By Michael Kavanagh

Centrica, owner of British Gas, is poised to shake up the UK consumer
electricity market by offering free power on Saturdays to customers willing
to concentrate their energy use at weekends when overall demand is low.

Proposals for the new energy tariff, which could be introduced next year,
mirror a range of deals already on offer to US customers of Direct Energy,
the sister company of British Gas in North America.

Centrica’s US retail business has already pioneered the concept of free
electricity use on Saturdays through annual contracts billed “Free Power
Saturday” in the north-east of the US and has also introduced a version of
the deal to consumers in Texas.

The tariffs are designed to encourage US consumers to concentrate domestic
consumption for power-hungry devices such as washing machines and tumble
dryers at the weekend when industrial demand is lower.

In Pennsylvania, Centrica also offers free power on Sundays as an
alternative to Saturdays for consumers keener to perform their weekly
chores on the Sabbath. The option of a weekend tariff pitched at half the
unit cost of electricity consumed from Monday to Friday is also available.

Sam Laidlaw, chief executive of Centrica, said that free energy tariffs
could be offered to UK consumers by early next year in a move the company
hopes could ease criticism of the utility and its rivals for introducing
inflation-busting bill increases last winter.

However, consumers would need to have a smart meter fitted in their
property before switching to the weekend tariff.

“We need to get more smart meters in the UK, and if it [free power days] does come to the UK it will be at least six months,” he told the Financial

Though smart meter installation in the UK remains in its infancy, British
Gas has obtained a clear lead among the “big six” utility groups by
installing over 1m of the devices.

Politicians have been pressing electricity companies to do more to help
consumers lower their bills as they try to tackle voters’ displeasure at
the rising cost of living in the UK.

Last year, the prime minister promised to force energy companies to put all
customers on their lowest tariff. However, his attempt to radically
simplify the market has been somewhat dimmed because of concessions by the
regulator that will see companies offering different deals depending on the
type of energy meter customers use.

Mr Laidlaw also argued that consumers switching much of their weekly power
use to the weekend would help Britain meet environmental targets for
reducing carbon emissions.

“In addition to being good for customers, they [free power days] are good
for carbon reduction by reducing peak power generation that is
disproportionately higher in carbon dioxide emissions,” he said.

Additional reporting by Elizabeth Rigby

Copyright The Financial Times Limited 2013.

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