British Gas has announced a new scheme where customers pays more, or less, for their electricity depending on the time of day.

This is what Privatization does. When liberated from the dead-hand of state control, privately run businesses can innovate more because more ideas can be dreamed-up and market tested. The concept of market testing is alien to state-controlled businesses because they don’t operate in a market, they have captive users who must accept whatever is offered at whatever price is charged. So there is no incentive to innovate in the first place.

I like this idea. I think it is imaginative and I think it would work. The next step though would probably be dynamic pricing, where the price fluctuates not only with the time of day but with how much load there is, that is how many other people are competing with you to use electricity. In that case electricity will go to the highest bidders, those prepared to pay the most. I’m not sure I’d welcome that personally, but if a Ryanair-style energy provider does enter the market, who knows how they would structure the tariff.

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