Ofgem: Half-hourly settlement can help cut energy bills

Half-hourly settlement is a “major” part of the UK’s smart and flexible energy system and will help reduce bills. That’s according to Ofgem, which adds it is also expected to […]

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By Priyanka Shrestha

Half-hourly settlement is a “major” part of the UK’s smart and flexible energy system and will help reduce bills.

That’s according to Ofgem, which adds it is also expected to increase the number of time of use tariffs and other types of smart products available to consumers.

Suppliers currently estimate customers’ electricity consumption based on the average consumer’s usage, however, there could be discrepancies between this and how much wholesale electricity a supplier has bought.

The regulator is therefore reforming the electricity settlement process by placing incentives on suppliers to buy energy to meet their customers’ demand in each half hour of the day.

Energy companies can use information from smart meters that can record electricity use information every half hour of the day, “giving a much more accurate picture of consumption and demand and can match their purchases accordingly”.

They can bill customers based on the cost of generating and supplying the electricity they use.

Technology such as energy storage also allows householders and businesses to shift their energy use and change their demand for power in response to price or other factors.

Anna Stacey, Head of Settlement Reform, Consumers and Competition at Ofgem says for householders and businesses, half-hourly data means knowing how much electricity they are using.

They can choose to use more or less in response to this information and avoid times of the day when electricity is expensive to generate, when production is relying on fossil fuels or when networks are strained.

Ms Stacey adds: “For the electricity system as a whole, half-hourly settlement will help suppliers, network operators and generators understand when and where energy is being used. They can then target when and where to invest in the energy network and avoid building expensive extra power stations and putting up more poles and wires that are needed.”

From April this year, all medium and large businesses were to be settled on half-hourly electricity use under the P272 industry code.

Ofgem suggests businesses can use the detailed usage information to shop around for a supplier “who offers them value for money based on their specific needs”. From July, suppliers can settle their small business and domestic customers using their half-hourly data too.

The regulator has launched an industry code review to weigh up whether to require all consumers with smart meters in Britain to be settled using their half-hourly data. Views are sought until 1st September.