Plans for the roll out of smart meters across Europe will pave the way for intrusive data mining of homes and small businesses unless the European Commission takes action, the EU privacy watchdog has warned.

Smart meters will be useful tools for energy conservation, but together with data from other sources the potential for “extensive data mining” is significant, the European Data Protection Supervisor (EDPS) says. The patterns and profiles built up from this could be used for many purposes, including marketing, advertising and possibly price discrimination by third parties, it warns.

The watchdog “regrets that the Commission has not provided more specific, more comprehensive and practical guidance” to protect citizens and small companies, such as a requirement to carry out data protection impact assessments, and an obligation to notify personal data breaches.

EDPS also has more specific proposals for the Commission, including clearer guidance on the legal basis of data processing, giving customers control of the frequency of meter reading and mandatory use of “privacy-enhancing technologies”.

It has also asked for specific guidance on the data retention period and giving customers access to their individual profiles and the data mining tools used on them.

Some aspects of the UK approach received a cautious welcome by the watchdog, specifically public consultations run by the Government, and the guidance on privacy impact assessments provided by the Information Commissioner's Office.

In the UK the switchover will replace 53 million gas and electricity meters, involving visits to 30 million homes and small businesses, according to the Department of Energy and Climate Change. The mass roll out of smart meters is expected to start in 2014 and be completed in 2019.