Cap on fuel bills ‘must be in place by next winter’
PEOPLE have been failed by Britain’s biggest energy companies and let down by the regulator, according to a scathing cross-party report released today.
The UK Government has been urged to put a price cap in place in time for next winter and not to be put off by companies that “whine and wail”.
MPs want the urgent introduction of a price cap to stop consumers being ripped off by a “dysfunctional” energy market which they say penalises customer loyalty.
They argue that 12m customers are stuck on poor-value tariffs, with some paying up to £300 more than others each year. Altogether customers are thought to have paid an average of £1.4bn a year in “excessive prices” between 2012 and 2015.
The Business, Energy and Industrial Strategy (BEIS) committee states: “Customer loyalty should be rewarded by suppliers, not exploited.”
It argues the so-called Big Six companies have brought the cap upon themselves by increasing prices last year and “failing to take effective action against the overcharging for years of their customers on default and standard variable tariffs (SVTs)”.
Anglesey Labour MP Albert Owen, a member of the committee, is hopeful that cultural change is under way.
He said: “I’m very pleased that we’ve now got all parties agreed that we need an energy cap... I’ve campaigned on it for a long time.”
Committee chair Rachel Reeves said: “The energy market is broken. Energy is an essential good and yet millions of customers are ripped off for staying loyal to their energy provider.
“An energy price cap is now necessary and the Government must act urgently to ensure it is in place to protect customers next winter. The Big Six energy companies might whine and wail about the introduction of a price cap but they’ve been overcharging their customers... and their recent feeble efforts to move consumers off these tariffs has only served to highlight the need for this intervention.”
However, a spokesman for SSE, one of the UK’s biggest energy suppliers, said: “We believe competition is better than caps but if there is to be a cap it will be critical to avoid repeating the mistakes of the existing cap; to avoid unintended consequences, a new capsetting methodology is needed which reflects the true cost of providing energy to all customers, based on a realistic view of what constitutes an efficient but also sustainable business model.”
The energy market regulator also comes under fire, with the MPs stating: “We conclude that Ofgem have failed customers, especially vulnerable customers, by being overly cautious and reactive on the issue of poor-value standard variable and default tariffs.”
David Melding, the Welsh Conservative Shadow Secretary for Environment and Sustainability, said: “Enabling energy suppliers to establish who should be on Ofgem’s safeguard tariff cap will help these vulnerable customers.”
An Ofgem spokeswoman said: “[We are] determined to deliver a better deal for all consumers. This is why we are pressing ahead as quickly as possible with plans to further extend price protection from five million consumers to all those on poor value default deals as soon as the Tariff Cap Bill is passed by Parliament.”
Plaid Cymru Westminster leader Liz Saville Roberts said: “Wales is an energy-rich country – we are a net exporter of electricity and yet we pay more in energy bills than the other UK countries... It’s time we took control over our resources and created a publicly-owned energy company – using any profits to subsidise bills for Welsh consumers or to reinvest into our own energy infrastructure.”