Pay more for power at peak hour under surge pricing plans

Kwasi Kwarteng has endorsed plans to charge households higher energy bills if they charge their phone or boil the kettle on a Friday evening, in a scramble to prepare Britain’s creaking power network for the end of fossil fuels.

The Business Secretary said that it “totally makes sense” for consumers to face higher costs at the busiest times of the week in the strongest sign yet that a radical shake-up is being considered by ministers.

The surge pricing proposals aim to reduce peaks in power usage which put the grid under heavy strain.

At present, gas and oil-fired power stations can be switched on to cope with this jump in demand, but this is harder with solar panels and wind turbines that vary in output.

Under the new billing system, households would be charged less when not many people are using energy, such as in the middle of the night. They would pay more at times – like Friday evenings – when lots of people are cooking, watching television or making a cup of tea.

The plans have already won support from energy companies but are likely to prove controversial with customers. 

Speaking on a podcast published by Aurora Energy Research on Friday, Mr Kwarteng said: “If we’re serious about net zero and energy efficiency and having a more nimble system, then we have to probably examine what is called price discrimination. 

“So that, 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 where people use a lot more electricity. 

“At the moment, it’s just the same blanket price. So 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.”

Consumer rights groups have warned the proposals could force extra costs onto people with poorly insulated homes, old-fashioned appliances or health conditions that require round-the-clock support.

But Mr Kwarteng claimed the current approach leads to unnecessary costs. He also suggested localised pricing for different areas could be looked at but that this was likely to be more technically difficult.

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