It’s great news that a Bill to cap energy prices has passed through the House of Commons this week and is expected to become law before next winter. It will mean that consumers will be protected from excessive energy bills until 2020, at least, with an option to extend the cap annually until 2023. I know that high energy bills are a big concern for many people, particularly people on low incomes so I was delighted to support this measure whilst the Government looks for a long-term solution.
It is clear that the energy market does not work for consumers. Those who shop around and switch suppliers can save as much as £300 each year but energy bills still remain too high for millions of households. Those who don’t switch remain on standard variable tariffs, in effect subsidising those who do switch and propping up the profit margins for the worst offending suppliers. What’s more these customers are often from vulnerable groups who really can’t afford the inflated prices. Ofgem has already introduced a safeguard tariff cap on prepayment meters, saving five million of the most vulnerable customers an average £60 each year. This Bill will build on that by putting an absolute cap on default standard variable energy tariffs by the end of the year so that the 11 million households on these rip off tariffs can feel the benefits this winter.
Strong competition is the best way to protect the interests of consumers and this Bill is part of larger efforts to reform the energy market. I believe that this gives more power to consumers, increases competition through the rollout of smart meters and makes switching suppliers quicker and easier for everyone.