Different ‘time rates’ to calculate energy bills

Electricity bills in future are likely to be calculated on different rates applying to three time periods each day following the introduction of smart meters.

The Commission for the Regulation of Utilities (CRU) has launched a consultation process over its proposals to introduce ‘time-of-use’ tariffs to coincide with the €1bn project to install a smart meter in every household and business premises here.

The CRU plans to provide 2.25 million smart meters to both residential and business customers of electricity suppliers over the coming years as part of its plans to reduce energy costs for consumers and help Ireland to meet its EU energy reduction targets.

The roll-out of smart meters by ESB Networks is scheduled to begin in 2019 and will take six years to complete.

Around 250,000 meters will be installed before 2020 with approximately 500,000 meters in each of the four subsequent years. Suppliers will be required to offer customers standard smart tariffs which will include a premium rate for the peak energy consumption period to be fixed at either 5-7pm, 5-9pm, or 7-9pm; a standard rate which will operate outside the premium rate between 8am and 11pm; and a night rate for energy used between 11pm and 8am.

The CRU said suppliers must ensure that there are “meaningful price differences” between the three rates.

It has proposed that such rates must also only be applied to either all business days (Monday to Friday), all winter days, or all business days in winter.

Energy providers will also be given the option of introducing one other special rate for another type of day such as in summertime or weekends.

The CRU said the measures are designed to ensure that standard smart tariffs are “simple in structure providing easy-to-understand signals to customers as to when it is cheaper or more expensive to consume electricity”. It said it has put in place requirements and obligations on suppliers to take primary responsibility for engaging and educating customers about the transition to time-of-use tariffs.

The regulator said suppliers will be free to offer alternative time-of-use tariffs in a move that could allow even further competition between energy providers.

The CRU said the rollout of smart meters marks a shift away from analogue to digital technology for electricity and gas retail markets in Ireland. It claims the meters will bring many benefits to energy customers by enhancing competition, making bills more accurate, and providing customers with better information about their energy consumption.

The introduction of smart meters is also seen as a key element of the Department of Communications, Climate Action and Environment’s white paper on energy, Ireland’s Transition to a Low Carbon Energy Future 2015-2030.

Pilot studies have suggested that households will cut their electricity bill by an average of between 2.5% and 3% as a result of savings derived from the use of smart meters.

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