A price cap on energy bills for more low-income families has been announced by UK energy regulator Ofgem.
A cap for four million consumers on pre-payment meters announced earlier this year will be extended to two million extra people, saving £80 on their energy bills.
Ofgem has also announced plans to cap the charge for installing a pre-payment meter under warrant – where customers are not paying their bills – at £150, and to ban these charges altogether for the most vulnerable.
A ‘safeguard’ tariff could also be introduced for vulnerable consumers that would protect them from overpaying for their energy.
Paying too much
The move follows research that suggests vulnerable consumers get a bad deal. An investigation in 2016 by the Competition and Markets Authority found families on standard tariffs were, overall, paying £1.2bn per year too much.
Despite this, five of the biggest energy suppliers raised their prices earlier this year.
Shares in Centrica – owners of British Gas – and SSE, both listed on the London Stock Exchange, rose when the Ofgem report was unveiled this morning (July 3), suggesting investors had feared stiffer penalties. The other four big players – EDF, npower, E.On and Scottish Power – are all foreign owned.
Ofgem’s latest announcement will also take the hassle out of switching energy providers. While the number of switches is at a nine-year high, according to Ofgem’s latest data, many people think it’s too much hassle and have never or rarely switched.
Price comparison websites will now have to make it easier for people to switch to cheaper deals. Currently, users can’t switch directly to some of the cheapest deals listed and have to visit the supplier’s own site. Now they will be able to click straight through for all available deals.
'More action needed'
However, consumer group Which? questioned whether the reforms went far enough.