Ofgem reports, “Reforming settlement in this way will give suppliers a stronger incentive to offer new time of use tariffs which encourage consumers to use energy when it is cheaper, and to cut back at peak times. Offering cheap off peak energy is one way they might do this. There would be no obligation for consumers to take up time of use tariffs but there could be big savings for those that can be flexible about when they use energy.”
To encourage the next generation of time-of-use tariffs, Ofgem’s plan to reform industry arrangements is expected to encourage suppliers to offer tariffs that cut charges for consumers using electricity when it is cheaper.
Rachel Fletcher. Ofgem senior partner of markets, says, “Smart meters will help consumers to have much more control over when they use energy. They also make it far easier for consumers to reduce their bills if they use electricity outside peak hours, or at times when electricity is cheaper to produce. However, to make sure consumers get these benefits, we must reform industry charging arrangements which 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.”
Secretary of State for Energy and Climate Change Ed Davey adds: “I welcome this programme from Ofgem. Alongside the roll-out of smart metering, it will reform back-office electricity market processes that are vital to help deliver a more modern, competitive energy market for consumers.”