Householders who charge their gadgets, wash their clothes and run their dishwashers overnight will pay less for their energy under a new dual-fuel tariff.
Green Energy UK said its TIDE tariff is the first to offer residential customers an electricity price based on the time of day, although the idea will be familiar to anyone on an Economy 7 or Economy 10 tariff.
Under the deal launched this week, customers will pay 4.9p per unit of electricity on weekdays from 11pm-6am, but five times as much between the peak weekday hours of 4-7pm. The average price of electricity in the UK is around 14p per unit.
Consumer groups and campaigners welcomed the tariff, but said it would not be for everyone.
Doug Stewart, the CEO of Green Energy UK, which has 20,000 customers, said the deal offered a savvy way for people to bring down their bill rather than trying to find the cheapest tariff with a “new-on-the-block supplier”.
“If we are to learn anything from GB Energy’s failure, it’s that cheapest tariffs are unprofitable and unsustainable,” he said of the collapse of another small energy supplier last November. “The mantra of ‘switch to the lowest tariff’ has done nothing for energy efficiency and encourages higher use by those who can’t necessarily afford it.”
The tariff is underpinned by smart meters, which the government has pledged to fit in every home by the end of 2020, although official figures recently showed only 9% have been installed so far. Around four in 10 of Green Energy UK’s customers already have smart meters, which are a prerequisite for the tariff.
Martin Lewis of Money Saving Expert said the deal looked good on his first analysis, though the gas price of 3.59p per unit was expensive.
“If you are a medium to heavy user who uses far more electricity than gas and you could shift your usage overnight, then this will be a winner. If you’ve got storage heaters, timers, a smart home and you put your dishwasher, washing machine and storage heaters on [overnight], then it’s not a bad deal,” he said.
Gillian Guy, the chief executive of Citizens Advice, said: “Time-of-use tariffs can be a good deal for those who can be flexible about when they use electricity at home. Some people will be able to make changes in order to save money, such as cooking or washing clothes at off-peak times.
“But for others – for example, families with young children – it could be more difficult to change when they use electricity.”
Alex Neill, the managing director of Which? Home Legal Services, said: “It’s good to see innovative tariffs being introduced and this will hopefully become much more common, particularly with the roll out of smart meters.”
Time-of-day tariffs are also seen as a way to solve potential headaches for the National Grid as more renewable but intermittent sources of power such as wind and solar are brought online. British Gas last year offered customers a day of free electricity a week in a bid to encourage them to sign up for smart meters.
Lewis was critical of British Gas for installing smart meters that other suppliers are unable to operate, but he welcomed the rise of time-of-day tariffs and said the Green Energy UK offer was “not a bad predictor of the future”.
“Ultimately, the more people are on these tariffs, it doesn’t just benefit them it, it benefits others, too, because it smoothes out demand curves. If we have smoother demand curves then we need less power stations on tap, which brings overall prices down. So, yes, this should be encouraged,” he said.