The UK Government has introduced new legislation to cap energy prices and help consumers save money.
The move will allow regulator Ofgem to cap prices until 2020, protecting 11 million households across the UK, who are currently on a standard variable tariff (SVT) or other default deals.
Rachel Reeves, Chair of the Business, Energy and Industrial Strategy Select Committee, said the energy price cap is urgently needed to protect consumers and help fix the energy market, which she believes is broken.
She added: “I’m pleased the government have listened and agreed to the BEIS Committee’s recommendations to put an end to the overcharging of millions of customers stuck on default and SVTs.
“Energy consumers have been overcharged for too long and the government now needs to quickly ensure this legislation is passed in time to protect customers next winter.”
The game is up for energy companies
Alex Neill, Managing Director of Home Products and Services at Which?, said: “The introduction of a price cap has been inevitable since the Competition and Markets Authority inquiry failed to stop those who are often least able to afford it from being ripped off with sky-high energy prices.
“The game is now up for energy companies, they must not repeat past mistakes by using this cap as an excuse for their shoddy service and bad deals.”
He suggested once the cap was removed, energy suppliers will be able to compete for customers by efficiently delivering better service and fair prices.
Greg Jackson, CEO of Octopus Energy, said he was delighted the government is bringing forward the “vital” legislation.
He added: “The power imbalance between customers and companies has stifled competition and led to rip off prices and cynical loyalty penalties which we hope the government will also address with this legislation.”
Cap mustn’t halt competition
Energy UK Chief Executive Lawrence Slade added the cap must accurately reflect suppliers’ costs, most of which he thinks are out of their direct control.
He said: “With a record one-in-six customers switching last year and over 60 suppliers to choose from, the energy market is changing rapidly and has never offered so much choice. It’s vital the cap doesn’t halt the growth of competition which is helping customers to find a better deal and save on their energy bills.”