This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2017/oct/11/ofgem-energy-price-cap-theresa-may

The article has changed 9 times. There is an RSS feed of changes available.

Version 2 Version 3
Ofgem extends energy price cap to 1m more vulnerable customers Ofgem extends energy price cap to 1m more vulnerable customers
(about 3 hours later)
The electricity and gas bills of 1m more households will be capped this winter after the energy regulator, Ofgem, extended a price cap for vulnerable customers.The electricity and gas bills of 1m more households will be capped this winter after the energy regulator, Ofgem, extended a price cap for vulnerable customers.
The move is an interim step towards Theresa May’s promise to put a ceiling on bills using standard variable tariffs, the poor-value rates that around two-thirds of consumers are on. The move is an interim step towards Theresa May’s promise to put a ceiling on bills using standard variable tariffs, the poor-value rates that about two-thirds of consumers are on.
Ofgem said the extra 1m households would save £120 on average on their annual dual fuel bill once the so-called safeguard tariff took effect by February.Ofgem said the extra 1m households would save £120 on average on their annual dual fuel bill once the so-called safeguard tariff took effect by February.
“This will provide some short-term relief for vulnerable customers ahead of government plans for an energy price cap being realised,” it said.“This will provide some short-term relief for vulnerable customers ahead of government plans for an energy price cap being realised,” it said.
The cap will protect households that are in receipt of the warm home discount, an existing payment for people on certain benefits. Ofgem said the cap would be extended to a further 2 million people in winter 2018/19. The cap will protect households that are in receipt of the warm home discount, an existing payment for people on certain benefits. Ofgem said the cap would be extended to a further 2 million people in winter 2018-19.
Dermot Nolan, the Ofgem chief executive, said: “Ofgem shares the government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.” Dermot Nolan, the chief executive of the energy regulator, said: “Ofgem shares the government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.”
Consumer groups welcomed the measure. Alex Neill, Which?’s managing director of home products and services, said: “The implementation of a market-wide price cap is clearly going to take some time, so it’s right that the regulator is looking to more quickly protect the most vulnerable.” Consumer groups welcomed the measure as a step in the right direction before a wider price cap is introduced by the government.
On Thursday the government is due to publish a draft energy bill for the cap on standard variable tariffs, which is unlikely to take effect until next winter at the earliest. “The implementation of a market-wide price cap is clearly going to take some time, so it’s right that the regulator is looking to more quickly protect the most vulnerable,” said Alex Neill, the Which? managing director of home products and services.
Nolan said he expected energy firms to do their best to move customers off standard variable tariffs while the legislation worked its way through parliament. Gillian Guy, the chief executive of Citizens Advice, said the move by Ofgem was “a warning to energy firms that they can no longer get away with ripping off their poorest customers”.
On Thursday, the government is due to publish a draft energy bill for the cap on standard variable tariffs, which is unlikely to take effect until next winter at the earliest.
Nolan said that Ofgem “stands ready” to put in place a broader price cap once royal assent has been given to any bill passed by parliament.
“We are in a position to go forward fairly quickly after royal assent is given. My guess is that all going well, it could be five months [after royal assent]. Possibly it could be more, possibly it could be less.”
John Penrose, the Conservative MP who led calls in his party for a cap before the Tory party conference, said the government should look at introducing the wider cap in time for this winter, rather than next winter.
“Seventeen million households shouldn’t have to wait up to two years for the cavalry to arrive,” Penrose said. ‘We need faster routes to deliver our pledge. We should look at using secondary legislation to get this through parliament quickly and end the rip-off before the cold winter months start to bite.”
Labour also urged the government to act immediately. “The government needs to hurry up and get on with it if customers are to feel the benefit this winter,” said Rebecca Long-Bailey, the shadow business secretary. “It is now mid-October and we are yet to have sight of the legislation, despite Labour’s persistent calls for the government to take action.”
Nolan said it was not for Ofgem to comment on exactly what form a wider price cap might take.
“We will have to see what parliament comes up with and we will consult on that basis,” he said. “It could lead to a number of options. I support any decision of parliament and we will implement it as effectively as possible.”
Nolan said that in the meantime he expected energy firms to do their best to move customers off standard variable tariffs while the legislation worked its way through parliament.
To that end, Ofgem is changing rules that previously meant suppliers had to move customers on to standard variable tariffs at the end of a fixed tariff. Now they will be able to automatically roll them on to another fixed deal, provided it is cheaper.To that end, Ofgem is changing rules that previously meant suppliers had to move customers on to standard variable tariffs at the end of a fixed tariff. Now they will be able to automatically roll them on to another fixed deal, provided it is cheaper.
Scottish Power and E.ON have said recently that they are taking steps to end the standard variable tariffs, switching billpayers to cheaper, fixed-term deals instead.Scottish Power and E.ON have said recently that they are taking steps to end the standard variable tariffs, switching billpayers to cheaper, fixed-term deals instead.
Nolan said he hoped others would follow, as long as it resulted in consumers being placed on better tariffs. “I’m calling on all suppliers to do more to get people off SVTs,” he added. “The ball is very strongly in their court and I would hope to see action from all suppliers.”