Energylinx News

July 5, 2017

Ofgem Consider a New Energy Price Cap

A price cap on energy bills could be extended to many more households on low incomes, under plans being considered by energy regulator Ofgem.

Ofgem said on Monday that it would hold a summit in July to consider what form of "safeguard tariff" would be best, with one option being to extend the existing cap for the 4m households that are on prepayment meters to a further 2.6m vulnerable households that are currently in receipt of the warm home discount.

Currently, there is a limit on the cost of gas and electricity for those on pre-payment meters and it saves about four million people £80 a year.

The proposals come after a much wider cap in the Conservative manifesto was absent from the Queen's Speech. The Conservative Party made promises during their election campaign and they have now been accused of betraying millions of households after Ofgem announced the watered down proposals.

Theresa May had originally pledged a price cap on energy bills for 17m families during the general election campaign, but the policy wasn't mentioned in the Queens Speech. Instead a letter was written to Ofgem from business secretary, Greg Clark, asking for safeguarding "customers on the poorest value tariffs".

The response from Ofgem lists a range of proposals covering billing and switching.

Dermot Nolan, chief executive of Ofgem,

"We're focusing on plans that we will take forward with some urgency to offer extra protection for some customers."

That includes "a strong possibility that we'll extend the price cap currently in place for pre-payment meters to vulnerable customers as well".

Millions 'suffering'

Other proposals outlined by Ofgem include:

• A trial that would allow households to enter only their postcode and current supplier into a "digital deal checker" to view the cheapest tariff
• Requiring suppliers to inform customers of cheaper deals with rival companies, under a trial scheme
• A clickable option on all price comparison websites to ensure customers see prices in the whole of the market, not just preferred suppliers
• A cap on the charges levied when a pre-payment meter is installed under warrant

Savings to be made

Last year the Competition and Markets Authority concluded their investigation into the energy industry. They calculated that consumers were overpaying by up to £1.2bn a year. This is what led to the cap on the cost of energy for those on pre-payment meters.

Despite pressure not to put up energy prices, 5 of the "Big 6" energy suppliers raised prices earlier this year. The only supplier not to was British Gas but they are expected to announce a price increase after summer.

Lawrence Slade, chief executive of Energy UK, which represents the major suppliers, said:

"Energy companies are committed to engaging with their customers to help them get the best deals, and switching levels continue to rise with over two million consumers having already switched this year.

"We are committed to working with the government and the regulator to deliver an energy market where competition continues to flourish and which produces fair outcomes for all consumers, including better targeted support for the most vulnerable."

Switch to Save

If you're unhappy with the cost of your energy you should check to see whether you could save money with another a supplier. Running a comparison is easy and only takes a couple of minutes, you can do it on Energylinx's website or by calling one of our friendly energy advisors on 01259 220000.

Posted on July 5, 2017 at 01:31 PM