Trio of challenger suppliers back ‘relative price cap’
MP to propose limit on difference between suppliers' standard variable tariffs and their cheapest deals
A trio of challenger energy companies have backed proposals to ban customers on standard variable tariffs from paying more than six per cent above what they would have on their supplier’s most competitive rates.
Octopus Energy, Ovo Energy and Utility Warehouse have endorsed a call by Conservative MP John Penrose for the government to implement a ‘relative price cap’ to protect the majority of energy consumers on default tariffs.
The backbench MP will outline his proposal during an early day motion debate, due to take place today (16 March), which he has secured alongside former shadow secretary Caroline Flint and Scottish Nationalist Party MP Patricia Gibson.
Speaking in advance of the debate and after a meeting on Monday with the business, energy and industrial strategy secretary Greg Clark to discuss the plans, Penrose accused energy companies of “systematically” ripping off loyal customers.
“I’m delighted that the industry is reacting positively to this plan.
“Loyal customers are being systematically ripped off by big energy firms, and it’s just not fair. Most industries don't exploit their best customers like this, by quietly switching them onto expensive default tariffs when their existing deal comes to an end. Loyalty should be rewarded, not exploited.
“The House of Commons has a huge opportunity on Thursday to give the energy secretary a mandate to implement a relative price cap in order to protect energy consumers.”
Responding to Penrose’s proposal, Ovo Energy chief executive and founder Stephen Fitzpatrick said: “The time has come for the Government to step in and take bold action to protect consumers’ interests. We welcome John Penrose’s ‘relative price cap proposal’ as a step in the right direction towards long term fair pricing for all.
“Creating a link between SVTs [standard variable tariffs] and the cheapest tariffs in the market will help everyone benefit from competition, drive more innovation and ultimately lead to lower bills for millions of people.”
Octopus Energy founder and chief executive Greg Jackson added: “These simple proposals would be quick to implement and would dramatically improve the market for millions of people, and force energy suppliers to think long and hard about how to give customers good value in a competitive market, rather than hiding behind rules and regulation.
"For far too long the practice of 'tease and squeeze' pricing has been used by the big six to bamboozle and exploit millions of loyal customers, costing them hundreds of pounds a year too much. We wholeheartedly welcome this proposal to make that practice history and bring fairer prices to everyone.”
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