Ofgem extends price protection to one million more households

Prepayment safeguard tariff extended to one million more vulnerable households this winter.

Ofgem extends price protection to one million more households

Ofgem will extend its prepayment safeguard tariff to one million more vulnerable households this winter.

The announcement, made October 11, said the safeguard will help households save an average of £120 a year.

Following Prime Minister Theresa May’s announcement last week, to publish a draft bill to put a price cap on energy bills, Ofgem said it will work with the government to cement this legislation.

It will consult on the design of the safeguard tariff while the draft bill progresses through Parliament. Ofgem will then ensure all households on standard variable and other default tariffs receive price protection as soon as the legislation is in place. 

The energy regulator said it will extend the price protection to a further two million households in time for winter 2018 once the government’s price cap is confirmed.

In the meantime, Ofgem said suppliers must step up efforts to get more of their customers on default tariffs onto better value deals. It said some suppliers have recently come forward with proposals to do so but more action is required. 

To help with this, Ofgem is introducing new rules to allow suppliers to roll customers coming to the end of their contracts onto another fixed deal instead of a poor value standard variable tariff.  

Ofgem will be carefully monitoring to ensure any new default deals do not become another way to penalise customers who rarely switch.

Under a separate initiative to boost confidence in the switching process, Ofgem is proposing that consumers would receive automatic compensation if their switch goes wrong. 

Lawrence Slade, chief executive of Energy UK, said: “It is right we ensure protection for the most vulnerable, while ensuring we do not risk halting the growth of competition and engagement in the market which is ultimately benefiting all consumers. 

“One of the major contributors to high energy bills, especially over winter months, is the poor quality of our housing stock.  As ministers have recently highlighted, energy efficiency measures have helped to keep bills down – to around the same level we were paying nearly a decade ago.”

Slade added: “Making our homes energy efficient would be the most effective way of reducing bills for customers over the long term – which is why we are calling for the government to make it a fully funded national infrastructure priority.”