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Will the energy regulator’s plan make a difference?

Energy price pound

Ofgem, the energy regulator, has announced that a plan is on its way to tackle energy bills and relieve the burden on the most vulnerable energy customers in the UK. But will it be enough?

Today the energy regulator has outlined proposals to deliver a fairer, more competitive energy market that will help around two million customers on low incomes.

Update: 7 August 2018

This weekend, the government announced an independent review of energy costs.

The entire electricity supply chain will be under scrutiny as the independent review seeks to uncover ways of reducing costs and meet the government’s ambition of achieving the lowest energy bills in Europe while meeting climate targets.

The review, led by energy expert Professor Dieter Helm CBE, will build on commitments made in the Industrial Strategy Green Paper and include the role of innovative technologies like electric vehicles and artificial intelligence. Although a step in the right direction, the time for action on energy bills is now.

Our managing director of home products Alex Neill said: ‘It is right to look at how to keep costs down, but yet another review is going to be cold comfort to the millions overpaying on their energy bills right now.’

So far half a million people have backed our campaign for fair energy prices. We want to see urgent action from the government and regulator to tackle the lack of competition in the energy market and ensure all consumers get a good deal on their energy prices.

Ofgem’s plan

While the regulator has announced the plans to deliver a fairer energy market, it hasn’t yet published the full details.

The regulator has proposed a new ‘safeguard tariff’ specifically for vulnerable customers and it plans to hold a summit in July to consider which ‘safeguard’ tariff’ would be best. One option would be to increase the existing cap for four million households on prepayment meters to include those who receive the Warm Home Discount.

Some of you will recall that earlier this year we pressed for action from energy companies to tackle their often poor value standard variable tariffs. Today, the regulator noted that energy companies must do more to help customers who are stuck on these tariffs switch to a better deal. The regulator will announce reforms to improve energy switching services.

The regulator also announced a proposed cap for charges to install pre-payment meters under a warrant, and ban these charges altogether for the most vulnerable energy customers.

But, the plans announced today fall short of the Prime Minister’s aim to help 17 million families on those often poor value standard variable tariffs with an industry-wide price cap, as outlined in the Conservative’s manifesto. The policy to tackle energy bills with a price cap was also lacking from the Queen’s Speech on 21 June.

Energy bills

While we welcome the plans to help the most vulnerable as well as steps to make switching easier, will these plans go far enough to help the millions in the UK are overpaying for their energy?

We believe that any price cap intervention in the energy market should first consider our five test points before implementing:

1. It must not cause longer-term price increases
2. It must not remove incentives for providers to improve their service
3. It must not stifle innovation
4. It must lead to a truly competitive energy market
5. It must have clear criteria for bringing any cap to an end

Ofgem will be consulting on its proposals and we’ll be feeding in to this.

Do you think Ofgem’s planned interventions will be enough to deliver a fairer energy market that finally works for all consumers?

Comments

You can satisfy all the people some of the some of the time .
You can satisfy some of the people all the time .
You can never satisfy all the people all the time .

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Col says:
4 July 2017

Yeah, but you can at least try!

[Removed] says:
4 July 2017

I changed from British gas after 40 years to find a cheaper firm joined Ovo on a prepay tariff and in the first 9 months they have put my price up twice i was never notified and just found out when i complained. I have already spent more on duel fuel tarriff that before nearlu £1,000 in 9 months. I am disabled and live alone in a one bedroom flat how can i be using that much. I have complained to the CEO but was not allowed to do that i was told he does not deal with customers i was left with a dispute officer who stopped writing. This is not what they advertise.

[Moderator – this comment was edited to remove the user’s name and personal information at their request]

John, if you were unfamiliar with prepayment metering you might not be aware that it invariably leads to being charged at a higher rate. The meters can also be set for debt recovery and if you have spent an extra £1000 over 9 months I wonder if such a setting has been applied to your meter somehow.
Don’t try to handle this on your own, the stress isn’t worth it. If you don’t already have someone to fight your corner and help you sort this out in an official capacity then contact your local Citizens Advice office. Depending upon your age, Age UK might also be able to help. Alternatively look for a local Disablement Action group in your area.
Failing that write to Raw Deal at The Sunday Post. They have a good reputation for resolving consumer complaint issues.

I am on an interesting payment terms with SSE where I pay 80 pcm. I would like to discuss it with aomeone in the know if at all possible

Linda Brown says:
4 July 2017

In June l was told by E>O>N Energy to apply for 140 for winter fuel discount
my husband being vunerable who suffers with MS and Now has been diagnosed
with Alzihmers. When the application form came guess what it told us not to
bother to reply if we were not on any benefits and DLA does not count.
Yet these are the most vunerable people surely.
What a surprise so did not even bother to fill in the application form disgusting.

I think each provider should scrap variable tariffs altogether. To be truly competitive in the domestic market they should individually have one fixed standard price. It would then be so much easier to compare prices. This would also bring back true competitiveness between suppliers. Why should any domestic user pay any less or more for their supply? All of these complex plans that suppliers, Ofgem, and Ministers come up with lend themselves to manipulation and we could end up paying more! KEEP IT SIMPLE!!!!!!!!

I disagree. To run a viable competitive business, one needs to be able to set (or negotiate) the prices at which sales are made to customers.

Even then, most energy retailers are just “middlemen” who buy energy in bulk, add their costs and profits, and then sell it on.

It’s really easy to compare energy prices, Stanley. The difficult bit is making a decision. The big snag is long-term fixed-price contracts. Get rid of them and have fair variable tariffs and there would be a more transparent cost basis which would assist people in making decisions. This would lead to more switching which would increase competition on rates.I would suggest that there should be no exit penalties and a maximum notice period of four weeks. Firms could still offer discounts for dual-fuel, paperless billing, and direct debits; they could also give a loyalty bonus when rates have to change.

I have been carrying out work on a house with prepay meters, staggered at the cost compared with normal pay quarterly gas & electric .

Maybe the people on these meters should watch what they use and make paying their energy bills a priority over many other none essential things they pay out on, bet most would pay their iPhone bill or subscription TV charges with more priority, keep out of debt to prevent ending up on these meters.

It is easy for customers who get into debt to get stuck on an expensive tariff with a single supplier. This leads to a vicious circle, when the tariff makes it hard to pay off the debt, and you can’t change to a less expensive tariff or supplier until you’ve paid off the debt.

The people on these meters have no other option than to make paying their energy bills a priority – otherwise they have no energy to watch. The problem with prepay is not how well users can manage their financial outgoings but that the charges applied are virtually always exorbitant. So people on low incomes who have difficulty managing money have even less money to manage. That sure solves that problem!!
As someone who learnt at a very early age that if you cannot afford it you cannot have it, I do understand where you are coming from. I also understand suppliers charging higher rates for debt recovery. However once any debt is paid prepayment customers continue paying higher prices for the privilege of paying for their energy usage in advance. So the people who can least afford to buy the energy they require are paying the most for it – and undoubtedly funding your and my annual switch.

I’m interested in the achievements made during the industrial revolution, and it is difficult not to be aware of the exploitation of the poor, which has continued to this day. In fact there is a much longer history of the gulf between rich and poor. Getting rid of higher charges for those with prepayment meters should have been stopped decades ago, but never mind – these customers have helped make energy cheaper for the rest of us. 🙁

Doug Blow – You mentioned finding meters finding meters charging high rates. I can think of two possibilities:

1. The meters were set to a high rate to help the company recover past debts while still providing energy.

2. If the meters belong to the landlord, they may be charging more than they are permitted to. I temporarily lived in rented accommodation in the early 80s and was being charged about four times the legal maximum rate. I informed other tenants and one let me check their meter and confirm that they were being charged the same as me. I deducted the overpayment from the rent and politely told the landlord to check the meters in his other rental property. I hope that private meters have been phased out.

All our governments say they will do something about the energy suppliers with regards to pricing but it seems not one of them so far has balls big enough to do anything and yet again its the poorer that have to prop up the system again and in some cases get them selfs in debt, sorry about my french but its true maybe one day someone will have big ones to take these energy suppliers to task.

The industry have had years to fix their profiteering, and done next to nothing, often shifting the blame to consumers for not switching (as it turns out an utterly opaque and troublesome process in my experience, despite the automated online tools). It’s time for the regulator to step in because market forces are never going to fix this. The ideologically-motivated Tory privatisation sell off of our shared assets has failed and swindled us all, and should be regarded as a discredited policy.

A cap will not work fairly, it will cause fixed tariffs to increase, everyone has the option to fix their tariff each year, takes very little effort, old people should be helped by their relatives or charities could offer to help them.
Getting rid of standing charges would help the old, sick and poorer households, all charges should be included in kWh prices so it would not increase bill of average user in upto a 3 bed semi, heavy users would pay a little more but call it emmission charge, an incentive to reduce consumption, this would also make switching much simpler.
Encourage people to do things to save money themselves not think they are entitled to best offer without any effort. Switching should be speeded up to 7 or 14 day process. When we leave EU VAT should be scrapped on home energy and remove green taxes, it would mean putting a charge on electric cars as they are running on electricity at only 5% VAT, unfair to all other motorists. People seem to find time to compare mobile phonr deals, broadband, insurance, car prices and car fuel to get best deals, home energy is no different, do you buy your booze at the dearest outlet or compare deals.

Grace says:
4 July 2017

Vulnerable have neither access or knowledge to work computers. Their daily life takes all their energy.

Georgina Marks says:
4 July 2017

For the vulnerable consumers to enjoy the benefits of any energy price cap available they need to be fully explained to those that find these company websites confusing. The energy price cap also needs to be available to those that do not have the availability of switching on a computer and getting the online deal of the moment. The customer also needs to want to change. I know many people that can’t be bothered with changing their tariff as they think that it is too much hassle and very confusing.

The privatisation of National assets including gas and electricity by the Thatcher government represents one of the largest transfers of wealth from the poor and middle class to the rich. These assets were created from the taxes of the poor and working class. Rightfully they should be renationalised.

After Christmas I contacted my supplier to let them know I intended to switch suppliers, usual questions from them . I contacted another supplier who offered a better deal ( still have the email) they asked who my supplier was and I told them, and they said they wa ould do all the work on switching at their end. They never did and I am still with my original supplier . the whole energy system is a farce and should be given back to the government to sort out , in saying that the way this country is governed they would probibly make the same mess as the energy companies.

John says:
4 July 2017

Have you noticed how the “daily charge” is creeping. They get this payment whether you use power or not. I invested in solar which has reduced my electricity and gas usage considerably but I still pay this fixed charge just for being connected.

Phone and broadband suppliers apply a standing charge too – they call it line rental and it is paid whether or not you make calls or surf the net just to keep you connected. It works out at about twice the average daily cost of power supply.

Perhaps you don’t want people to be able to call you or send you messages by e-mail. Somebody has to pay for the cable, the transmission system and the exchange equipment and it might as well be the home subscriber. Anything else would be at a premium.

This comment was removed at the request of the user

One way of helping people choose the best option for them, would be to outlaw the Companies who purport to help the public choose the best deal. The public generally only see those Companies who pay Uswitch, Compare the Market, and Money super Market and other “middle men” for promoting their business, and not mentioning those companies who are not paying them to promte them

Look at all the huge profits these companies are making.It should be renationalized so all of us benefit instead of the bosses of these companies giving them selves massive wages.

Barry, please can you post some links to give the evidence that shows how big these profits are?

I would like to see the energy industry renationalised so that there could be lower costs for everyone as there is not the same pressure for energy companies to make and pass on profits to shareholders. Huge purchases of gas and electricity by government would benefit all users and do away with the need to spend hours on the computer every year trying to change to cheaper tariffs. Such a waste of everyone’s time, effort and energy. Many people are unable to make these comparisons, especially those without access to computers, many very elderly and some who are disabled. It is a grossly unfair system and desperately needs changing.

Geoff Young says:
4 July 2017

Whilst its good that (Ofgem) plans for a safeguard tariff for customers on certain benefits will help some homes, but energy firms will be able to still charge high prices to households stuck on standard variable tariffs. More legislation needed.

Denise says:
4 July 2017

I agree wholeheartedly with Silver Darling and those that mention taking energy back to public ownership. There is no doubt that the larger utilities companies will continue to protect their profits and their highly paid CEOs.

Small local non profit making companies supplying energy purchased directly from international markets might be a good way to begin and a way in which local people, vulnerable and otherwise would learn about energy prices without having to negotiate the internet.

I also agree with a previous response who said that energy should be the same price to everyone- as long as it isn’t controlled by those with a profit motive.

The only real way to improve the energy market is to disband the cartel that exists with the six major energy companies.Make no mistake there is a cartel in operation hence no competition.Successive governments have ignored the very obvious situation