Price Cap For Prepay Meters To Be Put In Place By Ofgem
Ofgem says that the price cap has been put in place to protect the “Vulnerable” customers from being overcharged for the services.
The cap idea came after a report from the Competition and Market Authority(CMA), which said that the 6 biggest energy suppliers were still overcharging some pre-pay meter customers.
The CMA says that the cap will help those who are “Vulnerable” and those who are unlikely to change suppliers by saving them around £75 a year. This will take effect in April 2017.
The price cap isn’t the only idea put forth. Working with the suppliers directly to show the “vulnerable” customers other suppliers who may have better offers. They would also show them smart meters. This would make switching suppliers faster and easier.
In 2017, Ofgem will also put a database in place. This will allow different suppliers to offer rivals’ customers on variable rates, a better offer.
Chief executive, Dermot Nolan, says “The CMA’s final report is a watershed moment for industry and consumers and points the way to a fairer and more competitive future,”.
“I call on energy companies and consumer groups to seize this opportunity.”
A two-year long inquiry, by the CMA, uncovered that the Biggest 6 suppliers have been overcharging customers up to £1.4 billion collectively per year.
This means that two out of three households have been overcharged for the gas and electricity, unlike those who have actively looked for cheaper offers by other suppliers.
“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,” says Alex Neill, director of policy and campaigns at Which?
He went on to say “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.”
Energy supplier, E.ON, issued a statement saying “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.”
EDF energy are fully supporting the proposal, suggested by the CMA.
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