Uswitch comments on recommendation to introduce energy price cap

Commenting on the Business, Energy and Industrial Strategy Select Committee’s recommendation that the Government should introduce its energy price cap bill, Richard Neudegg, Head of Regulation at Uswitch.com says:

“Though well intentioned, a widespread price cap affecting the whole of the energy market could do more harm than good. Energy companies should be doing far more to get their customers off expensive Standard Variable Tariffs, but a widespread price cap could lull energy customers into a false sense of security if they think they are protected by it.

“A record 5.5 million people switched energy provider last year, with some saving up to £491 – far more than the Government has said a cap will save them. We’re reaching a tipping point in the energy market but a cap risks undoing the good work by damaging competition, relieving the pressure on suppliers to keep prices low and improve the service they offer to their customers.

“It is crucial that the process of reforming the energy market does not start and end with this price cap. Ofgem needs to take concrete steps to avoid some of the worst unintended consequences of a cap and maintain levels of competition in the market, while also protecting the most vulnerable. This means imposing hard targets for suppliers to get customers off standard variable tariffs alongside deeper, targeted support for fuel-poor households.”