UK energy companies have set out how they intend to encourage customers to switch to cheaper deals, as the government comes under pressure to take further action to help households
Bills that are easier to understand, tariff “health checks” and long-term fixed-rate deals are among the initiatives proposed by electricity and gas suppliers, as they try to ward off further government intervention.
Suppliers have come under a renewed spotlight after three of the “big six” suppliers — Npower, EDF Energy and ScottishPower — announced an increase in rates this year for customers on standard variable rates; a move the government has described as “completely unacceptable”.
Consumer group Which? asked suppliers to submit plans on how they would help households on expensive deals to switch instead of waiting for further regulatory moves.
Around two-thirds of UK households are on standard tariffs which tend to be more expensive than fixed deals, according to Ofgem, the energy regulator.
All of the big six, bar EDF Energy, have published their individual plans, which have been passed to ministers and Ofgem. EDF said it did not believe “the solution lies in each energy company setting its own plan” and pointed to industry-wide remedies last year from the Competition and Markets Authority following a two-year probe into the market.
Npower, which is raising prices by almost 10 per cent for half of its customers, is offering households on standard rates to fix prices until 2021 through a deal that should save them about £57 a year.
British Gas, which has among the highest proportion of customers on standard tariffs, at 74 per cent, has been testing a “simplified” bill with 45,000 customers to make it easier to understand if money could be saved by changing deals.
Which? wants ministers and Ofgem to report on suppliers’ progress by the end of April.
Alex Neill, managing director of home and legal services at Which? said: “Recent price hikes show once again that it's people stuck on the most expensive tariffs that are losing out through a lack of competition in this market.”
The CMA said customers had been overcharged by £1.7bn a year by energy companies, although that finding was challenged by some industry leaders.
This article has been corrected to change a reference to British Gas having the highest proportion of customers on standard tariffs, to British Gas having among the highest proportion on standard tariffs
Read more
