Smart meters to cut electricity bills 3%

The Commission for the Regulation of Utilities, which oversees the electricity and gas markets, has confirmed that a standard smart tariff (SST) will be introduced as part of its €1bn programme to provide 2.25m smart meters to households and businesses over the coming years.

Pilot studies have suggested that households will cut their electricity bill by an average of 2.5%-3% by using smart meters.

The programme is part of the Department of Communications, Climate Action, and the Environment’s white paper on energy, Ireland’s Transition to a Low Carbon Energy Future, 2015-2030, which aims to reduce energy costs for consumers and help Ireland to meet its EU energy-reduction targets.

The rollout of smart meters by ESB Networks is scheduled to begin next year and will take six years.

Around 250,000 meters will be installed before 2020, with about 500,000 meters in each of the four subsequent years.

The CRU has set out that electricity suppliers must offer consumers three different time-of-use rates: A peak rate at 5pm-7pm; a day rate at 8am-11pm (but excluding the peak); and night rate at 11pm-8am.

The three rates will apply over the course of a year, with no differences made for weekends or major holiday periods, like Christmas.

The regulator has also stipulated that there must be “meaningful price differences” between the three rates.

At the moment, energy customers can only avail of cheaper off-peak tariffs if they have a special day/night meter installed.

In fixing three different tariffs, the CRU said they needed to be simple in structure and to offer customers an easy-to-understand system of when it was cheaper or dearer to consume electricity.

The tariffs will be consistent across all suppliers, which will make it easy for consumers to compare prices.

The CRU said it had abandoned its original proposals, which would have involved six different tariffs across a year, as suppliers had expressed concern that it would prove too complex and confusing for customers.

The regulator said time-of-use tariffs would play a crucial role in Ireland’s energy future, by reducing costs and making supply more resilient and secure.

“This will be important, in light of increasing demand on the system, through electrification of heating and expansion of electric vehicles,” the CRU said.

It claimed time-of-use tariffs will also incentivise customers to shift their energy usage patterns to times of the day when electricity would be cheaper. According to the regulator, that would have the knock-on effect of reducing the requirement to increase investment in more generation capacity.

It is expected that electricity bills based on the new tariffs will be issued at some stage during 2020.

The regulator maintains that the introduction of smart meters will bring many benefits for customers, including enhanced competition between suppliers, making bills more accurate and providing better information on energy consumption.

The cost of the programme is expected to be spread between the regulator, the electricity suppliers, and the consumers.