In a radical move to reduce the strain on the national power grid through the week, British Gas have announced that they will be offering free electricity on Saturdays. Centrica, British Gas’ parent company, have already trialled this scheme in America could please everyone by cutting carbon emissions as well as benefitting the poorest families.
“He also said large businesses should be paid to ration their electricity usage on weekdays as a cheaper solution to a looming energy crunch than building new power plants that would only run ‘for a few hours a year’.
The 'free electricity Saturdays’ plan would require customers to have 'smart meters’, which send automatic usage readings back to the company. British Gas has installed 1m smart meters in UK homes and businesses to date.
Mr Laidlaw faced questions from analysts over whether the tariff would be seen as irresponsible by encouraging higher usage at a time when ministers are attempting to cut carbon emissions. ‘We will think very carefully about how we launch it [in the UK],’ he said.
However he insisted it would not necessarily lead to a rise in consumption, rather encouraging consumers to shift the timing of electricity-intensive activities. This could reduce the need to fire up extra power plants to meet demand on weekdays and reduce carbon emissions overall, he said.
Centrica's US business Direct Energy already offers the tariff to customers in the north-east US and is rolling out the tariff in Texas.
It hopes ‘ultimately’ to be able to offer it in the UK. ‘We are some distance away from getting all the systems in place,’ he told the Telegraph. ‘We want to see how well it works in Texas.’
The tariff could be launched mid-2014, Centrica said.
In the US customers enjoying ‘free’ electricity on Saturdays also face higher charges the rest of the time. However, Mr Laidlaw said consumers stood to benefit and it tended to be ‘low income high consuming families that take advantage of this, which is socially progressive not regressive’.
Mr Laidlaw was speaking as Centrica revealed a 9pc rise in half-year adjusted operating profits, to £1.58bn, as increased earnings from British Gas and gas storage and production offset falling profits from power plants.
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Mr Laidlaw echoed recent warnings over possible power shortages as old plants close, saying there was a risk ‘if there are further plant closures without new investment’. However, he said ‘we should recognise that the risk is probably for a few hours a year’.
‘If there are ways in which we can work on demand response then... that can be a much more cost effective way of solving the security of supply situation than building a lot of plant that’s only going to run for a few hours a year,’ he said.
In June ministers courted controversy by backing a National Grid to pay large businesses to switch off between 4pm and 8pm on weeknights.
But Mr Laidlaw said the plan was sensible and the Hess energy supply business in America, which Centrica agreed to buy in a $1bn deal on Tuesday, already operated a similar scheme where customers who wish to ‘receive an additional incentive not to take power at certain times of the day’.
However, he criticised a parallel National Grid plan to pay companies to keep running power plants they would otherwise mothball. Mr Laidlaw said ministers should instead bring forward the introduction of a new system of capacity auctions that are not due to start making payments until 2018. ‘Having two forms of capacity mechanism, one for the short term and one for the long term, is a very complex way of doing it and may result in unintended consequences,’ he warned.
Mr Laidlaw said all Centrica’s potential UK power plant investments were on hold ‘waiting on subsidies’. A proposed £2bn offshore wind farm that it had hoped to take an investment decision this year was now caught up in a policy backlog awaiting confirmation of subsidies until the end of the year, and EU state aid clearance.
Mr Laidlaw said it would be ‘prudent’ for ministers to offer subsidies to encourage more gas storage, such as Centrica’s planned £1.4bn Baird project, as an ‘insurance policy’ to prevent the kinds of spikes seen in the March cold spell when storage levels fell ‘uncomfortably low’.
‘The risk is that if you have a situation where you are struggling for security of supply, you have to pay the highest price in the world to bring LNG to the UK. That could mean very significant additional costs on customer bills,’ he said.”
This article was originally sourced from The Telegraph.
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