a review conducted by Ofgem last year.
Lewis has formally requested Energy Secretary Ed Miliband change the rules around smart meter targets
PAThe review examined whether energy suppliers were meeting their smart meter installation targets and ensuring existing smart meters were working properly.
While the new measures aim to improve customer service, they don't address what Martin Lewis describes as the fundamental regulatory problem.
The current system effectively penalises companies for diverting resources to fix broken meters rather than installing new ones.
This creates a situation where suppliers may prioritise new installations over repairs to avoid regulatory penalties.
