Under a new scheme, major provider Scottish Power are to start offering customers the ability to buy their energy in a novel way, purchasing day to six month long bundles rather than signing up to a conventional style tariff.
The Power Up scheme will work like a combination between a conventional tariff and a pre-payment plan, with customers buying a set amount of kilowatt hours designed to last for a designated period of time. The amount of energy included in each package will be worked out based on personal estimates, generated by tracking the household in question’s energy usage over a seven day period.
Customer can then buy 1-29 days’ worth of electricity, or they can buy one, three or six month packages, using the designated PowerUp mobile app. This works on a rolling basis, so the customer isn’t tied into a plan and will not face any standing charges.
The idea behind the Power Up scheme came from a desire to change the way energy plans are priced and delivered in order to tailor the service more towards the customer.
Keith Anderson, Scottish Power’s CEO, argued that it represents a way of presenting energy costs that is more immediately comprehensible for the customer. He said: “We’re saying to people buy it by the day, not by kilowatts or a fancy tariff you don’t understand.”
He went on: “You go to the garage and put £50 in your car. Inherently you know that will last you two to three weeks.
“We thought why don’t we do the same thing with energy.”
Ofgem praised Scottish Power’s innovative approach, saying that they welcome any attempt to give customers more control over their usage, and potentially clear pricing structure.
A statement from Ofgem said: “We want more competition to increase choice and drive down prices for consumers.
“We encourage suppliers to offer new innovative tariffs to help people engage in the market and find the best deal which suits them.
“Innovative tariffs can be tailored to an individual consumer’s needs and give people more control over their energy bill and how they pay for it.”
The arguments in favour of Scottish Power’s new scheme are, in this sense, similar to those made in favour of smart meters, insofar as it could give customers a much better idea of exactly what they’re using and spending.
The Power Up plan will, at first, only be available to existing Scottish Power customers and will only be available from the supplier directly.
