Millions of households with smart meters face paying more for their electricity at the busiest times of day under regulator plans. The Telegraph has more.
Ofgem is consulting on introducing a “dynamic” energy price cap to meet the demand of Net Zero, despite repeated assurances from the Government that smart meter technology would not result in more expensive energy bills for consumers.
The energy watchdog said it would look to “encourage consumer flexibility” by basing the energy price cap around the wholesale costs of electricity throughout the day.
The plans include allowing suppliers to charge more for electricity when the grid is at its busiest, as Britons move away from conventional gas boilers and adopt electric-powered heat pumps and electric vehicles.
Proposals would scrap the energy price cap – currently £1,690 a year – and effectively switch the entire country to a 1970s-style “time-of-use” tariff that charges different prices throughout the day.
This would either be introduced in weekly “time bands” that are divided into more expensive peak and cheaper off-peak periods, or linked directly to half-hourly wholesale market prices.
Ofgem admitted the latter proposal would risk “exposing customers to wholesale price variability” and that “many consumers may struggle to engage with constantly evolving pricing”.
Of particular concern is the effect on energy bills of those using medical equipment. The regulator said it was considering exemptions for those relying on power for such equipment, as well as for millions of electric drivers who charge their cars overnight.
Consumers would be given incentives to take advantage of lower prices and avoid using electricity when costs go up in both scenarios.
Experts warned against the effects of surge pricing on vulnerable groups such as the elderly who typically have the heating on for more time during the day.
Read More: Smart Meter Customers Face Paying More at Busy Times to Help Meet Demand of Net Zero