A further one million “vulnerable” customers will be protected from high energy prices this winter under proposals announced by Britain’s energy market regulator on Wednesday, which also include possible compensation for households that experience problems when they try to switch supplier.
Ofgem will also introduce rules so that customers who are on fixed price energy deals can automatically be rolled on to another, cheaper fixed term product when their deal expires, rather than expensive default tariffs that prime minister Theresa May is targeting.
Mrs May last week sent shares in energy companies tumbling when she said she would legislate for a price cap to protect all households on expensive default products, known as standard variable tariffs (SVTs).
Ofgem’s proposals on Wednesday do not include the extensive price cap the Conservatives want – instead the regulator said it would work with government to protect all households on pricey SVTs “as soon as possible if legislation is in place”.
The government is expected to introduce a draft bill on Thursday that will pave the way for such a cap.
In the meantime, Ofgem said a further one million vulnerable households will benefit from savings of £120 on average this winter. Some 4m households that pay for their energy via pre-payment meters already benefit from price protections introduced in April.
The 1m vulnerable customers identified are those who receive the government’s “warm home discount” – which entitles them to a one-off reduction in their electricity and gas bill between October and March – but who aren’t already protected by the measures introduced in April to help pre-payment meter customers.
Depending on the timing of the government’s proposed legislation, Ofgem said it will seek to help another 2m vulnerable customers in time for the winter of 2018.
The announcements will no doubt disappoint campaigners who would like to see much swifter action to help all households on standard variable tariffs.