New price cap on energy bills considered by regulator

New price cap on energy bills considered by regulator”

Energy companies saw limited impact today from news energy regulator Ofgem could cap bills for some of their poorest customers and make it easier to switch supplier in response to a government request to set out plans to help customers.

Ofgem said it was mulling a safeguard tariff to limit bills for those deemed at financial risk to ensure they did not overpay for their energy.

Chief executive of Ofgem, Dermot Nolan, explained the safeguard tariff would be aimed at "vulnerable customers" and protecting vulnerable consumers is a priority.

Energy prices became an issue in last month's national election with the threat of a broader cap in standard variable tariffs hanging over the industry.

Mr Clark, whose Business Secretary role also covers energy, said: "The government has made clear its commitment to extending price protection to more energy customers on poor value tariffs". Ofgem's rule change will give customers better access to cheaper deals, allowing them to switch directly from a price comparison site, it said.

Under the proposal, a price cap on energy bills could be extended to two million more households on low incomes.

Now the regulator has said it will hold a summit in July with consumer groups on how it could extend the pre-payment meter cap to other households.

Ofgem also wants to impose a cap of £150 on the amount suppliers can charge customers for installing a pre-payment meter under warrant and to ban these charges altogether for the most vulnerable. It will also trial a new "Check Your Energy Deal" online switching service, and also will test whether writing to customers, including those who are vulnerable and not online, about cheaper offers from rivals will prompt them to shop around and switch tariff.

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".

Such a move would have shaved £100 annually from those bills per customer.

Around 70% of customers at Big Six firms - British Gas, SSE, npower, EDF Energy, Scottish Power and EON - remain on standard tariffs which are seen as offering poor value.

It cited research it had conducted, as well as the findings of an investigation done by the Competition and Markets Authority, which points to vulnerable consumers in particular getting a poor deal when it comes to paying for energy.

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