OFGEM, the UK gas and energy market regulator, has sets out tough new plans to make the energy market work better for consumers over the next financial year by driving up competition between suppliers.
A set of reforms are being developed which will help improve competition and consumer trust in the energy market, starting with a price cap to protect pre-payment meter customers in April which will save them up to £75 a year.
This stems from the Competition Authority’s remedies for the energy market, and OFGEM intends to make it easier for consumers to get a better deal in the market by carrying out extensive trials to find the most effective ways to help consumers shop around for better deals.
Dermot Nolan, Chief Executive, said: ““Many changes will be brought in as we head towards a smarter market which should revolutionise energy, giving consumers much more control. Helping consumers to get a better deal and bringing in faster, hassle free switching are also priorities for us.
“However, the key to a better energy market is trust. We will play our part by clearly explaining how the market works and building more confidence in the switching process.
“But energy suppliers also need to step up to the plate and work with us and consumer groups to create an energy market which works for everybody, not just those who frequently switch to get the best deals.”
OFGEM has also set out its plan for bringing in faster, more reliable switching, and will reach a decision on it by the end of the year. Faster switching will help ensure consumers get the most out of smart meters. Key programmes over the next financial year include:
- Preparation for the next Revenue = Incentives + Innovation + Outputs (RIIO) price controls for gas and electricity transmission, and gas distribution (from 2021).
- Continuing to put the onus on energy suppliers to treat their customers fairly, with special consideration for vulnerable consumers. We will do this by introducing more principles-based regulation for suppliers.
- Expanding competition within the UK’s energy network – with OFGEM to introduce tendering for high value onshore transmission upgrades from next year to drive down costs for consumers, and:
- Working with the government and industry to make the energy system more flexible – OFGEM says a more flexible system could save consumers between £17-40 billion by 2050.