Energy Price Cap - October 2017

I maintain the view that promoting competition in the market is the best driver of value and service for customers, however this Government is prepared to act when markets are not working for all consumers. 
 
The Government made a manifesto commitment to extend the price protection currently in place for some vulnerable energy consumers to more of those on the poorest value tariffs. In June, it wrote to Ofgem asking what action they intend to take and I welcome Ofgem's commitment to protect a further one million families from expensive standard variable tariffs for the first time. This will take the total number of families protected from expensive standard variable tariffs to over five million.
 
The Government has since published a draft Bill which will provide for Ofgem to set a cap, or 'safeguard tariff', on the Standard Variable Tariffs that 60 per cent of people are on. The Safeguard Tariff will be designed by Ofgem, who will be tasked with setting it at such a level that it still leaves considerable motivation for consumers to shop around for the best deal, but improves the terrible prices paid by some people. 
 
More broadly, there is already a prepayment price cap in place protecting households least able to benefit from competition. In April 2017 a prepayment price cap came into force protecting over four million households using pre-payment meters. This will remain in place until the end of 2020 and will save the average household £80 a year.