ScottishPower customers will soon be able to buy gas and electricity in bundles of days rather than signing up to standard or fixed-price deals. The system is being based on the way people fill up their car with petrol or buy data bundles with a mobile phone.
The company says it is an attempt to simplify energy bills. ScottishPower chief executive Keith Anderson said: “We’re saying to people buy it by the day, not by kilowatts or a fancy tariff you don’t understand.”
Customers will use an app that has a gauge measuring consumption. The company will tailor each customer’s “day” based on a personalised forecast of how much energy they typically use.
This will also vary according to the time of year. Customers will be able to buy packages of gas and electricity in quantities from one day to a month, and up to 180 days ahead.
The firm has been piloting the scheme and it says it could transform the way consumers buy energy.
Mr Anderson said they went back to scratch and looked at how people bought petrol for their car. “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.”
A fuel gauge supplied within the app will then tell customers how much energy they are using and how much they have left.
Under the scheme, called “PowerUp”, customers will not have to pay a standing charge.
Scottish Power said its tariffs for the scheme would include some of the firm’s most competitive prices. It will be launched to existing customers initially, and the company firm will then consider whether to open it up to the wider market.
A two-year investigation into the energy industry by the competition authorities found that many consumers were not engaged in the energy market and failed to switch to the cheapest deals.
The new approach to buying energy has been welcomed by the industry regulator.
In a statement, 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.”
Claire Osborne, energy expert for Uswitch.com said: “Energy bills are notoriously difficult to understand and so this approach, similar to how we buy petrol, should help consumers use less, waste less and pay less for their gas and electricity.
“The fact that the deal has no standing charge will be attractive to many customers – particularly those with second homes which are unoccupied for part of the year – as there’s nothing to pay on days when no energy is used.”