Ofgem has dropped plans to introduce a backstop price protection for vulnerable customers after the proposed energy price cap bill gained Royal Assent.
The Domestic Gas and Electricity (Tariff Cap) Bill was passed by parliament on 18 July and was given Royal Assent a day later.
A safeguard tariff, which was already in place, protected four million customers on prepayment meters and a further one million automatically eligible for the Warm Home Discount (WHD). The backstop tariff would have protected a further two million customers if the price cap was not passed into legislation.
All well-established suppliers with more than 50,000 customers would have been obliged to offer the tariff, which stood at £1,089 for dual fuel customers.
As the bill is now law all customers on default tariffs will be protected this winter.
The regulator also announced it has brought forward the notice for consultation on the baseline (input) values that are used to determine the level of the impending energy price cap.
By law Ofgem is required to design and implement a temporary cap on standard variable tariffs and fixed term default tariffs.
Anna Rossington, deputy director, retail price protection at Ofgem announced the update in an open letter.
She said: “On 23 August we will publish our policy decision, with a statutory consultation on the associated licence conditions. We will also publish the draft impact assessment for consultation.
“In the policy consultation, we stated that we intend to set the baseline (input) values that are used to determine the level of the cap by notice, rather than in the licence condition. We said that we would issue a draft of this notice for consultation in September.”
The draft notice will be published alongside the statutory consultation in August and the final licence conditions are intended to be issued in October.
Rossington added: “We will also announce the initial level of the cap for implementation by the end of 2018, when the licence comes into effect.”