Energy companies have been warned that no further delays will be tolerated to a new system that could create cheaper and more accurate bills for consumers.
The Market-wide Half Hourly Settlement (MHHS) programme could help customers save on energy bills by allowing more consumers to benefit from tariffs that offer cheaper energy at specific times of day.
Time of use tariffs can help bring down energy bills. Data from the Department for Energy Security and Net Zero shows that electric vehicle owners can save an estimated £332 a year by charging their vehicles through a time of use tariff during off-peak hours at night. Households could save £38 a year by switching from a variable tariff to a dynamic tariff and running dishwashers and washing machines during off-peak hours.
In 2024 Ofgem agreed to a request from Elexon, the programme implementation manager, to delay the MHHS programme for 6.5 months, to give them more time to test the new system. Ofgem also wanted assurances the programme would work as intended, is being robustly tested, and will bring benefits to customers.
Now, Ofgem’s chief executive Jonathan Brearley and Ed Miliband have written to CEOs to make clear that no further delays will be accepted.
The introduction of the new system from 2025-2027 means that, where consumers have consented to share their data, suppliers will be more likely to offer new and innovative tariffs. The result of this could be more control and cheaper bills.
Charging for electricity at different times of day is essential to the energy revolution, alongside building more wind and solar farms, and speeding up grid connections.
MHHS is an important part of Britain’s net zero journey. And this technology allows people to take advantage of cheaper renewable energy when generation is high, for example, if there are strong winds.
Jonathan Brearley, chief executive at Ofgem said:
'As the energy regulator, we do our best to pass savings onto customers and shield them from rising costs. The MHHS programme could bring down bills and reduce emissions, but it needs the industry to do its bit.
'Last year we made the tough decision of approving a delay to the scheme to give the industry more time to get this right.
'But we’re drawing the line on any further delays. We’ve written to the energy companies involved to set out some new ground rules, along with a consultation seeking views from the industry on how best to implement the programme on time.
'We're acting now to prevent any more hold ups and get consumers the savings they need.'
Energy Secretary Ed Miliband said:
'Households should be able to cut their bills by taking advantage of cheaper electricity at off-peak times.
'We’re calling on energy suppliers to use the most accurate half-hourly data so they can offer more tariffs that help reduce bills and support a flexible system to lower costs for everyone.
'But delays mean customers are missing out on opportunities to save money. Energy companies need to step up their efforts and we won't accept further setbacks as we build a fairer energy system that helps to deliver on our plan for change to protect bill payers.'
Ofgem is also consulting on a package of regulatory measures to expedite the MHHS programme. It is currently reviewing responses from the industry on plans to ensure participants allocate sufficient and appropriately skilled resources to hit delivery milestones and avoid delays.
Background
- Market-Wide Half Hourly Settlements (MHHS) send accurate signals to suppliers about the cost of serving their customers throughout each day
- This will place incentives on suppliers and other retailers to develop and offer new tariffs and innovations that encourage and enable more flexible use of energy and help consumers to lower their bills, for example time of use tariffs, automation, vehicle to grid solutions and battery storage
- Making best use of existing infrastructure should reduce the need for future generation and network investment. This would help decarbonise the sector cost-effectively, which will benefit all consumers and wider society
- On 10 March, we published a consultation on proposed directions for the programme participants
- Migration of consumers to the MHHS system is set to begin in October 2025
- More information on the programme can be found at MHHS Programme
Source: Ofgem
