Ahead of the UK’s national smart meter roll-out in 2015, UK energy regulator Ofgem will reform how the industry settles payment at different points of the day to encourage a new generation of time-of-use tariffs and cheaper off-peak electricity.
As part of its Smarter Markets programme, the project will tackle the industry settlement arrangements.
Using data from smart meters, energy suppliers will be encouraged to buy energy based on their customers’ half-hourly consumption data, as opposed to estimated usage.
The regulator says that reforming settlement in this way will give suppliers a stronger incentive to offer new time-of-use tariffs that incentivise consumers to use energy when it is cheaper, and to cut back at peak times.
Rachel Fletcher, senior partner, markets, Ofgem, said: “To make sure consumers get the benefits [of smart meters], we must reform industry charging arrangements that have been in force since the 1990s.
“This is so that more advanced time-of-use tariffs can be brought in.
“Taking these steps now means that we can make the energy market work even better for consumers, now that our reforms for a simpler, clearer, fairer market are in place.”
Better tariffs for prepay
In other energy news, one of the UK’s big six suppliers, EDF Energy, will give 5.9 million households with prepayment gas and electricity meters the option to fix their energy prices for the first time in the next couple of months.
EDF Energy has announced it will offer a two-year, fixed priced tariff to its prepay customers in the coming months.
The energy supplier is the first of the big six to offer the fixed rate type of tariff for pre-payment customers.
Fixed rate plans allow customers to lock in the unit rate cost of their gas and/or electricity, effectively protecting them against price rises for one, two or even three years.
The UK’s second largest supplier SSE had pledged to freeze gas and electricity prices for its customers until 2016.
The supplier said it expects profits to fall as a result of the move and will be cutting 500 jobs and cancelling three windfarm developments in order to make annual savings of £100m.
Meanwhile, rumours of a British Gas price freeze surfaced recently when global bank Credit Suisse announced it was lowering its projected estimates for British Gas parent company Centrica due to SSE’s move.
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