New energy price cap considered

New energy price cap considered

The price cap on energy bills could include many additional persons with low income. Currently, around four million individuals manage to save up t

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The price cap on energy bills could include many additional persons with low income.

Currently, around four million individuals manage to save up to £80 a year on a limited cost of gas and electricity for them on pre-payment meters.
It is possible that this number will go up for two million others on certain benefits.

It is said that the energy market was working against consumers and, suggested a tariff cap to help 17 million people who are paying standard rates. Those people would be able to save up to £100 a year.

Till today this scheme was not implemented, and the government said ministers were “thinking about the best solution” to help those on the poorest-value tariffs.

Urgency

Greg Clark, Business Secretary, asked Ofgem to challenge the regulator to use his power to lower the bills.

Dermot Nolan, CEO of Ofgem, stated for the BBC: “”We’re making the plans that we will take forward as soon as possible to offer additional protection for some customers. There is a high possibility that we will extend the current price cap for pre payment meters to poorest customers also“.

Energy costs

Competition and Markets Authority performed a landmark investigation last year, discovering that a lot of houses on regular variable tariffs were overpaying their energy.

As a result of this, price cap was set regionally for all on pre payment meters.
Just one of the big six energy suppliers did not raise the prices for other customers. Ofgem stated that those rises are not justified.

Citizens Advice has pointed that two million homes that have the right to Warm Homes Discount should be included in the scheme, as well as some of the pensioners and families with little children.

Millions ‘suffering

More proposals suggested by Ofgem include:

  • A program that would enable a person only to enter their postcode and chosen supplier and to check the prices that provider is offering.
  • Making suppliers obligated to inform their customers on better deals with rival providers, during the trial period.
  • A place where customers would be able to compare prices of all suppliers on the market and not just preferred ones.

CEO of Energy UK, Lawrence Slade, which represents the biggest suppliers, said: “”Energy corporations are committed to engaging with their consumers to help them get the best deals, and switching levels proceed to rise with over two million customers have already turned this year.

“We are dedicated to working with the government and the regulator to deliver an energy market where competition resumes to flourish and which produces fair outcomes for all customers, including better-targeted assistance for the most vulnerable.”

However, customer group Which? asked whether the Ofgem proposals went far enough to guarantee the energy market worked well for all customers.

Alex Neill stated:”Millions of hard-pressed consumers are overpaying for their energy and suffering due to an absence of competition in the energy market.”

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