Reforms not enough.
Energy suppliers are working on reforms required by the Competition and Markets Authority (CMA) and Ofgem to protect customers from overcharging. They need to. The CMA reports the annual rip-off is £1.4 billion.
But already the reforms look too timid and too late.
The CMA thinks only more competition will solve the problem. But most customers (70%) are “disengaged”. They don’t switch suppliers and are stuck on high Standard Variable Tariffs (SVT).
Competition matters but protecting customers matters more.
The automatic ‘safeguard’ tariff suggested by Citizens Advice was one of the remedies for overcharging proposed by the CMA in its provisional market report in 2015. In its final report (June 2016) they dropped it because they said it would delay effective competition.
The CMA members weren’t unanimous however. One, Professor Martin Cave, dissented. At the end of a long report (page 1415) he explains why and proposes “a wider non-renewable price cap …. to give all SVT households speedy and reliable relief from the very high charges they are currently facing”.
The Sun says ministers will look again at the industry.
Good idea, considering the claims about excess profits; doubts about smart meters; and an expert opinion that competition alone isn’t protecting families from exploitation.
Isn’t it now time for the government to support Professor Cave and make energy work for everyone?
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1 How much does your energy firm make from you? The Sun, 14/11/16
2 Energy giants call for smart meter deadline delay Daily Telegraph, 12/10/16
3 Energy Market Final Report, Competition and Markets Authority, 24/06/16
4 Citizens Advice says it is “fundamentally unfair” that energy firms are charging much higher prices for standard tariffs Citizens Advice, 14/11/16
Thanks also to James Plunkett, Director of Policy and Advocacy at Citizens Advice: How do you solve a problem like over-priced energy bills? 14/10/16