Surge pricing to be introduced to Uk customers.
In other words, wholesale buyers of gas don’t give a monkeys about gas price any more because they will pass it directly onto the consumers who are stupid enough to use it at peak times….when everybody else does.
This is extremely good for the gas price because none of the wholesalers are exposed to gas price volatility any more but it’s crap for the consumer. Much MUCH more domestic gas development is required in the next 2-3 years imo.
Energy ‘surge pricing’ to be offered to millions of households
. ByMatt Oliver
9 February 2022 • 8:30pm
The three businesses - which together have 11 million customers, equal to around a third of British households - gave their backing to a plan in which smart meters will automatically send half-hourly updates to suppliers about household energy use.
This change paves the way for the widespread use of surge pricing, raising the possibility that families could pay higher electricity rates for watching television or putting on the washing machine during peak times such as the morning and evenings, as prices fluctuate throughout the day.
The three companies already provide time-of-use deals to relatively small numbers of customers but experts say the smart meter overhaul will make it easy to offer them to millions more bill payers.
A Scottish Power spokesman said: “Time of use tariffs that are updated on a half-hourly basis will give consumers a real opportunity to save money on their energy bills, particularly for EV drivers charging from home.
“Half-hourly updates will also give a highly accurate profile of local electricity demand as the country moves towards an all-electric future through net zero.
“This will allow network companies to get more out of existing grid infrastructure and target upgrades to the grid for increased demand more efficiently.”
EDF said: “Half-hourly market settlement will play a key part in our transition towards a net zero future, as well as benefiting customers.
“We already have a number of simple Time of Use tariffs available, which enable customers to enjoy lower prices at night-time, when energy is less in demand and therefore cheaper, including a tariff designed to help EV charging at a cheaper rate.”
Greg Jackson, chief executive of Octopus Energy, said the shake-up would be “extremely good for consumers”.
At present the vast majority of households are charged a flat rate for electricity and gas usage.
But energy firms and Ofgem, the regulator, insist that surge pricing will ultimately lead to savings for customers as more people take advantage of bargain prices during less busy hours.
This would be done with the help of sophisticated gadgets that are programmed to draw power from the grid when it is cheap - and potentially sell any remaining surplus back after prices rise.
They have also argued that encouraging households to spread demand throughout the day is vital to reduce the strain on the national grid as electric cars become more widespread.
This would also limit how many costly upgrades are needed for infrastructure in future.
The time of use tariffs will be far easier to roll out from 2025, when Ofgem plans to make half-hourly updates the default option for millions of smart meters rather than something households must opt in to.
Mr Jackson said: “Octopus has been offering these tariffs for years and they are unbelievably popular with those who want them - but it also allows us to be cheaper for everyone else.
“This is something that has benefits for consumers and for energy companies. It is just another place we have to compete.
“If you do not want to do this the power is more expensive for everyone, there is more competition for electrons, and we will need more infrastructure and that will push costs up.”
Smart meters can already send half-hourly use reports, but at the moment customers must “opt in” to do this.
Ofgem is changing the rules so that this level of updates is the default setting. Customers who do not want to share this data will have to ask to "opt out" instead.
The regulator will receive powers to enact the change in May and has told the industry to implement them by 2025.
It will give energy suppliers an unprecedented insight into household consumption on a half-hourly basis throughout the day, allowing them to see exactly how much power customers are using - and rapidly adjust prices according to demand.
There is no suggestion that energy firms will force customers to adopt surge pricing.
However, analysts say the flow of far more detailed data will make it far easier to offer them.
Martin Young, an energy analyst at Investec, said the overhaul “builds towards a more flexible energy system and by extension flexible prices”.
But he said most companies were likely to continue offering a “a simple, more vanilla tariff for those who want them.”
Technology, such as electric cars which charge when energy is cheap and sell back to the grid at busy periods, may also cushion the impact of pricier periods on many consumers, he added.
(20min delay)