Economy 7 customers face losing the service; the system loses flexibility. Should it be maintained?

The Energy Networks Association is consulting over whether the teleswitching service should be switched off next year. The service allows energy suppliers to switch payment rates for customers on tariffs such as Economy 7, and remotely switch on and off electric heating systems in households using the tariffs.

Around 1.5 million households will be affected by the change, which could be required because the technology providing it is obsolete. The service is used by suppliers, but provided via distribution network operators (DNOs), some of which have little interest in maintaining it for longer. It would cost £1.5 million in immediate maintenance and around £1 million per year to keep the system in operation, and because the system is so old it would only be expected to have two or three more years of life.

But for current users that period is crucial.

Eventually, smart meter services will enable suppliers to give customers a replacement service, but initial plans to prioritise smart meter installation to teleswitch customers have not been pursued. That means teleswitch customers – who generally use electric heating and have less ability to change supplier – could face several years of more expensive tariffs.

Questions also arise over other uses of the teleswitching service.

Demand response

In Northern Ireland just 10,000 homes are connected to the teleswitch service but the NI System Operator uses that pool of users to help manage power flows on the grid. Could the same approach be taken in the GB grid, where there is capacity to control around 1.5 million homes?

In fact, that already happens to a limited extent. Although the customer sees tariff changes at specific times, behind the scenes National Grid is able to stagger the start-up and switch-off of electric heating in different areas, helping manage power flows.

National grid, via its Power Responsive initiative, is searching for new tools to provide  flexibility and demand response for a more dynamic grid. In that case:

  • How much will it cost for National Grid to buy in other services to replace that source of flexibility over the next few years?
  • How much more demand response could be teased out of the system if it remained in place for a couple more years?
  • Do these services together outweigh the cost of maintaining the system for longer?

Although the teleswitching system operation can only be extended by a couple of years, it is a period in which the need for demand response is growing rapidly. Careful consideration should be given to extending the life of the service. It could be a cost effective tool to help manage the system in the short term. And customers could lose out  it disappears next year.

The consultation closes on 5 August. Details here

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