Energy firms using smart meters may have a hidden motive to charge domestic customers more when the demand for power surges, an expert from energy regulator Ofgem has warned.
The technology is a way of ending estimated bills and giving households real-time information on how much energy they are actually using. The drawback is that it will also allow firms to introduce a wealth of new tariffs that could hit home owners who use electricity and gas during peak times.
‘Time of use’ tariffs, under which those who use home appliances at quieter times, such as overnight, will be rewarded with reduced rates (remember Economy 7?). All very well for night owls and shift workers, but not very practical for most people who use appliances and heating at the weekend or in the morning and evening, before and after the working day.
The move towards such a tariff makes it likely that there will be a surge in electric usage during school holidays, and at Christmas and Easter, when millions of households use their domestic appliances at the same time.
Jerry Fulton, energy regulator Ofgem’s former head of gas and electric meter technology, believes the industry will quickly change from the two-tier ‘peak’ and ‘off peak’ system to new prices that will change every 30 minutes, depending on demand. He said: “I believe that the hidden agenda behind smart meters is that they will allow half hourly charging. Instead of having two charge rates, day and night, the price of energy will change every half hour so, when solar and wind generation are low and usage is high, the price of electricity will rise steeply.”
Smart devices send data to suppliers that includes when households use the most energy. Under the default setting, the device sends a monthly total usage figure to the supplier, but this frequency can be changed by the consumer to as often as every half an hour.
Regular updates are a must for households on a tariff where price variations depend on the time of day. This type of tariff was first rolled out by British Gas two years ago, when they began to give smart meter customers access to free electricity, to encourage people to use electricity to do the laundry, for instance, during off peak periods such as the weekend.
Smaller energy provider, Green Energy UK, already has a time-of-day tariff in place in which prices vary between periods of high and low demand. The tariff charges up to five times more for electricity used in early evening than it does overnight.
Every household must be at least offered a smart meter by 2020 but they are not yet compulsory. The £11 billion Government roll out continues and more tariffs are to be expected. Make sure you are on the best tariff for all your home energy costs by frequently checking comparison websites.
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