New energy price cap will help 1 million low income households save £120 a year – are you eligible?
Regulator Ofgem announces plans to help protect vulnerable customers
ONE million households will save £120 a year on average under new plans announced by Ofgem.
The regulator will extend its prepayment safeguard tariff which helps support low-income households.
Last week Theresa May announced plans to impose price caps for those customers on poor-value standard variable tariffs (SVTs) - an energy suppliers "default" deal.
Today Ofgem said it will work with the Government on these plans to make sure those on SVTs and default deals are protected.
Ofgem expects the extension of the safeguard tariff to be in place by February 2018 and provide assistance to one million households.
It will apply to those customers receiving the Warm Home Discount from their supplier, a scheme which aims to help vulnerable customers struggling to pay their bills.
Dermot Nolan, chief executive of Ofgem, said: “We share the Government’s concern that the energy market is not working for all consumers and are determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.
“The proposed bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.
“In the meantime, we expect suppliers to do more to get customers on poor value default tariffs onto better deals.
“We also expect suppliers to co-operate when Ofgem initially introduces a safeguard tariff for around one million vulnerable households this winter. "
“The introduction of further price protections will give time for Ofgem’s reforms to work and for smart meters to be rolled out across the country as we move towards a smarter, fairer, more competitive market.”
Mr Nolan added that customers will automatically feel the benefit of the cap if they are eligible for the Warm Home Discount.
"Customers won't have to do anything at all," he said.
";Some of those customers on such a scheme are getting some of the worst deals on the market.
"I believe suppliers should do more to get their customers off SVTs."
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To help customers, Ofgem is also introducing new rules to allow suppliers to roll customers onto another fixed-term deal provided it is cheaper than its SVT.
Alex Neil, of consumer group Which?, said: "Today's announcement will be welcome news to the some of the UK's most vulnerable households. The implementation of a market-wide price cap is clearly going to take some time, so it's right that the regulator is looking to more quickly protect the most vulnerable.
“Energy companies must also do much more to engage their customers, helping them to switch to a better deal now."
The Government is expected to announce a draft bill tomorrow on proposals which would see bills capped for millions of SVT customers.
What is the Warm House Discount?
Ofgem is proposing to extend its existing safeguard tariff to homes receiving the Warm Home Discount. Are you eligible?
Under the scheme you could get £140 knocked-off your energy bill this winter.
All the major suppliers are signed up to the scheme and it applies to two main groups:
- Pensioners who receive Pension Credit Guarantee Credit - The Department for Work and Pensions works with suppliers to identify those who are eligible. You should receive your rebate automatically but if you don't and think you should, contact your supplier.
- Fuel-poor customers - Suppliers must provide a rebate to those at risk of or in fuel poverty. Each has its own criteria but if you are on income suppport and have children under five you should contact your supplier straight away. Most suppliers will have opened their applications for support in the summer and aim to paythe rebate over winter.
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