‘Money-saving’ smart tariffs now cost more than traditional bills

ENERGY tariffs that were supposed to save residents hundreds of pounds a year on bills now cost three times more than traditional gas and electricity deals.

The gas crisis has rendered specialist smart meter tariffs, once lauded as the future of energy pricing, effectively redundant as prices have risen across the board. So-called “time-of-use” smart meter tariffs, which lower the price of electricity when demand is low and increase the cost in times of high usage, were sold as one of the key benefits of the smart meter rollout.

In normal times, these deals would save the typical family £210 a year compared with the average variable tariff from one of the big six energy firms, according to supplier Octopus.

Customers could even get paid to use electricity when energy prices dropped so low they became negative.

However, following the spike in wholesale energy costs, these deals now mostly charge customers close to the maximum rate possible, whatever time of day they use their appliances. Under normal circumstances, a house in London on a time-of-use tariff could expect to pay between 5p per kilowatt hour (Kwh) – the standard measure of power – and 30p per Kwh depending on the time of day.

Today, they are charged roughly 34p per Kwh no matter what time they use their energy. This means households will be paying more than double what they did at the beginning of last year, and more than three times what they did in the summer of 2020.

In July 2020, the average price of energy per day for a London home on Octopus Energy’s time-of-use tariff Agile was around 8p per Kwh. This increased to 16p at the beginning of last year, before rising to 22p in the summer.

This would raise the cost of the average household’s electricity consumption from roughly £1.27 a day in early 2021 to £2.70 a day today.

The deals only apply to electricity usage, and gas prices do not change.

Octopus Energy, the only large supplier to offer the tariffs in Britain, has warned that most households would be better off using a traditional tariff.

The supplier said: “[Our] half-hourly pricing exposes customers to wholesale market rates. Over the past few years, this has enabled customers to save significantly compared to a standard tariff, but right now, prices are consistently high. Most homes will be better off staying on a standard fixed or variable tariff for the winter.”

Joel Stark, of metering and data provider Stark, said: “The benefits in turn justify the exploding costs of the rollout. If they aren’t happening, this programme is probably not creating value for Britain. So why are we ploughing on with this massively overpriced solution?”