Energy providers have slammed Ofgem’s plan to shake up the energy market by introducing a price-cap on pre-pay meters.
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It also said it will trial “more effective prompts” to customers on “expensive standard tariffs” who have not changed supplier.
Ofgem said it would…
‘I call on energy companies and consumer groups to seize this opportunity’.
It said the cap from next April would save households using pre-pay energy meters around £75 a year. The idea is that other energy suppliers will be able to contact these customers to offer them better deals.
The Big Six now supply energy to just under 90% of the domestic customers in the United Kingdom and generate about 70% of total electricity output in Great Britain.
A spokesperson for Eon said: “As with the publication of the CMA report, we will now review Ofgem’s proposals in detail to fully understand the implications for our customers”.
Ofgem’s newly devised solutions are aimed at opening up opportunities for competition and market innovation as well as driving down bills and improving customer service.
Ofgem has published a separate consultation today on the CMA’s proposals to remove parts of its Retail Market Reforms so consumers can enjoy a wider choice of innovative good value deals.
“The regulator faces a huge challenge in implementing all of these recommendations in a way that stimulates competition to deliver better outcomes for many more consumers”. For this to happen, the industry will need to commit to working with the regulator to ensure people get a fairer deal on their energy.
According to the CMA’s two-year investigation, two-thirds of United Kingdom households were paying “over the odds” for their energy compared with those who have switched to a different tariff.
“We want to see a strong, independent, respected regulator trusted by customers and companies alike”.
First Utility, the UK’s largest independent energy provider, said it was not happy with the proposals which could “help those who already shop around”.
The CMA’s two year long inquiry identified that the big six energy suppliers have been overcharging customers by up to £1.4bn a year. Ofgem has also consulted on its approach to the CMA’s recommendation to remove the requirement on price comparison websites to display all the tariffs on the market.
“Instead they’ve opted to create a new abuse: sharing of everyone’s personal data with every energy company in the land, which is likely to create a blizzard of junk mail”.
“You don’t even have to switch supplier”.
However, critics have said it is impractical for most people to check every few weeks whether they were getting the best possible deal.
“It leaves your pocket empty”, she said.
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Nolan told BBC Radio 4’s Today programme that the CMA recommended “remedies” and Ofgem would make the market fairer and encourage customers to switch suppliers.
