Poorer families face threat of peak hours electricity rationing as expert warns ‘surge pricing’ tariffs could force households to limit their use

• Overhaul would allow smart meter homes to be charged more during peak times
• Households will pay less for electricity at night and more when demand is high
• Ofgem say the move could save households £4.6bn over more than 20 years
• It is hoped encouraging families to spread power use will ease grid pressure

Struggling families could be forced to ration power when they need it most under the drive to go green.

An overhaul of the energy market will allow homes with a smart meter to be charged more for using electricity at peak times.

Households will pay less for electricity at night and more when demand is high under energy regulator Ofgem’s plans.

The move, which the regulator says could save households £4.6billion over more than 20 years, will allow suppliers to automatically receive readings every half hour and set different rates throughout the day. 

It is hoped that encouraging families to spread their power use will ease pressure on the grid as more households acquire electric cars and replace gas boilers with heat pumps.

An overhaul of the energy market will allow homes with a smart meter to be charged more for using electricity at peak times. It is hoped that encouraging families to spread their power use will ease pressure on the grid as more households acquire electric cars and replace gas boilers with heat pumps. Pictured: A woman reads her utility bills (stock image)

They will have to agree to a ‘time-of-use’ tariff – but industry experts say prices are likely to be cheaper than standard deals.

Yet the energy regulator’s price cap will not apply, leading to fears rates could soar when the price of electricity does.

An Ofgem report also reveals that the benefits to bill payers are ‘modest’, with savings of as little as £2 and no more than £9 a year if they cut back on peak power use.

It comes as soaring energy prices are fuelling the worst cost of living crisis in Britain for 30 years. From April the average bill is set to surge by another 54 per cent to nearly £2,000 a year.

Joe Malinowski, founder of TheEnergyShop.com, said ‘surge pricing’ tariffs could mean families are forced to ration energy use during expensive peak times. He also said a smart meter could even cut off power if the price of electricity suddenly soared.

He added: ‘Some households will inevitably have power outages during peak times when energy potentially becomes unaffordable. We already see extraordinary swings in the price of energy and this is likely to get worse.’

Calculations by the TheEnergyShop show that families cooking an evening meal or watching prime time TV could expect to pay twice what they would in the middle of the night.

Britain’s Chancellor of the Exchequer Rishi Sunak hosts a press conference in the Downing Street Briefing Room on February 3, 2022, as he announces an energy bill rebate

The Government aimed to install a smart meter in every home by the end of 2020 – but the deadline has been pushed back to 2025.

Latest figures show that around 25million have been installed, covering nearly half of domestic meters. Yet many still cannot have one because they live in high-rise flats, old properties with thick walls, or remote regions.

Some 4.8million devices have also stopped working because customers switched supplier or turned them off. 

A study by the University of Reading found that high-income and middle-income consumers would typically pay more on a time-of-use tariff if their energy habits did not change. But the energy industry insists all households will benefit.

Rowan Hazell, senior analyst at Cornwall Insight, said: ‘There is a lot of talk of surge pricing, but it is likely suppliers will put caps on the amount that prices could reach in a certain half hour, in order to bring an attractive offering to the market. 

This programme has the potential to save consumers money.’

Ofgem said: ‘This major system upgrade is a significant milestone on Britain’s path to net zero. It will enable a more efficient, flexible and greener energy system.’ 

What your meter will do 

What is a smart meter?

Smart meters automatically send readings to suppliers. A separate in-house display screen shows customers how much they are spending.

The aim is to put an end to estimated bills and help households cut costs by reducing their power usage.

Do I have to get one?

They are not compulsory. But with energy firms under pressure to meet deadlines to install them to avoid hefty fines, many have resorted to bullying tactics, sending letters implying they are a legal requirement.

Pictured: A woman pours a cup of tear behind a smart meter. Smart meters automatically send readings to suppliers, with an aim to cut down on estimated bills

What is changing?

Regulator Ofgem will allow all smart meters to send readings to suppliers every half an hour by the end of 2025. It paves the way for more households to sign up to ‘time-of-use’ tariffs.

What is a time-of-use tariff?

These offer customers cheaper prices when they use power at off-peak times, such as at night. Some charge a day rate and a night rate. 

Others could cut prices when there is an abundance of renewable energy on sunny or windy days. 

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