HOUSEHOLDS face paying more for electricity at peak hours in a BIG energy bills shake-up backed by the Business Secretary.
Kwasi Kwarteng said it “totally makes sense” for the government to look into raising the cost of electricity during busy times like Friday evenings.
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It comes as families across the country are struggling to cope with eye-watering hikes to energy bills as costs spiral.
Millions saw their bills DOUBLE to an average of £1,971 from April 1 when the new price cap – which limits how much suppliers can charge customers for energy – rolled out.
Rocketing bills are being driven by soaring wholesale energy prices and supplies have come under pressure – with the Russia-Ukraine crisis worsening the situation.
But surge pricing plans – which could hike bills even more – is aimed to help put a stop to spikes in demand for power.
This is putting the National Grid – which has already warned electricity supplies will be “tight” – under pressure to keep the lights on.
Speaking on the Aurora Energy Research podcast, Mr Kwarteng said there was a “legitimate reason” to look into how electricity is priced.
He said having a “rigid” pricing system where households pay the same for their power no matter how in demand it is actually increases costs.
He said the government would “probably examine what the economists call price discrimination”.
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Mr Kwarteng explained how this would work: “If you charge your phone on a Wednesday morning at 2am, it’s going to cost you less than if you were to do the same thing let’s say on a Friday night when people use a lot more electricity.”
He added: “I think there is a lot of work we can do to make a more nimble system that reflects actual economic activity in the moment.
“In order to make it more efficient, we probably have to have more continuous pricing, and more variation, in terms of you know, how we pay for charging electricity, or even putting a kettle on.”
Energy companies including Scottish Power, EDF and Octopus Energy have previously supported surge pricing.
And surge pricing could seen be offered thanks to smart meters, with people paying more at peak times and less at quieter times – giving households access to time of use tariffs.
Spreading demand and avoiding surges in energy use (which time use tariffs would encourage) could lead to savings across the power network.
The costs of running the network are shared among everyone and efforts to reduce that would be passed on to them too, experts say.
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