Ofgem to consider 'time-of-use' price cap to help reduce households bills

dailyrecord.co.uk:

Ofgem is considering the idea of a new "dynamic" price cap based on when households use their energy throughout the day.The energy regulator has launched a consultation on multiple possibilities for the future of the price cap, including focusing on times energy is used the most.

They hope this will encourage families to think about when they use their energy.It suggests that homes using more renewable forms of electricity could be rewarded for adjusting when they use power, helping lower energy costs for everyone.

However, if more households start using these 'time-of-use tariffs', it might be difficult to keep a universal price cap that works well for everyone.According to Ofgem, the planned introduction of half-hourly settlement from 2025 - when smart meters will track how much energy gets used every 30 minutes - is expected to lead to more of these smarter time-of-use tariffs that give discounts to customers who use energy more flexibly.This would allow families to benefit from less expensive energy when renewable energy production is high, like when it's extra sunny or windy.Other ideas include a targeted cap that could consider various factors like vulnerability, and more flexible market-based price safeguards.

These could set a limit between what a supplier's default tariff and the readily available tariffs are in the market, putting a cap on the profit suppliers can make - or swapping the cap with a ban on acquisition-only tariffs.Ofgem has said that the price cap, along with the temporary ban on acquisition-only tariffs, has been successful in protecting customers from the "loyalty penalty".