Energy customers who don’t or can’t switch supplier are to be protected from overcharging.
The Domestic Gas and Electricity (Tariff Cap) Act which became law last week requires regulator Ofgem to cap standard variable tariffs paid by millions of loyal customers.
In recent years the government has introduced protections for vulnerable customers and households on low incomes.
The new law is different. It acknowledges that the energy market is failing the majority of customers.
In 2016 a Competition and Markets Authority (CMA) energy investigation showed annual overcharging of customers was £1.4 billion.
Since then, for all the ‘Switch or Suffer’ urging by Ofgem, the industry and consumer groups, public demand for action has become irresistible.
At CARBS we have long campaigned on behalf of loyal, as well as vulnerable, customers.
In its preliminary report the CMA team recommended a price cap. By the time of its final report however it had changed its mind – it thought a cap might delay the progress of competition. A single commissioner, Professor Martin Cave, continued to believe a price cap was necessary to redress the extraordinary level of overcharging.
At the time we highlighted Professor Cave’s statement of dissent which we believe has been influential in public debate.
It’s good news society has formally accepted the market for something no one can do without must be firmly regulated. Welcoming the new law, national Citizens Advice Chief Executive Gillian Guy said: “Loyal customers have paid over the odds for too long.”
And here’s more good news: in June the government announced the preferred candidate as next chairman of Ofgem is….Professor Martin Cave.