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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.

Guest
Dan James says:
15 December 2010

Why not make the greedy shareholders stump up for an upgrade of all the infrastructure that they had from us for a pittance.The energy companies have run it all into the ground and paid out huge profits– little if any has been plowed back in, so now its blackmail time–they go to the government ie US and say we need money to upgrade or the whole system will not cope.Well after milking us and the government and the system for many greedy record profit years I say RE-NATIONALISE it, neither energy nor water the nescesities for living should be in the hands of greedy shareholders.

Guest

WELL SAID.

This is a superb concise summary of how we got into this mess and it is all too rarely said, least of all in the places it most needs to be heard.

Guest

Don’t forget a lot of the shareholders are some of our greedy politicians and their friends and relations. There are a lot of the biggest shareholders being foreign governments to help pay for their nationalised utilities.

Guest
Greystoker says:
16 December 2010

The energy companies would like to impose fluid tariffs on the consumer for the purpose of shareholder value and in order to invest in new plant.It has to been estimated that the electricity supply industry will require £200 billion in the next 10 years.The point has been reached after taking out huge profits from energy consumers since privatisation,a succession of owners,the majority foreign and not quoted on the UK financial market have reached the time when the generating and transmission system requires updating.The electricity supply industry was valued at £37 billion but was sold off for £7 billion and attracted investors like bees round a honeypot.Further, successive governments have allowed generating companies to become vertically integrated companies,ie generating thir own energy and supplying their own industrial and domestic consumers.Consequently there is no competition at the wholesale level which must have an adverse effect on industrial and domestic pricing.Ofgem are reported now to be looking at energy pricing but no doubt it will return a report, “all is well”

By 2016, fossil fired plant will be subject to the full rigour of the Large Combustion Plant Directive which will force a reduced operating regime and ultimately the decommissioning of such plant if the generating plant has not been retro fitted with FGD (Flu Gas Desulphurisation).

Coupled with this there are a number of alliances who hope to install a new raft of nuclear reactors which the government hopes will dovetail into the decomissioning of the present fossil fired plant (non FGD and FGD) and represent a climate change ************** main contenders are the EDF/Centrica who hope to commission four 1600mw European Advanced Reactors, a pair at Sizewell in Suffolk and a pair at Hinkley Point in Somerset.EDF for their part,have made some representation for financial support from HM Government while to take 25% of the venture,Centrica have had to fund £2.5 billion in order to buy 20% of the alliance and will have to service this debt.EDF,a French state enterprise,15% under private enterprise have recently had to put their distribution networks up for sale to balance the books.Needless to say,it the former CEGB nuclear organisation had been left in state control then,there would have been already further PWR units such as that at Sizewell B commissioned.

Huhne supports nuclear generation provided that no public money is involved which is an echo of the principle of privatisation in 1990 when it was declared that investment in new plant would depend on the free market.There would be no obligation on generating companies to generate and supply energy if the market conditions were not favourable.Financial returns would decide if newcomers and plant would enter the market.If returns were poor then new plant would not be installed.

Unfortunately nuclear projects cost money and the time lag for the project to be completed and the plant to enter commercial operation can be as long as long as 7 years.The envisaged EDF nuclear plant in the UK will be based on the new plant being projected at Flammenville,Cherbourg and this is at least a year behind time.

Nuclear plants form the base load generating into the electricity grid system.They are not flexible insofar that they cannot be two shifted,ie shutdown and brought back on load after a short shutdown,be it overnight or other low load demand periods.Consequently,off peak load will be essential to maximise the use and enhance the financial returns on nuclear plant investment.The French having a nuclear plant component of 85% must manage this effectively but it requires attractive prices for the consumer to participate.

This raises the question of UK off peak tariffs which in reality penalises the consumer in that the Economy 7 period may be at a cheaper level but the other 14 hours of electricity consumption where the bulk of electricity units are consumed are charged at a higher rate than a consumer who is not on a Economy 7 tariff.So much for the consumer providing load to keep generators operating efficiently and hence cheap during the night “trough”

Regarding the centralised control over the domestic consumer.This is a hair brained idea.It would require dedicated circuits in domestic premises to be installed together with the control systems in place.Industrial consumers would be rewarded with attractive tariffs where this is neccessary but the bargaining power of the domestic consumer in these circumstances would count for little.

It must be confusing for the average consumer to understand tariffs which appear initially to be attractive but then are replaced by other attractive tarrifs in a loss leader fashion.All are revenue raising exercises designed to increase shareholder value.There does not appear to be financial direction in place in these companies to service the renewal of plant and systems.Its probably a case that these companies do not have long term plans to stay,they can sell out at any time after making a quick profit.

Guest

As I already mentioned in another thread, I think there needs to be far more thought on this. One idea would be to rate individual properties for a maximum current it is permit to draw from the grid to be charged at a standard rate. Current drawn exceeding this rate should be charged at a higher tariff.

The effect should be to encourage users to use power more sensibly (run washing machines at night and not first thing in the morning during high peak demand) and purchase more low power (efficient) devices. Perhaps the extra time a 2kW kettle takes to boil compared to a 3kW kettle isn’t so inconvenient!

A combination of current drawn versus time of day should be quite simple to set up IF the government step in and draw up the requirements for Smart Meters.

Guest

A lot of people misunderstand many of the issues that are raised here.
a 2kW kettle uses a unit of electricity every 30 minutes. A 3 kW one uses a unit of electricity every 20 minutes. Therefore, if the 2kW one takes a third as long again to boil as the 3 kW one it uses exactly the same amount of power. Sadly, though, may lower rated kettles take twice or more time to boil as higher rated ones, so in fact by buying a lower rated one, we are likely to use MORE power.
Maximum current drawn is also a difficult one: if you limit the current drawn (all domestic properties are limited to 100 amps or less by the service cut out) the only effect will be that exceptionally heavy users will no longer be able to use all their appliances simultaneously. However, if, for example, you live in a household where it is normal to have the tumble dryer on AND the washer AND the iron all at once, current limiting might stop you from using all three at once, but I expect such a user would then simply wash first, then tumble dry after, then iron after that. No difficulty staying within the current limit but the same amount of electricity is used, just over a longer time.
These misunderstandings and pitfalls are exploited by the manufacturers of appliances and the energy rating label scheme. I have posted on another thread at length about the situation I was in 2 years ago when an old washing machine, rated at a maximum wattage of 3250, was replaced by an “energy saving” model (Energy Saving Trust and Which? recommended) which was rated at a maximum wattage of 2500. However, it used almost 4 times as much electricity to complete a cycle (same temp, same load, same fabric type) compared to the old one. THis was mainly because the old one filled with Hot and cold water and heated the water a little more if needed for only about 20 minutes even on a long wash, before going on to cold only rinses, but the new one filled with only cold water and washed for over an hour on every cycle, before starting to rinse. Like the kettle example, lower consumption but for a longer time is often more expensive than higher consumption for a shorter time. (I scrapped the machine and bought a second hand one which uses very little power but is higher rated again.)
To be sure we are using less power we need to really have our wits about us: little wonder that so many people are confused.

Guest
Harry Felgate says:
25 December 2012

Dave Darwent. Using lower power appliances would reduce to peaks signifcantly. Steam power plant does not like changes in load so a million 1 kW kettles for 10 minutes is much better than a million 2kW kettles for 5 minutes. I worked in the industry for 15 yrs and can tell you how the efficiency plummets during load big load change periods.. I think a good start would be for someone to write to all homes suggesting lower power appliances and not running them at the same time. This would help even out the peaks and troughs enormously. The object of the exercise with Economy 7 etc is to maintain load in low demand periods. Your washing machine example doesn’t take into account the energy used elsewhere to heat the water entering via the hot fill connection. Modern machines use less water too so is a further saving and conservation.

Guest

Many suppliers charge a higher Kwh rate for the first so many units after which the price goes down.
To reduce usage it should be the other way around. That is the more you use the higher the unit cost.
Wouldn’t need any silly peak time tariffs then.

Guest

But they are encouraging you to use power not save it – Good business practice increases profit.

Guest

The idea of peak time energy charges, apart from the current off peak tariff, should be abandoned. Those consumers advocating this are the equivilant of turkeys voting for christmas.The main beneficiary will be the foreign investors in Germany, France , Spain and USA not the people in the UK.
If the energy supply industry is to remain privatised the tariff structure introduced by the Co-op should be forced on all electricity and gas companies with the actual prices being approved by OFGEM before they can be applied.
The best solution would be to nationalise the industry mainly as it was before.

Guest

Be very careful about taking Ofgem surveys at face value. Prof Stephen Littlechild (“Ofgem’s Procrustean Bed”) has written a very good critique of Ofgem’s approach to reforming the energy retail market. New entrants to this market would be more viable if we as customers were more willing to sign up to energy tariffs that automatically tracked commodity costs.

Guest
Karen says:
29 December 2012

One thing that concerns me about switching appliances off for short periods is the fact that sometimes they fail to start up again! I had a freezer which was working fine, it was 6 years old and never showed any sign of a problem till we had a double power cut within 24 hours. The first time it happened just before we went to bed and the machine started up ok, but we then had the second in the middle of the night and that finished the machine off! What impact would it have in particular on older freezers/fridges if constantly turned on and off to save power that is what we don’t know? Lots of people on low incomes cannot afford to keep updating their larger appliances, so are at more risk of appliance failure than those with more modern machines.

Guest

“”Experts” are recommending varying energy prices throughout the day. Is this a genius way to cut our bills and help the environment.”
Come on get real, only a complete fool would believe that in any way shape or form this will reduce energy costs for any consumer.
It would of course make energy generation cheaper for the supplier, but this saving will go to increase the already record breaking year on year profit for shareholders. The consumer or “victim” won’t see any benefit.
If you really think otherwise more fool you.

Re-nationalise and give hard pressed consumers a say through the ballot box.
They sure as anything don’t get a say now.

Guest

A tariff offering different rates for peak and off-peak usage would have to be cheaper for those prepared to move some consumption from peak to off-peak to be successful..

Anything which increases the efficiency ( and thus reduces the costs) of electricity generation is good for the environment nad to be encourages.

Guest

Agree about the environment, but cheaper for the user prepared to “move some consumption from peak to off-peak”?
Well we all should know by now what these privatised suppliers are like with their lust for ever increasing profit.
Not going to happen is it?