Scottish Power chief leads utilities’ charge for ‘surge-pricing’ ahead of government’s new energy cap

Scottish Power – which recently completed the installation of its one millionth smart meter – has defended the use of these devices and chief executive Keith Anderson is also keen to use them to introduce ‘surge’ or ‘variable’ pricing for household gas and energy bills.

Surge-pricing – as used by US-owned private-hire taxi firms – puts up prices at times of peak demand.

This maximises profits for (energy) providers and forces the market to ‘self-regulate’ by forcing out consumers who cannot pay peak-surge prices.

Critical observers say this is nothing more than ‘casino-power-buying’ of what should be a fairly staid public utility in which it’s a case of ‘heads I win, tails you lose’ coin-toss for energy providers. They also question the timing of Scottish Power’s call after the UK government aims to bring in a new energy price-cap to help consumers by this Autumn.

The controversial scheme – which relies heavily on smart meters – could significantly change the way households consume energy.

Anderson explained: “Industry figures show that, on average, energy usage per household can reduce by around 350 kWh per annum, and bill quality improves with accurate readings.

“As well as giving customers more control over their energy consumption, the new meters will be an essential element of smarter networks, which will be vital for supporting the increased uptake of electric vehicles in the years ahead.

““We will work closely with the Government to keep momentum moving in the right direction. As it stands one million of our customers now have greater control over their energy at home, and we will be working hard to continue the rollout of this technology to benefit all of our customers.”

Surge pricing is technically permissible in the UK – but no companies currently deploy such tariffs as customers have to opt in to share their half hourly usage data.

Keith Anderson
Keith Anderson

Scottish Power said new surge-pricing – which leads to price shifts every half an hour will be put in place as soon as the energy regulator gives them the go ahead.

Anderson defended the tariffs saying they will ‘benefit customers by delivering a smarter grid’ and could offer ‘significant benefits’.

He added: ‘We would aim to introduce tariffs that offer savings to our customers based on real-time information. Beyond this, half-hourly data will benefit consumers by delivering a smarter grid.

‘Network companies will be able to monitor the exact flow of power and manage the local network in real time to respond to how people live their lives.

‘For example, as we shift to electric transport with more people owning their own electric cars, smart meters could help avoid potential reinforcements to the grid which would be paid through customer bills.’

A spokesman for the Department for Business Energy and Industrial Strategy said that nobody ‘will be forced into switching to a ‘time of use’ tariff.’

Meanwhile Centrica plc – which owns the Scottish and British Gas utilities – has reported a 20% slump to £430 million in operating profits.

The group also shed another 270,000 household gas and electricity consumers across the UK in the first six months of this year.

This is across the same period in which 4.1 million customers faced a price hike in their energy bills. The standard variable tariff increased in price by 5.5% over this period. In the latter end of 2017, British gas lost over 800,000 customers. 

Jane Lucy, chief executive of The Labrador – an online smart meter provider – commented: “Customers have had enough. Once upon a time, if prices increased, people would swallow the bill, but with household incomes being squeezed, many are much more inclined to leave a provider for a better deal elsewhere.

“The continuing fall in customer numbers and the number of services they buy will be a disappointment to the company that has been trying to stem the decline by offering new services, including allowing customers to monitor and manage their energy usage through mobile phone apps.”

1 Aug 2018


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