Energy Prices to Cool as New Tariff is Introduced
The Government is set to introduce legislation that will free people from “rip off” energy tariffs should be operating next winter, a move which would protect 11 million customers.
Although not quite in time for the cold snap we will experience this week, the Domestic Gas and Electricity Bill, should be implemented by Ofgem “as soon as possible so that customers get the protection they need by the end of this year”.
The idea is that Ofgem would have the ability to limit tariffs until 2020 and following on from this, Ofgem will recommend to the Government whether the caps should be extended on an annual basis to 2023.
The Chair of the Business Committee in the Commons, Rachel Reeves said: “Energy consumers have been overcharged for too long and the government now needs to quickly ensure this legislation is passed in time to protect customers next winter.”
The Prime Minister Theresa May reinforced this point and said the Bill would “force energy companies to change their ways”.
As she announced the bill the Prime Minister said that “it’s often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways.”
Lawrence Slade, chief executive of Energy UK, which represents power companies has taken a slightly more defensive approach to the Government’s move. He said that “it’s vital the cap doesn’t halt the growth of competition which is helping customers to find a better deal and save on their energy bills. It’s also important that the cap accurately reflects suppliers’ costs, most of which are out of their direct control.”
The reforms, which are going to bring a huge sigh of relief for people next Winter, come after Prof Dieter Helm, from Oxford University, was asked by the government to examine how to reduce energy costs while achieving climate change targets.