Time of use tariffs will soon be offered to millions of households

energy bills
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Millions of households across the country could soon be offered electricity tariffs with prices that change every half hour.

Under new powers that will be granted to energy regulator Ofgem in May, smart meters will automatically send usage information to suppliers every 30 minutes. Suppliers could then use this information to charge consumers more during peak times. However, at the moment, customers will have to ‘opt in’ to sharing this data.

Ofgem has said that the change will be implemented on all new smart meters by 2025, but people who already have a smart meter won't be affected unless they enter a new contract.

At present, Scottish Power, EDF and Octopus Energy all back the proposed changes. They currently collectively supply energy to 11 million households.

How will the new tariffs work?

With so-called ‘time of use tariffs’, customers are charged more for their energy at the busiest times of the day, such as evenings. Less is charged at quieter times, like overnight. As a result, bill payers can benefit from lower prices if they shift their usage to quieter times, when prices are cheaper.

Today, most energy users are on tariffs that charge a flat rate for usage. However, a small number of households with smart meters who have already opted in to half-hourly updates can access time of use tariffs. EDF, Scottish Power and Octopus all currently offer these tariffs, and people with Economy 7 or Economy 10 meters can get cheaper off-peak pricing.

Discussing whether the change could be good for customers, Gillian Cooper, head of energy policy for Citizens Advice, said: “As prices surge to record levels, smart meters can help us manage our energy use and make sure we get more accurate bills.

“In the future, a time of use tariff could allow us to get better value for money if we’re able to be flexible about when we use electricity.

“There’s no one size fits all, so we’ll all need information and advice to make sure we’re choosing a tariff that suits our needs.

“Strong protections must be in place for those of us who can’t be flexible with our use of electricity, so that we all pay a fair price.”

Will time of use tariffs lower bills?

It’s hoped that time of use tariffs will provide savings to people using the tariffs and to those who remain on traditional tariffs. This is because spreading demand and avoiding surges in energy use could lead to savings across the power network. The costs of running the network are shared among everyone and efforts to reduce those costs would also be passed on to everyone, too.

An Ofgem spokesperson 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 which will save billions of pounds per year on all consumers’ energy bills.

“Ofgem will work closely with industry to make sure it delivers this major upgrade while ensuring those in vulnerable circumstances remain protected.”

However, the news that energy will cost more at peak times will come as a shock to the millions of people who are currently facing a ‘cost of living crisis’. Last week, it was announced that the energy price cap is rising by a whopping 54%. Despite this, it’s still recommended that customers avoid running an online energy comparison because the best energy deals on the market from the country’s best energy suppliers cannot beat the new price cap.

On top of this, Ofgem has also told MPs that current forecasts suggest another increase is likely to come into effect before next winter. Some analysts now believe the price cap could rise to around £2,300 from 1 October.


Tom Brook

Tom is a freelance copywriter and content marketer with over a decade of experience. Originally from an agency background, he is proud to have worked on campaigns for a number of energy providers, comparison sites and consumer brands.