By Paul Homewood
h/t Philip Bratby/Ian Magness
Smart meters are to automatically send energy suppliers half-hourly updates on their customers’ power use in a revolutionary move that will allow "surge pricing" in millions of households’ bills.
The energy regulator Ofgem will be granted legal powers in May allowing it to change the way smart meters operate, so that information about usage is sent to suppliers every 30 minutes by default.
Suppliers will be able to use the data to change consumer energy prices as much as 48 times per day, allowing them to charge more at peak times.
The plans are viewed by industry experts as a key stepping stone towards “time of use” tariffs, which would charge customers different rates for energy throughout the day depending on demand.
This could mean that households pay more during the busiest periods, raising the possibility that they could be penalised for watching television, boiling the kettle or charging gadgets at popular times such as mornings and evenings.
Consumer rights groups have also warned that people with poorly insulated homes, old-fashioned appliances or health conditions that require round-the-clock support may lose out without safeguards.
But energy company bosses and Ofgem on Tuesday insisted the plans will ultimately benefit most customers, saving them between £1.6bn and £4.5bn overall.
This is because the changes will let more people take advantage of lower prices at “off peak” times, in turn easing demand at peak times and lowering prices for everyone.
A timeline published by Ofgem says it will formally gain the powers to introduce the changes in May. They will be implemented by 2025.
https://www.telegraph.co.uk/business/2022/02/08/smart-meter-overhaul-open-gates-surge-pricing/
Claims that customers will “save up to” £4.5bn are of course highly misleading. What OFGEM really means is that the tens of billions extra which will need to be spent on intermittency will be slightly less if peak loads are reduced.
The painful reality for many will be they will be punished for using electricity when OFGEM does not want them to. It is OK for the wealthy guy with an electric car in the garage and a biomass boiler, who is out of work all day, and who in large part can avoid surging power prices during the day.
But for families with children who need heating during the day, or older people who just fancy a cup of tea while they watch daytime TV, the prospect is not so good.
One of the biggest concerns must be what controls, if any, are placed on this surge pricing. For example, can energy companies charge whatever they want, what warnings will be given, and who decides when surge pricing is used.
There must be a real fear that people just end up with inflated bills through their letter box, without any warning.
Not for the first time, this latest proposal clearly indicates just how worried the government and OFGEM are that we will shortly be facing acute shortages of power.
For years, we have had a reliable electricity grid, which has had ample reserves to meet spikes in demand and sudden drops in supply. All, of course, at very affordable prices.
Those days, it seems, will soon be behind us.
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February 9, 2022 at 11:24AM
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