Ofgem is delaying smart meter reforms that could save households £214 million a YEAR
- The mandatory half-hourly meter readings have been postponed to September 2025
Electricity bills will remain higher for even longer as regulator Ofgem delays smart meter reforms that could save households more than £200 million a year.
The changes would mean that energy companies would have to prepare bills every half hour for all homes with a smart meter. This is currently optional.
Ofgem hopes the move will save households up to £4.5 billion by 2045, or an average of around £214 million a year.
However, the regulator has now postponed the process for the fourth time, by six and a half months, to conduct more tests.
The delay means the mandatory ‘market-wide half-hourly billing’ (MHHS) program will start at the end of September 2025, instead of the original date of early March next year, although not all energy companies will switch to the new system. same time.
In an energy context, “offsetting” means that an energy company adds up how much power a customer has used against the amount it costs, and not the more usual meaning of paying off a bill in full.
Don’t count on it: long-awaited changes to energy bills will be postponed even further
The goal of MHHS is to equalize the prices that energy companies and consumers pay for electricity.
Currently, the price that energy companies pay for electricity from providers changes every half hour.
But that rapid change is not always passed on to consumers, because many energy companies update their bills less often. However, some energy rates already charge half an hour.
Most households pay energy bills limited by the Ofgem price cap, currently £1,717 per year for average energy consumption. The price ceiling will rise by 1.2 percent to £1,738 on January 1, 2025.
It means the average home will pay an extra £21 a year for energy until the price cap is reset in April 2025.
A statement from Ofgem said: ‘Ofgem is extremely disappointed that such a significant delay has proven necessary.
“MHHS remains a high priority for Ofgem and the government as a means to decarbonise the energy sector at the lowest cost.
“MHHS participants must comply with the revised MHHS implementation schedule and ensure the earliest possible delivery of MHHS-related benefits to consumers.”
Ofgem said there would be no further delays to the reforms.
How can a half-hour bill save me money?
The main savings will come from households and businesses switching to different tariffs, Ofgem hopes, including ‘time of use’ energy agreements.
These are rates where the price paid for energy varies, with cheaper rates available outside peak periods, usually at night. An example is an Economy 7 fare.
This is unusual compared to standard energy deals, where the price paid does not vary over time.
Further savings could result from energy companies becoming more efficient as a result of half-hourly billing.
For example, if more homes have smart meters, energy companies can predict the demand for electricity at certain times more accurately.
That means they can ‘balance’ the electricity grid more efficiently by turning power plants on and off to meet this demand.