British energy minister Greg Clark yesterday pledged to ‘work together’ with the Big Six gas and electricity providers in announcing details of the Brit-Govt’s new Bill to bring in a price-cap on energy prices.
But he also told the chief executives of the Big Six – who came out against the energy price-cap during the Westminster parliament’s energy committee investigation – that they only have themselves to blame for the pickle they now find themselves in.
A ‘perfect storm’ of rising fuel prices – regarded as unjustified and unfair by main observers – couple with a tsunami of consumers switching away from them to more price-competitive rivals has hit the Big Six.
In a letter to the Big Six bosses, Clark bluntly told them: “We are taking this action because the energy market is not working for all customers.
“The Competition and Markets Authority 2016 investigation into the energy market highlighted that domestic customers of the Big 6 energy companies pay on average £1.4 billion a year more than they would in a truly competitive market.
“There is in effect a two-tier market. Those households who are prepared to shop around can, on average, save around £300 from switching from a standard variable tariff of the Big Six to the cheapest tariffs on the market.
“But far too many customers remain on poor value tariffs.
“It is of particular concern that these customers typically tend to be more vulnerable than those who are getting the best deals.
“While we have seen recent tentative steps by large suppliers to improve their treatment of loyal customers, in our view these do not go far enough.
“This view was endorsed by the BEIS Select Committee in their recent report of Pre-Legislative scrutiny of the draft Domestic Gas and Electricity (Tariff Cap) Bill.
“We want to see a fully working, competitive market that is innovative, adaptive and flourishing, with low costs for consumers, and we look forward to working with you, and other suppliers, on that.
“Advances such as smart metering, faster and more reliable switching and data sharing will support the huge potential of technological innovation to deliver a better energy market for consumers.
“We have said previously that our intention is to introduce a temporary cap to protect consumers, while the objective of a more competitive market is achieved. I am sure that you support that objective.
“I hope you will work constructively together with Government and Parliamentarians to ensure the Bill passes smoothly through Parliament and that you will support Ofgem’s work to ensure the cap is implemented in time for next winter.”
It will mean an absolute cap can be set on poor value tariffs, protecting the 11 million households in England, Wales and Scotland who are currently on a standard variable or other default energy tariff and who are not protected by existing price caps.
Currently some consumers are paying up to £300 more than they need to – this cap will help bring this overcharging under control.
The Bill is part of a package of measures being introduced by government to increase competition in the retail energy market and lower prices for consumers, including the rollout of smart meters in every household and initiatives to promote smarter and faster switching.
The government intends that OFGEM implements the cap as soon as possible so that customers get the protection they need by next winter.
Prime Minister Mrs May added: “It’s often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways.
“Our energy price cap will cut bills for millions of families. This is another step we are taking to help people make ends meet as we build a country that works for everyone.”
Competition Authority throws out plea by SSE and EDF for £120m refund
The British Competition and Markets Authority has upheld OFGEM’s decision to reject a plea by Big Six generators SSE and EDF for a £120 million refund which would have been paid for by gas and electricity consumers.
Andrew Wright, senior partner at OFGEM, said: “It is disappointing that SSE and EDF challenged our decision.
“The energy market is under close scrutiny and companies should be working hard to deliver a better deal for customers – rather than seeking additional revenues that will add to customers’ bills.”
27 Feb 2018