Out-Law News 1 min. read

Energy price cap: smart meters could ‘offer some relief’

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Smart meters could help UK households struggling with the rising cost of energy, according to one expert.

While traditional meters register a running total of energy used, smart gas and electricity meters can record half-hourly price and consumption data, providing automatic meter readings to energy suppliers. In-home-displays show the cost and amount of energy a household is using, allowing customers to adopt energy efficiency measures that can save money.

Becca Aspinwall of Pinsent Masons said: “Smart meters could have a real impact on energy bills as we approach winter. Energy suppliers are likely to increasingly offer ‘time of use’ tariffs for those with smart meters. Crucially, there's an expectation that the National Grid will offer financial incentives to households with smart meters to use less energy during peak hours.”

Energy suppliers are required to install smart meters in every home in Great Britain as part of a national government programme to replace older energy meters, including prepayment meters. Aspinwall said: “While not a silver bullet, smart meters will offer some relief as energy costs are expected to continue to increase. These measures wouldn’t have been possible without the roll-out of smart meters over the last decade.”

Her comments come after Ofgem, the energy regulator, announced that the energy price cap for a typical household in England, Scotland and Wales would rise to £3,549 a year from 1 October. The latest rise is expected to leave many people in fuel poverty – unable to keep their homes warm during winter. The NHS Confederation warned that an increasing number of families will be forced to choose between skipping meals or heating their homes.

The price cap, which is set every three months, limits the maximum amount energy companies can charge households for each unit of energy they use. It also limits the ‘standing charge’ that customers pay for their connection to the grid. The cap is set according to how much energy companies have to pay for wholesale electricity and gas supplies.

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