Energy price cap approved by Parliament
Commenting on Parliament’s approval of the Government’s plan to cap Standard Variable Tariffs for domestic energy customers Richard Neudegg, Head of Regulation at Uswitch.com, said:
“The Government and Ofgem must now tread very carefully when implementing the price cap. Previous regulatory interventions led to increased energy prices for consumers, so it’s vital this short-term measure is removed before it does lasting damage to competition and pushes up prices for everyone.
“If households believe this cap will protect them from price increases and stop shopping around for better deals then energy companies will remove their cheaper tariffs. This will hit hard-pressed households on poor value standard plans the most as they miss out on hundreds of pounds worth of savings.
“Ofgem must set the cap at a level where the Government’s objectives to promote switching and competition can be met, with clear criteria to measure progress. If the cap fails to meet those criteria, and competition begins to suffer, the Government should be prepared to act quickly and decisively to undo the damage by withdrawing the cap.
“There is a real risk Ofgem could get this wrong, leaving the 10 million households that have already moved off default plans paying more as cheaper deals are removed, and the remaining 57% of customers staying where they are on poor value energy deals – meaning the cap will have achieved nothing.
“Ultimately, switching to a decent deal will save far more than a cap ever could, with households saving up to £482 by switching away from Standard Variable Tariffs.”
FOR MORE INFORMATION
Tim Dunford
Phone: 020 3872 5612
Mobile: 07785 552666
Email: tim.dunford@uswitch.com
Twitter: @uswitchPR
Notes to editors
The Domestic Gas and Electricity (Tariff Cap) Bill was approved by Parliament yesterday (18 July) and is expected to receive Royal Assent and become law today. Ofgem will then announce the level at which it intends to set the cap on Standard Variable Tariffs for gas and electricity, and the date from which it will be effective, in the coming months.
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