Explainer  ·  Issue 14  ·  Tuesday 27 October 2026

Watts Happening

The UK energy newsletter that doesn't work for the industry

The Spark

Ofgem checks every Economy 7 default tariff against one assumption: that you use 52% of your electricity at night. It does not check whether you do.

That split is written into suppliers' licences. Ofgem tests compliance when the tariff is set, and says it does not go back to compare the assumption with what customers actually used, bar in limited circumstances.

If less than 52% of your use falls in the off-peak hours, your average price per unit is higher than the one the cap check assumed. Ofgem is now reviewing how the whole time-of-use cap is built.

This Week in Watts

Ofgem's own example says heat pump owners pay less than they cost. Its time-of-use review could change that.

The price cap has a second level most people never see. Alongside the familiar single-rate cap sits a “multi-register” cap for tariffs with more than one unit rate. That covers Economy 7, Economy 10 and a growing number of time-of-use deals. For October to December it is £1,046 a year for electricity, at 3,400 kWh on direct debit. Suppliers can split day and night rates however they like, provided the weighted average stays under that figure.

On 12 October Ofgem opened a call for input on rewriting how that cap is set. The trigger is half-hourly settlement. Around 24 million meters had moved over by September, and suppliers are now charged for when their customers actually use power, not an estimated profile. Ofgem frames the review as rewarding people who shift their use to cheaper hours.

The paper makes a less comfortable point. Today's multi-register cap is built on the demand shape of a single-rate customer. Ofgem then works through an example of two customers on the same averaged cap. One is an electric car owner who charges overnight. The other is a heat pump owner whose use leans into the dearer daytime hours. The car owner pays more than they cost to serve, and the heat pump owner pays less. Suppliers make money on the first and lose it on the second. Ofgem warns they may respond by not offering heat pump owners fixed tariffs.

The second and third options move towards charging each group what it costs to supply, and Ofgem rates them higher for it. In its own example, the customer who benefits from averaging today is the heat pump owner.

Nothing changes yet. Ofgem plans another consultation next year and aims for its first changes in the second half of 2027. Responses to this round close on 20 November.

A regulator that has written down which customers it undercharges has told you where the next rise lands. We think heat pump owners should be in this consultation, not reading about its outcome afterwards.

The Bill Buster

Watts on the Market

Quick Watts

From the archive