Tag Archives: Electricity prices

Consumer Affairs, Energy, Government, Society

Smart Meters and the ‘hidden agenda’

ENERGY USAGE

Smart Meters

ENERGY firms using smart meters have a “hidden agenda” to charge customers more when demand for power surges, an expert has warned.

The technology has been promoted as a way of ending estimated bills and giving households real-time information on how much energy they are using.

But it will also allow firms to introduce a raft of new tariffs that will hit those who use electricity and gas at peak times with higher charges.

Under these “time-of-use” tariffs those who use appliances at off-peak times overnight will be rewarded with low rates. This will have the effect of spreading out demand over a 24-hour period. This is seen as an advantage by the Government and energy industry because it means fewer power stations are needed to cover the daily peak.

. See also Concern over energy firms refusing to pass on price cuts…

But the move towards these tariffs raises the prospect of surge pricing during holiday periods when millions of householders are using appliances at the same time.

The former head of gas and electricity meter technology at the energy regulator OFGEM, Jerry Fulton, said the industry will quickly move beyond a two-tier peak and off-peak system to prices that change depending on demand every 30 minutes. 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.”

Unlike ordinary meters, smart devices transmit information about when households use most energy to suppliers.

The default setting on most means that the machines send a total usage figure to suppliers once a month. Customers can change this to send their data as often as every half an hour.

These regular updates are essential for those who have signed up to a tariff where prices vary depending on the time of day. This type of tariff was first offered by British Gas two years ago.

It ran trials giving smart meter customers free electricity for eight hours on either a Saturday or Sunday in an attempt to encourage them to shift heavy power use to this off-peak period.

Another smaller provider, Green Energy UK, has already launched a “time-of-day” tariff where prices vary between periods of high and low demand. It charges five times more for electricity used in early evening than it does overnight.

More of these types of tariffs are expected to flood the market as the rollout of smart meters continues. They are not yet compulsory, but suppliers must at least offer every household a smart meter by 2020.

Critics say everyone cooking family meals, watching prime-time TV shows and heating their homes in the evenings will be penalised by time-of-day tariffs. Higher charges are also likely to apply in the mornings when people are taking showers and heating their homes as they get ready for the day ahead.

A spokesperson for the comparison site Energy helpline, said: “Energy prices are confusing enough and fluctuating half-hourly tariffs will complicate matters further. How are you supposed to know when to turn the dishwasher on when the cost is continually changing?

“For years the Government has been saying it wants to simplify the energy market for customers. This will do the exact opposite.”

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Britain, Energy, Environment, Government, Politics, Society

Concern over energy firms refusing to pass on price cuts…

ENERGY BILLS

Intro: Millions of energy consumers on fixed deals will lose out

Millions of energy consumers with fixed price energy tariffs will not get a £50 reduction in utility bills as promised by David Cameron and George Osborne. A pledge was given this week in the Autumn Statement that electricity bills would be cut following the decision by the government to roll back some green levies.

The energy giant E.ON has announced that more than one million of its customers will get a reduction of only £12 – or 23p a week.

EDF is taking the same line with its one million fixed rate customers, who include many pensioners and families. Npower, SSE and Scottish Power may follow suit.

The Prime Minister, Chancellor George Osborne and Energy Secretary Ed Davey have made repeated pledges in their efforts to protect customers by rolling back environmental charges.

Mr Osborne said this week: ‘There’s going to be an average of £50 off people’s bills … We are absolutely insistent that this is going to be brought in.’

The smaller reduction of £12 covers the Government’s decision to switch funding of the Warm Homes Discount – a subsidy for poorer families – from energy bills to general taxation. The rest of the decrease was expected to come from changes to the Energy Companies’ Obligation Scheme, a levy applied to all bills to raise money for energy-saving measures for poorer households.

However, the element of the reduction is not being passed on to customers on fixed tariff deals by some companies.

In contrast, British Gas, the largest of the ‘big six’ suppliers, announced that all tariffs and payment methods will get a reduction of £53 from January 1.

A spokesperson for Consumer Futures, a campaign group, said: ‘The message has been that people were going to save £50 on their energy bill, but it seems a fair chunk of people will not get that. This sort of behaviour is not going to do anything to reassure customers … People feel confused and angry about their energy bills. This latest development just adds insult to injury.’

The spokesperson added: ‘I think in the current climate, bearing in mind how people are struggling, the right thing to do would be to apply the full reduction across the board. That is the expectation that the Government has created.’

Following the Autumn Statement, E.ON immediately announced a price rise of almost £60 a year for customers on standard tariffs. The changes will take effect from January 18.

The provider says that cutting the bills of fixed price customers by only £12 was justified because many of these people were already on relatively good price deals and tariffs.

EDF took a similar line and said its short-term fixed deal is some £90 a year cheaper than its new standard prices.

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