May pledges to tackle ‘rip-off’ firms as energy bills capped
THERESA May has vowed to protect consumers from being “ripped-off” by big business as a new energy price cap comes into force today.
The cap will limit the amount paid for electricity and gas by those on default and standard variable tariffs.
Regulator Ofgem believes most will save £75 a year.
The annual £1,137 cap, set for a medium domestic dual-fuel customer paying by direct debit, will remain until 2020. However, it could be kept until 2023 if the energy market does not become competitive enough.
The Government has pledged to slash the amount customers pay the Big Six suppliers by £1billion a year.
The Prime Minister said: “Our energy price cap will cut bills for millions of families and people across the UK who have been ripped off by energy companies for far too long.
“But work to tackle this issue doesn’t stop there.
“We’re working with regulators and industry to ensure that consumers are not unfairly overcharged in the future – whether on their phone bills or their insurance premiums.”
The cap follows a statement by the Competition and Markets Authority suggesting the insurance, mortgage, mobile phone and broadband markets were set to be reformed after it found loyal customers are being overcharged to the tune of £4billion.
It was called in by Citizens Advice, which accused firms of billing existing customers more than new ones.
The watchdog also found vulnerable people, including the elderly, may be more at risk of paying the loyalty penalty.
Ofgem chief executive Dermot Nolan said: “Consumers can have confidence that any price rises in the future will only be down to genuine increases in energy costs rather than supplier profiteering, while falls in energy costs will always be passed on to them.”
However, consumer group Which? said cheaper energy deals were vanishing from the market ahead of the cap.
Its analysis from December found just eight tariffs costing under £1,000 a year – compared with 77 dual-fuel tariffs in January.
Gillian Guy, Citizens Advice chief executive, said: “This cap will put an end to suppliers exploiting loyal customers.
“However, while people on default tariffs should now be paying a fairer price for their energy, they’ll still be better off if they shop around.”
Savings on gas promised