Business

Poor value energy tariffs to be capped

Legislation to crack down on expensive energy tariffs is being introduced to Parliament on Monday.

The government claims it will protect 11 million people from costly tariffs.

The law will allow energy regulator Ofgem to limit what companies can charge customers for their standard variable tariffs.

Energy UK, which represents gas and electricity suppliers, said it was vital the cap did not stifle competition in the energy market.

The government says the Domestic Gas and Electricity Bill will limit the cost of standard variable tariffs until 2021 at least.

The move is an admission that encouraging consumers to regularly switch providers to pay less has not been as successful as hoped.

About a third of households pay the default tariffs, which are usually the most expensive.

Price cap on energy bills 'urgently needed'

British Gas scraps standard tariff for new customers

How many people will the cap on energy prices help?

The business committee of MPs said earlier this month that competition was not working and had failed to deliver fair prices for consumers.

Committee chairperson Rachel Reeves said: "The Big Six energy companies might whine and wail about the introduction of a price cap.

"But they've been overcharging their customers on default and standard variable tariffs for years and their recent feeble efforts to move consumers off these tariffs has only served to highlight the need for this intervention."

The Business Department says the average annual savings between standard tariffs and fixed rate deals could be up to £300.

The proposed price cap is not expected to come into effect until early next year.

It is separate from Ofgem's safeguard tariff, which is already helping some five million vulnerable customers pay lower prices.

Energy UK said it was important that the price cap reflected costs – most of which were outside their control, such as distribution costs and the wholesale cost of energy.

Original Article

BBC

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *