Smart meters are used to hike prices at peak times
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.
But the move towards these tariffs raises the prospect of surge pricing during holidays such as Christmas and Easter when millions of homeowners are using appliances at the same time.
The former head of gas and electric 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 told The Daily Telegraph: ‘I believe that the hidden agenda behind smart meters is that they will allow halfhourly 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 work.
Mark Todd, of the comparison site Energy helpline, said last night: ‘Energy prices are confusing enough and fluctuating halfhourly tariffs will complicate matters further. How are you supposed to know when to turn the dishwasher on when the cost is continuously changing?
‘For years the Government has been saying it wants to simplify the energy market for customers. This will do the exact opposite.’