Ofgem boss says time-based tariffs could cut energy bills significantly

In the United Kingdom, Ofgem's chief executive Jonathan Brearley addressed the Energy Security and Net Zero Committee, emphasizing the necessity for the energy market to adopt more complex time-based tariffs. These tariffs, also known as time-of-use tariffs, incentivize consumers to utilize electricity during off-peak hours when demand is lower. Brearley noted that the implementation of such tariffs could significantly reduce energy bills for consumers. During his address, Brearley responded to concerns surrounding the pace of progress towards a more competitive energy market following the energy price crisis. He pointed out that approximately 35% of customers are currently on fixed tariffs, indicating a growing trend towards switching energy providers. Although this is still below pre-crisis levels, the regulator is observing positive developments in market dynamics. Brearley highlighted a substantial increase in the adoption of smart time-of-use tariffs, which surged by 75% over the past year. He attributed this rise largely to the increasing ownership of electric vehicles (EVs), which has driven demand for more economical charging options. Despite the growing popularity, smart time-of-use tariffs still represent a small portion of the overall retail energy market, accounting for only about 2.3%. Notably, tariffs tailored specifically for EV charging saw an impressive 107% increase. Commitment to regulating the market effectively while supporting innovation was emphasized as Brearley discussed future plans for half-hourly settlements. These reforms are aimed at enhancing the overall consumer experience and ensuring that the energy market remains responsive to consumer needs. Brearley also expressed concerns about the potential digital divide that may arise from complex tariffs, noting that vulnerable customers must be supported during this transition while also maintaining regulatory standards to protect those who may not be able to engage with the new systems effectively.