British customers with smart meters are at greater risk of paying higher energy bills at the busiest times of day compared to other customers under new Ofgem plans.
According to reports, the regulator is considering the introduction of a new energy price cap to try and meet the demands of net zero.
They said that the new plan would try and encourage “consumer flexibility” by basing the cap around how much electricity costs during the day.
This means under the new rules, Britons would pay more to their suppliers when the national grid was at its busiest and less when it was quieter. However, this would be affected by the weather with more power coming from renewable energy sources when the weather allows.
The Telegraph reported that this would mean the end of the current energy price cap and take consumers back to a ‘time of use’ tariff last seen in the 1970s. The basis of this system is to charge customers depending on what time of day they use electricity.
This would work either in “time bands” that are divided into peak and off-peak periods, or linked to half-hourly wholesale market prices.
Speaking about the new system, End Fuel Poverty’s Simon Francis said: “People shouldn’t be penalised and disincentivised from putting the heating on when they need to. Smart meter systems need to actually be smart and work for this to actually happen.”
The latest plans come as the Government receives criticism for the slow roll-out of smart meters across the UK.
The roll-out of the devices is behind schedule and proving massively expensive as installers try to fit them into every home and business in the country.
Money-saving expert Martin Lewis gave a damning verdict on the roll-out earlier this month. He said: “The rollout of the smart meters has been a disgrace in this country.
“Twenty percent of them don’t work and meet people with nothing more than a fixed meter which is what you’ve got anyway.
“If it doesn’t work, you’re not necessarily worse off. (But) on a macroeconomic level, it has been a terrible rollout.”
Although consumer groups and politicians from across Westminster have supported and encouraged the roll-out of smart metres the programme is facing an increase in costs and delays.
As a result of the delays and issues, there is growing concern over whether the devices actually work. Chairman of the House of Commons Public Accounts Committee, Dame Meg Hillier slammed them last year.
They said: “There are functionality issues with many. Millions will have to be replaced when they become obsolete, and the evidence is unclear whether their benefits are even working as advertised. On top of this, smart meters have serious reputational obstacles to overcome with the public.”
In a statement, Ofgem’s Director General for Markets, Tim Jarvis said: “While the price cap played an important role in protecting consumers from the loyalty penalty that existed before its introduction, the energy market is changing as we move to net zero, and we recognise the systems we have in place may need to change too.
“We’re looking in detail at the elements of the price cap that have worked well and the challenges we’ve identified in recent years, while also considering how a wide range of future consumers will use and pay for energy, to make sure we develop the right measures that will protect and benefit consumers across the board.
“We will continue to work with government, industry, consumer groups, charities and the public on the future of pricing regulation. Our aim is to ensure the market works for everyone.”
