Let's see if new smart-meter packages can save us money

Dynamic-pricing smart-meter plans demand dawn dining and the strategic skills of an air-traffic controller, says Kya deLongchamps 

Get it wrong, and dynamic pricing could give you bill shock every 24 hours instead of bi-monthly. File picture

As we skate skate in and out of contracts every 12 months to sop up savings, power prices are set to soar yet again. Starting this month, there’s a bright, shiny new smart-meter package on offer from Energia, SSE Airtricity, Bord Gáis Energy, Electric Ireland, and PrePay Power/Yuno. Termed dynamic pricing, these are tariffs that track wholesale electricity prices every 30 minutes.

The rumour is that kWh unit prices based on real-time wholesale pricing could invade every type of electricity deal in the years to come.

Spoiler alert: Suppliers have been forced into presenting these new deals by the Commission for the Regulation of Utilities (CRI). Never a good start.

The dynamic tariff is a new type of electricity tariff where the price of electricity changes throughout the day, reflecting how electricity is generated and used across the grid, according to Electric Ireland: “A dynamic tariff plan will give you access to these 30-minute interval electricity unit rates.”

I’m visualising myself poised in the utility room, the mobile phone in one hand, a trembling finger hovering over the start button of the dryer.

How does this all work?

With a dynamic pricing package, we have a 24-hour window to plan for the following day. The prices, ordered by time, are posted by the supplier in 48, 30-minute intervals.

These tranches are based on peaks of power, helped by wind and solar generation feeding into the grid. When the grid is flush, power is less expensive. When the draw on the grid is higher, just as with peak times on most tariffs (5pm to 8pm), the dynamic-tariff price is higher. The unit pricing changes every 30 minutes (my heat-pump dryer cycles are 3 hours long — go figure).

The CRI assures us lovingly that there’s a cap on pricing. Your unpredictable dynamic price per unit will not shoot to the moon if the data centres are punch-drunk on kWhs.

Dynamic-pricing plans are intended to offer the engaged consumer more control — plotting when we run some appliances to take advantage of low tariff periods in 30-minute grabs, instead of two-four smart fixed-price tariff bands or a 24-hour fixed-unit price deal. If you’re retired or working from home, you can be more athletic than a commuter — batch cooking at dawn, running the dishwasher on super-quick at 2.30pm and so on.

Could dynamic pricing be the way of the future? 

Night-time usage? It’s not best practice to run large appliances while no one is home or overnight. My parents’ home was razed to the ground by an exploding tumble dryer in 2017. Limit your activities to preset water heating and charging the EV.

To enjoy a dynamic-pricing deal, we must have a smart meter with a good signal that can track our usage every 30-minutes (CTF 4). Not every smart meter is capable of this, and I’ve had angry emails from readers venting their red-hot frustration at what they see as promises made but not kept by ESB Networks. The supplier will check that the signal is good enough to participate before we sign up for this plan. If eligible, the customer is supplied with the 48 half-hour dynamic prices for the following day through an app, online portal, or email.

Sadly, dynamic pricing is not a big glittering birthday present to consumers straining under utility bills but willing to put in the effort.

The deals are a hybrid product with base rates too high for most of us to do a dynamic dance into savings. We have to pay the base unit price no matter what, and both base and dynamic rates are variable. The dynamic unit portion included in the rate is the same across every supplier.

Dynamic tariffs are made up of three parts

• Standing charge plus €19.10 PSO: A fixed charge set by the supplier. You pay more if you are a rural user than you do if you are an urban user. There’s no escape here.
• Base-unit rate, set by the supplier: This is the fixed part of the price you pay for each unit of electricity you use. The CRI presents an illustrative day of base-unit prices of 10c/kWh. No supplier is offering 10c/kWh.
• Dynamic unit rate, set by the market: In addition to the base-unit rate, this is the variable part of the price that changes during the day at 30-minute intervals. The dynamic unit rate is added to the base unit rate to make the whole unit price.

Let’s do some maths

This example is from Electric Ireland (first out of the gate with a dynamic-pricing deal):

• The standing charge is (including VAT): €328.58 (urban) and €400.48 (rural). That’s EI standard price, so no hike there.
• The base-unit prices (including VAT): Day-time-standard 19.81c/kWh, night-time-standard 8.52c/kWh, and peak-standard 22.55c/kWh.

We then add on our shifting dynamic unit rate to this baseline.

My BS meter is quivering, and the only interesting figure I see is that baseline overnight price of 8.52c/kWh (11pm to 8pm), which would be fabulous for someone with two great big EVs, which both needed charging to the brim due to a couple’s long daily commute. Dynamic (variable) pricing also applies to solar export if you have solar-PV, but you’ll have to be on a dynamic-pricing plan, obviously.

There’s a list of risks with dynamic-pricing tariffs on the Electric Ireland information page. Now I’m becoming extremely nervous.

• Spikes: If wholesale electricity prices spike for any reason, you will be open to the sudden price rise. Not the case if you were paying a set price for energy on a regular tariff.
• Uncertainty over bills: With prices changing frequently, predicting your electricity bills in advance may be difficult. This might be problematic for households that like to budget for upcoming expenses.
• Peak usage: Does your household use a lot of electricity at peak times? If so, it might not be practical to shift all that energy usage to times when demand is low. This would put you at risk of buying most of your electricity when wholesale prices are at their highest.
• Monitoring: To get the best value from a dynamic tariff, you’ll need to track and manage your electricity usage regularly. This could be difficult if you are already short of time.

Savings? The CRI puts it this way: “If you use more electricity in cheaper half-hours (for example, late at night or during windy periods), your overall unit cost can be lower than on a fixed unit-rate tariff or time-of-use tariff.”

So, if you have a big breakfast at 7.45am each morning, you’re in bed by 5pm, you’re up all night doing the washing, don’t budget for future expenses, have the nerves of a tightrope walker and the strategic skills of an air-traffic controller — this is the plan for you.

For the rest of us, dynamic pricing could deliver fatter bills than other standard time-of-use tariff plans. Energy Pal has a useful calculator. Before signing up for any deal, this allows us to upload our smart-meter data and see just how we are currently using day/peak/night hours.

The CRI offers this helpful hint: “Some customers may have equipment that can assist them in adjusting when they use electricity. This could be a home energy management system, a smart EV charger or smart appliances.”

So, we can just shell out for some of those expensive goodies too. As more deals come online, use the price-comparison websites to make your decision. You can see the rise and fall in market prices for electricity at Semopx.com, which publishes the official day-ahead market prices in euros per megawatt-hour (€/MWh).

Sorry, but for now, I’m out.