Almost 1 million vulnerable households on poor value deals will make big savings on their energy bills from this month after OFGEM, the British energy market regulator, extended the prepayment safeguard tariff.
These customers will initially make average annualised savings of around £115 a year because suppliers have to cut their prices to below the level of the safeguard tariff cap.
These savings will fall to around £66 a year from April when the level of the safeguard tariff rises due to higher energy costs.
The safeguard tariff stops suppliers from charging customers too much and ensures any price increase is justified by rises in underlying costs.
In April last year, Ofgem introduced the safeguard tariff for over four million prepayment customers, who also find it difficult to get a better deal and are more likely to be vulnerable.
After Ofgem extended the safeguard tariff to almost one million vulnerable customers last week, more than five million households are now protected.
Dermot Nolan, OFGEM chief executive, said: “We are working with the government to protect all customers on poor value default deals, such as standard variable tariffs, from being charged too much for their energy as soon as possible.
“Our aim is to protect those who do not switch, while making it easier for those who do to get a better deal.”
British energy minister Claire Perry, MP, commented: “It is a positive step that a million vulnerable consumers are now being protected from unfair energy price rises through the energy cap.
“But energy tariffs are still too high – customers of the Big Six energy suppliers are overpaying by up to a staggering £1.4 billion a year. This is totally unacceptable and why government will continue to go further – including by bringing in new laws in the forthcoming energy Tariff Price Cap Bill to put an end to rip-off standard tariffs.
Lawrence Slade, chief executive of Energy UK – whose members include the Big Six – commented: “That the cap will rise from April does show how energy costs, which are out of any suppliers direct control, are increasing and underlines why it is critical any broader cap must be cost-reflective and protect competition which is delivering benefits for consumers.”
8 Feb 2018