Sunday, 17 December, 2017

Ofgem extends price protection to one million more vulnerable households this winter

The regulator said the move will save affected households £120 a year on average The regulator said the move will save affected households £120 a year on average
Nellie Chapman | 12 October, 2017, 21:21

Prime Minister Theresa May stunned the industry last week when she announced a plan to impose price caps on standard variable tariffs (SVT), the basic rate that energy suppliers charge if a customer does not opt for a specific fixed-term deal.

For now, the regulator said suppliers must ramp up their efforts to get more of their customers on default tariffs onto better value deals.

Prime Minister Theresa May first proposed a price cap on the energy sector earlier this year, the biggest market intervention since its privatization nearly 30 years ago.

The Government's plan to provide price protection to all households on default deals will reassure them that the price they pay reflects the underlying costs of supplying their energy. This is created to build cross-party consensus on how the price cap will work.

Shares in SSE added 1.5 percent by 1215 GMT on Thursday, while Centrica was up by 0.4 percent. It punishes loyalty - the independent competition authority found millions of people who are customers of the Big Six suppliers are overpaying to the tune of £1.4 billion a year.

Around two-thirds of all energy customers in the United Kingdom are now on these variable tariffs.

The energy regulator Ofgem has announced it will extend its price cap to one million more vulnerable households this winter.

It set out exceptions covering tariffs already benefiting from protection and tariffs with environmental benefits.

The watchdog said it would need legislation in place to enforce a cap on default tariffs. May has previously indicated a cap could cut average energy bills by around 100 pounds ($132) a year.

The leftist opposition Labour Party, which has long advocated intervention in energy markets, performed better than expected at a June snap election, depriving May of an outright majority in parliament.

The regulator is also working on plans to extend its price protection plan to a further 2 million vulnerable households by next winter, but Nolan said this would be dependent on the timing of the government's legislation.

Ofgem said on Wednesday that whatever was contained in the upcoming legislation, the government's price cap would not come into effect for the upcoming winter.