New Ofgem rules could result in a significant fall in energy bills, experts believe.
From June 2025 onwards Ofgem is bringing in new rules for households with smart meters that will require energy companies to “settle” consumer electricity bills.
This means that energy companies will have to tally up how much energy a customer has used versus the amount it cost.
This new change only applies to electricity costs but Ofgem thinks that these more accurate bills could save consumers around £4.5billion by 2045.
This also means the rise of ‘time of use’ energy tariffs which incentivise energy use at off-peak times.
An Ofgem statement said: “Smart meters can record the amount of energy consumed or exported within every half hour of the day.
“This provides an opportunity to make the settlement process more accurate and timely, and act as an enabler for new products and services, for example supporting use of electric vehicles or making use of smart appliances.
“These can deliver positive outcomes for consumers through lower bills, reduced environmental impacts, enhanced security of supply and a better quality of service.”
These market-wide half-hourly settlement (MHHS) reforms are intended to curb the historically high average energy bills, despite the relatively good news from 1 April that energy bills had hit a two year low of £1,635 a year.
An Elexon spokesperson, the firm in charge of the scheme, said: “Ofgem has approved a revised date of December 2026 for the cutover to half hourly settlement across the whole market.
“Since entering the test phases at the end of October 2023 in line with the published plan, the programme has remained on track and continues to work well with market-wide participants.”
Abigail Ward, policy manager at Energy Saving Trust, told This is Money: “Improved half hourly settlement will be an important part of unlocking a flexible energy system, where peaks in energy use are balanced out and more renewable energy used across the grid.
“The programme will encourage energy suppliers to offer more time of use tariffs, the benefits of which include lowering the cost of electric heating and home electric vehicle charging.
“In the broader picture, more accurate forecasting of electricity consumption will mean spending less on balancing the grid – when power stations are turned on and off to meet changing demand.
“The cost of balancing has been increasing year on year but the market-wide half-hourly settlement will offer an important way to reduce these costs, which in turn should help to lower people’s energy bills.”
