Draft legislation which would put a price cap on rip off energy
tariffs will be published by the Government today (Thursday).
The Draft Domestic Gas and Electricity (Tariffs Cap) Bill will be
published in draft to allow it to be considered by Parliament.
The Business Secretary will ask the BEIS select committee to
scrutinise the draft legislation.
This will help build cross-party consensus on the workings of an
energy price cap as proposed in the Prime Minister’s speech last
week.
Under the Bill, the regulator Ofgem would bring in a price cap on
the poor value tariffs that exploit customer loyalty. This would
protect around two-thirds of households.
The Government has taken this step because the energy market does
not operate in the interests of the majority of consumers. While
we are in favour of free markets, we will always take action to
fix them when they’re broken.
More than 18 million households in Great Britain are currently on
a standard variable tariff or other default tariff. Many of these
are unfairly priced tariffs that are penalising the loyalty of
customers.
The Competition and Markets Authority found that customers of the
Big Six energy suppliers on standard variable and default energy
tariffs, which they have either always been on or are placed on
when a fixed contract expires, are paying £1.4bn a year more than
they need.
Following on from the regulator Ofgem’s announcement yesterday
that it is extending its existing price cap for vulnerable
consumers, five million households will for the first time
benefit from protection against rip off energy bills this winter.
Four million of those are on pre-payment meters. The regulator
will from February protect a further one million households who
receive the Warm Home Discount.
We welcome the action by Ofgem, but believe this could go further
to protect everyone on default tariffs from the unfair practices
currently seen in the market which affect two-thirds of
households in Great Britain.
The Government is determined to end this and is acting to protect
consumers.
Prime Minister said:
“I have been clear that our broken energy market has to change –
it has to offer fairer prices for millions of loyal customers who
have been paying hundreds of pounds too much.
“Today’s publication of draft legislation is a vital step towards
fixing that, and in offering crucial peace of mind for ordinary
working families all over the country.”
Business and Energy Secretary said:
“The energy market is broken. It punishes loyalty – the
independent competition authority found millions of people who
are customers of the Big Six suppliers are overpaying to the tune
of £1.4 billion a year.
“That is simply wrong. While five million households will see
their bills capped from this winter, I want to see every
household protected from rip off bills.
“That is why we have published this draft legislation today –
sending a clear message to suppliers they must act to put an end
to loyal consumers being treated so unfairly.”
