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Low-income households 'need energy cap' | Low-income households 'need energy cap' |
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Millions of low-income households could see power bills cut after a watchdog's report into the UK's energy sector. | Millions of low-income households could see power bills cut after a watchdog's report into the UK's energy sector. |
The Competition and Markets Authority (CMA) has proposed a price cap for all households using pre-payment meters. | |
It has also proposed that the regulator, Ofgem, keeps a database of customers that have been on a standard rate for three years. | It has also proposed that the regulator, Ofgem, keeps a database of customers that have been on a standard rate for three years. |
This database will then be opened up so these customers can be targeted directly by other suppliers. | This database will then be opened up so these customers can be targeted directly by other suppliers. |
The proposals are designed to reform the energy market and increase competition to help consumers save money. | The proposals are designed to reform the energy market and increase competition to help consumers save money. |
They follow an 18-month investigation into the energy market by the CMA, sparked by the fact that households and small businesses have paid £1.7bn a year more than they should have, says BBC energy correspondent John Moylan. | |
The CMA believes that those households using pre-payment meters, currently numbering four million, need protecting until smart meters are rolled out in 2020. | |
Energy Secretary Amber Rudd said: "This is a wakeup call to the Big Six [energy providers]. | |
"Energy customers should get a fair deal from a market that works for them. That's why we called for the biggest ever investigation into the energy market and won't hesitate to take forward its recommendations." | |
More competition | |
"We have found that the six largest suppliers have learned to take many of their existing domestic customers - some 70% of whom are on default standard variable tariffs - for granted, not just over prices, but with their service and quality," said Roger Witcomb, chairman of the CMA's investigation. | |
He said that, if implemented, these proposals would "shake up the industry". | |
He added: "Given the scale of the problems and the potential savings on offer, we think bold measures like giving rival suppliers the chance to contact long-standing [standard rate] customers are justified." | |
The CMA considered proposing price controls on standard tariffs, but decided instead to focus on increasing competition and making switching easier. | |
Mr Witcomb said consumers who had switched had saved hundreds of pounds, but those who had not were paying more than they needed to. | |
The CMA also proposed: | |
It also wants to end termination fees that discourage switching. | |
The proposals are designed to encourage competition and make it easier for consumers to get the best deal. |