Energy providers have cautioned that if electricity bill discounts are too low, the idea to give them to homeowners that reduce their peak-hour usage may not succeed.
A plan being considered by National Grid ESO would allow people to save money by refraining from high-power uses like cooking when there is a spike in demand.
However, energy companies Octopus and E. On argued that the suggested payments to encourage users to sign up were insufficient.
It is intended that after the consultation, a program would be introduced this winter.
Although the government declared last week that it will put a two-year ceiling on energy price increases for all homes, typical annual bills would still increase in October from £1,971 to a maximum of £2,500. Typical bills had been made up before the announcement of the additional help.
However, National Grid ESO has been contacting energy providers to investigate how its program to compensate individuals for reducing their electricity use during peak hours may operate.
It is anticipated that only residences with installed smart meters would be allowed to join up for the service. In the UK, there are roughly 14 million homes with electricity smart meters.
Octopus Energy and E. Both cautioned that the planned reward to users of 52p for each kilowatt-hour of electricity saved during peak hours was too low and would not encourage people to sign up, according to The Times, which broke the story first.
It would be “wrong to set a price before finding out what works for people,” according to Octopus Energy, which tested National Grid ESO’s suggestions with 100,000 of its customers.
Like with any new service, it continued, “we must first determine how customers react before adjusting the pricing.”
Customers who participated in the trial received credit credited to their energy accounts by Octopus. Additionally, there was a “self-refund option” that let users transfer the money they had been paid by reducing peak-hour consumption to their bank accounts.
According to a source in the energy sector, National Grid needs to provide more alluring rates to entice enough customers to sign up for their payment plan.
The insider continued, “We truly want this to work and we want people to participate.” “If you have a negative test-run experience, you won’t join it again when it becomes the real deal.
“We require an incentive that modifies behavior. The likelihood of success increases with increasing consumer payments.
According to reports, one supplier suggested that the additional payments made to clients who avoid peak hours should range from £1 to £2 per kWh.
The costs being negotiated by National Grid ESO, according to E.On, “aren’t going to be enough to entice anyone to take part.”
The business stated: “This activity is supposed to be a last-resort solution at times of grid stress, and we consider the incentive to customers should match current costs and give individuals a legitimate reason to take part.”
Customers will be able to “lower their bills simply by altering when they use energy to cheaper periods,” according to the supplier, which promoted “time-of-use rates.”
According to a release, “it means they can reduce carbon emissions by taking advantage of times when there is a lot of renewable power on the grid.”
According to a representative for National Grid ESO, two industry partners have given comments to the ESO as part of ongoing discussions to determine the parameters of the demand flexibility service we plan to provide this winter.
Before submitting our final design to the regulator Ofgem for approval, we will take into account and review this information, just like we do with all other comments we receive as part of this consultation.
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