Commenting on Ofgem’s proposals to cap Standard Variable Tariffs for domestic energy customers, Richard Neudegg, Head of Regulation at uSwitch.com, says: “Ofgem is playing a dangerous game by saying that customers will always be paying a ‘fair’ price for their energy under this cap. £1,136 a year is still almost £300 more expensive than the cheapest deal on the market.
“Customers are being sold a cap trap under the guise of a silver bullet. Rather than tackling the very real challenges faced by vulnerable households, this price cap condemns energy customers to more of the same – high bills, poor service and suppliers resting on their laurels. There’s a very real danger that customers will feel they can now stay put rather than vote with their feet – gravely damaging competition and guaranteeing that prices stay high for all.
“Ofgem’s own assessment of the proposed price cap shows that unfortunately it’s the customers doing the right thing by moving to a better energy deal who will be the ones hardest hit, with the potential for their bills to rise by up to £810 million.
“It’s vital that this cap doesn’t undo the great progress that has been made towards building a fully competitive energy market. There are over 70 suppliers in the market and switching is at record levels. We’re about to reach a tipping point, where the majority of customers will no longer be on a standard tariff – but that’s all at risk under a cap, if energy companies give the ten million customers who have switched a slap in the face by removing the cheaper deals and pricing up towards the threshold.
“Households should be under no illusion of protection. Prices can still rise when there is a cap, as we’ve seen with the two increases to the prepayment cap this year that have added £104 to energy bills for prepayment customers. The most effective way to save money on your energy bill – as well as send a clear signal to the energy companies to up their game – is by switching supplier. In a matter of minutes you could make savings of up to £482, which is far more than any cap can provide.”