Poorer families face threat of peak hours electricity rationing
STRUGGLING families could be forced to ration power when they need it most under the drive to go green.
An overhaul of the energy market will allow homes with a smart meter to be charged more for using electricity at peak times.
Households will pay less for electricity at night and more when demand is high under energy regulator Ofgem’s plans.
The move, which the regulator says could save households £4.6billion over more than 20 years, will allow suppliers to automatically receive readings every half hour and set different rates throughout the day. It is hoped that encouraging families to spread their power use will ease pressure on the grid as more households acquire electric cars and replace gas boilers with heat pumps.
They will have to agree to a ‘time of use’ tariff – but industry experts say prices are likely to be cheaper than standard deals.
Yet the energy regulator’s price cap will not apply, leading to fears rates could soar when the price of electricity does.
An Ofgem report also reveals that the benefits to bill payers are ‘modest’, with savings of as little as £2 and no more than £9 a year if they cut back on peak power use.
It comes as soaring energy prices are fuelling the worst cost of living crisis in Britain for 30 years. From April the average bill is set to surge by another 54 per cent to nearly £2,000 a year.
Joe Malinowski, founder of TheEnergyShop.com, said ‘surge pricing’ tariffs could mean families were forced to ration energy use during expensive peak times. He also said a smart meter could even cut off power if the price of electricity suddenly soared.
He added: ‘Some households will inevitably have power outages during peak times when energy potentially becomes unaffordable. We already see extraordinary swings in the price of energy and this will likely to get worse.’
Calculations by the TheEnergyShop show that families cooking an evening meal or watching prime time TV could expect to pay twice what they would in the middle of the night.
The Government aimed to install a smart meter in every home by the end of 2020 – but the deadline has been pushed back to 2025.
Latest figures show that around 25million have been installed, covering nearly half of domestic meters. Yet many still cannot have one because they live in high-rise flats, old properties with thick walls, or remote regions.
Some 4.8million of the devices have also stopped working because customers switched supplier or turned them off.
A study by the University of Reading found that high income and middle income consumers would typically pay more on a time of use tariff if their energy habits did not change.
But the energy industry insists all households will benefit.
Rowan Hazell, senior analyst at Cornwall Insight, said: ‘There is a lot of talk of surge pricing, but it is likely suppliers will put caps on the amount that prices could reach in a certain half hour, in order to bring an attractive offering to the market. This programme has the potential to save consumers money.’
Ofgem said: ‘This major system upgrade is a significant milestone on Britain’s path to net zero. It will enable a more efficient, flexible and greener energy system.’
‘Likely to get worse’