UK energy regulator Ofgem is considering a price cap on energy bills for more low-income households.
In a letter (1 page / 233KB PDF) to Greg Clark, the UK's energy secretary, Ofgem said it was launching work to examine options to protect vulnerable customers. Options on the table include extending the safeguard tariff for consumers on a prepayment meter to more households, as well as a cap on warrant charges to install prepayment meters and a ban on such charges for the most vulnerable consumers.
Ofgem was responding to a letter from Clark in June which challenged the energy regulator to use its existing powers to reduce bills. The move follows a pledge in the Conservative party manifesto to cap energy bills for millions of families. The policy was not part of the recent Queen's Speech.
Energy law expert Jeremy Chang of Pinsent Masons, the law firm behind Out-Law.com, said Ofgem's statement was welcome but did not go as far as the policy proposed before the recent general election.
“It shows that Ofgem is serious about trying to tackle these types of issues,” Chang said.
The regulator said it would change the rules for price comparison websites to make it easier for people to switch to cheaper energy deals, allowing them to switch directly from a comparison website for the first time.
It said it would also trial its own online switching service to help customers who have been on poor value standard variable tariffs for three years or more to find cheaper deals. They will be able to see quickly how much they can save by entering their address and the name of their current supplier, according to the plans.
Ofgem said it will also examine ways to support businesses' energy needs, particularly micro businesses. It said it would consult on measures including potentially extending domestic protections – such as cooling off periods and reducing a supplier’s ability to object to a customer switching – to the smallest micro business customers.
The news follows recommendations made by the Competition and Markets Authority (CMA) last year in a report on the UK energy market. The CMA said rival suppliers should be able to contact customers via a “secure database” to help those on default tariffs switch energy provider.
Ofgem chief executive Dermot Nolan said: “Ofgem is determined to get the best possible deal for all consumers in the energy market and to ensure that the most vulnerable in society are not left behind as we move towards a smarter, fairer, and more competitive energy market.”
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