Energywise explores how new electricity tariffs can support people in fuel poverty

Guest blog by Dr Giulia Privitera, Low Carbon Technologies Delivery Manager, UK Power Networks

Christmas is fast approaching and along with it some of the coldest weather of the year. In the Innovation team at UK Power Networks we are working with NEA and the wider energywise consortium to find out how hundreds of households can benefit from new electricity tariffs over the winter. Some households have already told us that they have changed their routine as a result of the new offers, for example doing laundry and cleaning at different times than usual.

Energywise is a partnership between the electricity company UK Power Networks and eight organisations including NEA, British Gas, social housing associations and a local community centre in London – the Bromley by Bow Centre.  UK Power Networks deliver electricity to over eight million homes and businesses across London, the South East and the East of England. We are not an energy supplier as we do not sell electricity or undertake billing.

By working in collaboration with an energy supplier and trusted community partners we are exploring how electricity distribution network operators can engage and support households in fuel poverty to benefit from energy saving measures and Time of Use (ToU) tariffs. ToU tariffs encourage people to move electricity consumption to different times of the day, for example away from peak times. Ultimately this can help customers to improve the way they manage their electricity use and reduce their energy bills.

 

 

The results so far have shown that hundreds of social tenants who got involved with the project in the London borough of Tower Hamlets saved on average 3.3% off their annual electricity consumption. Households realised these savings through the use of smart meter, energy saving devices and energy efficiency advice, which were all provided by the project. This proved that customers who may struggle to pay their energy bills can save as much as other demographic groups once they are engaged in the smart meter roll-out.

The energywise customer field officer team responsible for local engagement (based at the Bromley by Bow Centre in Tower Hamlets)

Building on the first successful energy saving trial, we have now offered our participants the opportunity to take part in a trial of new electricity ToU tariffs that do not penalise people for consuming electricity at peak times (non-punitive). Compared to previous industry initiatives that tested punitive price signals at peak times, we decided to focus on non-punitive tariffs because we believe these are more suitable for customers who may be struggling with their energy bills. An opt-in approach also ensures that they take an informed decision, which is particularly important when working with potentially vulnerable customers.

Specifically, with credit-metered customers we are testing a tariff that offers free electricity between 9am and 5pm on a Saturday or Sunday. To date, limited research has been carried out on customer benefits associated with a free electricity offer and we are looking forward to understanding the impact on the network of such tariff structures.

With prepayment-metered customers we are pioneering Critical Peak Rebate (CPR) tariffs in Britain. CPR tariffs are a no-lose proposition (i.e., they are simply “layered” on the customer’s existing tariff, with no financial downside to the customer): rebates are paid to customers for using less electricity relative to a baseline during a number of peak events per year. CPR tariffs have received little attention in the UK so far. However, due to their customer-friendly design and proven impact on peak demand in the United States, they have been identified by bodies including Citizen Advice as a potentially attractive candidate for demand side response in homes.

Having designed a brand new tariff in Britain we are now really keen to see what the energywise demand side response trial can teach us. Non-punitive tariffs were well received with 86% of our participants consenting to the new tariff arrangements. Early insights show that prepayment customers have earned on average a credit of £13 over the first six month of the CPR trial, with the total amount of electricity rebated for all prepayment households being equivalent to 700 loads of laundry. Not all participants feel they are able to move their electricity consumption, but those that are, find laundry and cleaning the easiest activities to shift.

The energywise project partner team

Our findings will inform the industry and policy makers on the extent to which customers in Great Britain are likely to respond to such tariffs. Energywise proved that an inclusive approach can make real differences to engaging with people that are traditionally hard to reach. It’s allowed us to help even more of our customers who need us the most. And it’s not only the people who are signed up to ToU tariffs who benefit. If enough people consistently cut their demand for electricity at peak times, it could mean that we can delay or even avoid spending our customers’ money on upgrading and putting additional capacity into our distribution network. That ultimately benefits every electricity billpayer.

UK Power Networks is the country’s biggest electricity distributor, making sure the lights stay on for more than eight million homes and businesses across London, the South East and the East of England. To find out more about UK Power Networks, please visit www.ukpowernetworks.co.uk

The energywise project partners are National Energy Action, British Gas, University College London, Tower Hamlets Homes, Poplar Harca, Bromley by Bow Centre, CAG Consultants and Element Energy.

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