Following government action in response to years of pressure from consumer groups, Ofgem today announced an energy price cap.
The cap means lower prices for 11 million customers who are paying expensive standard variable (default) tariffs because their existing fixed price deal has ended or they have never switched supplier to obtain a cheaper price.
At CARBS we have followed the policy debate since publication of a provisional Competition and Markets Authority report on the sector in 2015.
The CMA eventually found that suppliers were overcharging customers by £1.4 billion a year.
Ofgem and the industry insisted that the problem would disappear in time as ‘unengaged’ consumers entered the market and began to ‘shop around’; any form of price regulation would damage competition and so harm consumers.
But the arrival of price a cap signals government recognition that a fully deregulated market for something everyone has to buy has not led to fair treatment for millions or to responsible practice by suppliers.