As entrances go, the government’s introduction of a price cap on default tariffs has certainly had a decent build-up (see analysis, p6).
Among other things, it was cited as one of the key reasons behind the surprise collapse at the end of last year of the much heralded Npower/SSE retail merger, which was supposed to usher in a landmark shake-up of the structure of the energy market.
Which is why it’s never wise to make predictions.
However, no-one needs a crystal ball to see that there are some critical times ahead for energy suppliers now the historic market intervention, capping typical standard variable tariffs for dual-fuel customers at £1,137, has become a reality.
Over the past two years companies may well have grown used to the idea of a New Year price fix, but there will still be unknown impacts ahead for energy suppliers of all shapes and sizes.
Despite the cap arriving in line with forecasts, it is still likely to have been set either higher or lower than some suppliers had in fact budgeted for.
Among some of the early noises I have been hearing from the industry is that with so much mixed supplier reaction to the move, and volatile wholesale prices, the jury remains very much out on what the long-term effect of the cap will be.
Yes, it looks set to help address the market issues created by those companies that adopted more extreme pricing strategies, and the dispersion created between the cheapest non-standard tariffs and the most expensive.
And certainly, it looks set to squeeze out some of the least efficient players – although this too has uncertain consequences for others.
Yet how it will ultimately impact consumer behaviour as measured by switching remains to be seen, since the numbers released for November put 2018 on track to break 2017’s 5.5 million record.
It’s hard to miss the irony of the timing on all this. An energy price cap has been threatened and debated for years, and just before it’s finally implemented the market records its highest ever figures on customer engagement.
Who could have predicted it?