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Should we have peak-time energy tariffs?

Clock under lightening

Experts are recommending varying energy prices throughout the day. Is this a genius way to cut our bills and help the environment – or is it unfair on those who can’t pick and choose when to do their washing?

How would you feel about your energy company remotely switching off your freezer for half an hour a day? Before you start panicking about losing all your food in a pool of water, hear me out.

This is just one suggestion that has come about from a report by The UK Committee on Climate Change (CCC), which is recommending a new system that charges varying energy prices throughout the day.

What are time-of-use tariffs?

You might have heard of ‘economy 7’ – the current system that gives customers with a special meter a cheaper tariff late at night. If CCC gets its way, new time-of-use tariffs could be introduced from 2014, potentially meaning even more prices at different times of day.

The scheme would rely on smart meters being installed, letting your utility company to see minute-by-minute information about your energy consumption. It would also mean that, with your agreement, they could remotely switch off appliances such as water heaters or freezers for short periods to manage demand. (Which, incidentally, is perfectly safe.)

This all sounds great in theory, doesn’t it. Switch things off to save money and use energy-heavy appliances, like dishwashers and washing machines, when it’s cheapest. Lower bills, less demand on the grid.

Sort our current tariffs out first

But hang on. I’m already confused about energy tariffs – and so are many others, according to Ofgem. Their research shows that 70% of people find the number of energy tariffs available confusing, and more than 50% find it too difficult to work out whether they would make any saving if they switched supplier. And when you consider that the average household has 89 different tariffs available to choose from, this is hardly surprising.

‘Before we see a proliferation of these time-of-use tariffs, we need to sort out the tariff confusion that exists already – we’d like to see Ofgem introducing minimum standards for tariffs,’ says Fiona Cochrane, Energy Policy Team Leader here at Which?

But that’s not all, she says, adding that we won’t all necessarily save under this scheme. ‘Time-of-use tariffs could be beneficial for those who can shift when and how they use their energy,’ she explains. ‘But there are a lot of households that won’t be able to do this, and we don’t want to see them penalised because of this.’

This is a good point, and one that probably applies to me, being a full-time worker who can’t pick and choose when to use energy. Should I have to pay more because I’m not around at the ‘cheapest’ times or is there a fairer way? Ideas like remotely switching off appliances will help keep costs down, but there needs to be more of these ideas for time-of-use tariffs to be worthwhile on a wider scale.

Comments
Guest

Well it sounds like an idea dreamt up by a committee. A far simpler, more flexible and proven method would be to charge a higher rate for every unit of energy used above a pre-determined amount. No need for complicated “smart meters” or having your washing machine switched off in the middle of a cycle (which might waste more energy than it saves if it has to warm up again), it’s the way the Dutch consumption tax works.

The pre-determined amount is established from the size and type of the property of course.

Guest

Surely we already have a “peak time tariff”? It’s what we all pay all day every day unless we have an Economy 7 meter and it’s based on the “peak” load being during working hours when shops, offices, and (when we had any) industry are all consuming power?

After all, that was the whole point of “Economy 7” or, to give it it’s full official title “OFF PEAK electricity”.

Supposedly electricity used between midnight and 7:00 a.m. was “off peak” because so few commercial users were operating in those hours.

But that was all set up back in the days before 24/7 living, round the clock shops and the like, so our lifestyles have rendered the system somewhat out of date.

I have no objection to day and night tariffs at all, but I do think that introducing anything extra will cause confusion and hardship. It may also be a health and safety issue: we are always being told now that appliances such as washers should NOT be left on unattended or at night time in case they malfunction: if we introduce even more tariffs that are specific to times of day people will be more likely to take risk and there will be more house fires, floods, etc.

Personally I would say that what we need is not a greater number of tariffs but an honest pricing policy by the energy companies and appliances that really do save energy, not an energy rating scheme that cons us into using more (see the convo’s on energy labels, energy saving appliances and so on for info on this).

Guest

Wonderful – I’m an OAP – to save energy I wear two sweaters and a blanket – temperature set to around 60 F. But I need some heating to remain alive – Hypothermia kills a lot of the elderly. How about enough money for the OAP to live on? – or are they saving energy to reduce the elderly population? My state pension is insufficient already that’s why we have winter fuel allowance – Though with this Government – I have a feeling it will be dropped.

Guest
Mark says:
2 March 2011

Rest assured the government has no plans to stop your winter fuel allowance. Even wealthy pensioners who spend the winter abroad will get that. However I am due to lose all my child benefit soon and I am not rich.

I’m not too keen on electricity companies being able to shut off appliances remotely. For a start it would be expensive to install and what would stop them shutting off my freezer just after I have loaded it up or after a long power cut? In those cases food could go off as a result.

Guest

Hate to point out they have already lowered the Winter Fuel Allowance from £250 to £200 – so far no Condem “promise” has proved to be not worth the breath used to lie about it. –

So I doubt if this “government” will stop lowering it until the numbers of OAPs dying from hypothermia related deaths reach epidemic proportions

Guest
Harry Felgate says:
25 December 2012

Richard, I don’t know you or your circumstances but I am a pensioner too. At the age of 20 I started paying into a pension scheme. This left me with less to spend at the time but I carried on paying into the pension scheme even when the extra money would have been handy. I made sure I was never going to be an OAP.

Guest

Might I suggest you go to your Citizens advice centre they can help ensure you are getting all your entitlements I do not have a large income but I do check out all I am entitled to also look for help with insulation I did and my energy bill has dropped by more than half you do not have to double wrap yourself ask your energy supplier for one of their energy team to come and advise it’s free and very helpful, don’t be too independent there is help available.

Guest

From an environmental point of view allowing suppliers to reduce peaks in demand by remote switching-off of water heaters or freezers makes sense as it reduces the need to have generators idling just to cope with short lived surges in demand.

Not keen on peak time tariffs but if smart meters allow easy implementation of off-peak cheaper rates to again level out demand – why not. Many people could use the delay program on their dishwasher, tumble-dryer or washing machine to benefit from the cheaper rates.

Guest

I agree that remote switching off is a good idea in theory, but I hope it’s communicated properly or I don’t think enough people will buy in to it. And as it has to be opt-in, it will need enough participants to work and have any effect environmentally.