Published: Fri, October 13, 2017
Sports | By Nelson Rowe

18 million energy customers to see bills capped by government

18 million energy customers to see bills capped by government

Today's move by Ofgem stops short of rolling out a wider price cap, as suggested by the Prime Minister last week.

Business and Energy Secretary Greg Clark described the current system as "simply wrong".

Former minister John Penrose told the paper: "A temporary relative price cap puts the customer in charge, so energy firms compete to offer the best, most creative and attractive deals".

The Department for Business, Energy and Industrial Strategy states that more than 18 million households in Great Britain are now on a standard variable tariff or other default tariff.

And, although there will still be some Britons who won't benefit from those future energy price caps this year, Ofgem has already committed to helping cut energy bills for an additional one million people this winter.

Energy prices could be capped until 2023, the government has said, as it unveiled draft legislation to limit bills for up to 15 million households. However, the regulator would start capping bills five months after the bill became law.

More than 18 million customers are now on standard variable tariffs or other default tariffs - many of which see them paying more despite their loyalty. This is created to build cross-party consensus on how the price cap will work.

Ofgem said it would now consult the industry on its safeguard tariff for SVTs while the government's draft bill passes through parliament, and said suppliers in the meantime must step up efforts to provide better value deals.

Meanwhile, Ofgem yesterday vowed to expand the price cap for customers using pre-payment meters to include 1 million households considered socially vulnerable.

It will apply to anyone on a standard variable tariff, the expensive plans that customers are moved to when cheaper, fixed deals end.

Around two-thirds of all energy customers in the United Kingdom are now on these variable tariffs.

They argue intervention in the market does not promote competition. Ian Conn, who runs British Gas owner Centrica, gave a heavy hint that the UK's biggest energy supplier would do something similar.

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