Ofgem is planning to introduce its mooted cap on the bills of the most vulnerable customers early in the New Year.
The energy regulator has revealed that it is planning to consult on its proposal for a “safeguard tariff” that would prevent the poorest households from being put on standard variable tariffs, which are more than £300 per annum higher than the best deals available on the market, according to figures published yesterday.
A fast track consultation on the shape of the tariff has been pencilled in for this month (September).
Ofgem chief executive Dermot Nolan said in July that the regulator was exploring the extension of the recently introduced cap on pre-payment customers to the approximately 2m households who are eligible for the Warm Homes Discount.
An Ofgem spokesman said: “Ofgem remains committed to taking prompt action to ensure that some of the most vulnerable in society are not left behind as we move towards a smarter, more competitive market.
“We plan to publish a fast track consultation at the end of month on our preferred option of introducing a safeguard tariff for vulnerable customers early next year.
“The consultation will set out the different options on eligibility for the proposed safeguard tariff. In the meantime, we are continuing our work to help all consumers, particularly those on poor value standard variable tariffs, get a better deal.”
Utility Week was told by industry experts in the summer that Ofgem’s mooted price cap extension would take around a year to implement.
But MP John Penrose, who has led the campaign in Parliament to cap all SVT tariffs, told Utility Week that Ofgem’s plan does not go far enough.
“There is no way on this planet that Ofgem’s measly proposal can solve such a big problem. Whatever it takes, we will ensure that 17 million customers are protected one way or another.”
In a recent interview with the Financial Times, Nolan said that in order to introduce a wider ranging price cap, Ofgem would need to be given greater powers by Parliament.
Responding to Ofgem’s statement, Lawrence Slade, chief executive of Energy UK, said: “The energy industry is fully committed to doing more to ensure the retail market works for all consumers. This includes ensuring better support for vulnerable customers and more engagement with customers to get them on the best deal, as demonstrated by ever-increasing switching levels.
“We will continue to work closely with Ofgem and the government.”