New smart meter systems will come into effect this year which will send energy suppliers half-hourly updates on their customers gas and electricity usage.
In May Ofgem will be authorising the change to the way, smart meters operate and how the usage is sent to suppliers.
Energy suppliers will then be able to use the data to change the consumers energy prices up to 48 times per day. This means they can potentially charge households more during peak times, the idea behind this is to ease the demand during busy periods and eventually be designed to drive usage behaviour to lower kwph costs.
An example of this is using a washing machine in the morning could be cheaper based on when the National Grid usage is down. However, charging your phone overnight would be more expensive as this is a popular time. This system has been criticised by campaigners who fear that people will have no control over their usage and could see higher premiums.
Ofgem has insisted the new plan will benefit more customers and save households a collective £4.5 billion overall.
A timeline which had been published by Ofgem states it will formally gain the powers to introduce the changes in May and will then be implemented by 2025.
At present smart meters are already set up to send data every half-hour but the customer must opt-in for this to happen. Soon this will be the default and for customers who do not wish to share their data in this way will have to opt-out.
Greg Jackson, chief executive of Octopus Energy, said: “This change would be extremely good for consumers.
“People who want a bargain can grab them, while everyone else benefits because it reduces waste.”
A spokesman for Ofgem said: “This major system upgrade is a significant milestone on Britain’s path to net zero.
“It will enable a more efficient, flexible and greener energy system which will save billions of pounds per year on all consumers’ energy bills.
“Ofgem will work closely with industry to make sure it delivers this major upgrade while ensuring those in vulnerable circumstances remain protected.”
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