I have the same deal with British Gas, for both electric and for gas. (How they get gas down the electric wires is beyond me).
Each month they send me an email reminder and I go out to the garage and read the meters. I can submit the readings directly to their website and it tells me instantly what the bill will be. I pay by direct debit 15 days later. I get a small discount off the regular rate for this. Their website also gives me statistics on my energy usage - historically for me and comparative with the neighbourhood.
Before that I used to pay a fixed amount monthly. This is good for budgeting but not a great deal, because they always make sure that they are ahead by £50 or £100. This way I only pay for what I use, and I put money aside for it.
They send a meter reader round about once a year, and they read both meters. I am sure that if my usage differed wildly they would send someone round to check.
Energy supply here is competitive, and I can buy gas and electricity from several suppliers, without having to change the pipes and cables.
If you submitted a low reading, it would simply mean that he would get a bigger bill next month.