Gas and electricity prices are to be temporarily capped for the UK’s four million poorest households on pre-payment meters.
Meanwhile a new database of customers who haven’t switched in three years will be made available to rival suppliers and comparison sites to encourage them to contact consumers paying over the odds for their energy.
The plans have been announced this morning by the Competition and Markets Authority after a two year investigation into the energy market.
“The six largest suppliers have learned to take many of their existing domestic customers – some 70 per cent of whom are on ‘default’ standard variable tariffs – for granted, not just over prices, but with their service and quality,” said Roger Witcomb, chairman of the CMA’s energy market investigation.
He claimed that allowing competing suppliers and price comparison websites to alert customers to the savings they can make “will shake up the industry”. The new database will be operated by energy Watchdog Ofgem to ensure impartiality.
For the 4million customers on prepayment meters, including some of the most vulnerable customers, a transitional price control – effectively a cap - will be introduced until 2020. After which they should be able to benefit from the best prices through the roll-out of smart meters.
Richard Lloyd, Which? executive director said: "After two years of this energy inquiry, there is still a long way to go before we will have an energy market that works for all consumers.”
He warned that there are many people struggling with their bills who will not be helped by the price cap. He added the regulator must make sure that releasing customer data to rival suppliers is done so that it genuinely helps people switch from the most expensive tariffs to better deals, rather than result in more unwanted nuisance calls.
Doug Stewart, chief executive of independent supplier Green Energy is also concerned about the growing problem of nuisance calls. “Bombarding potential customers with phone calls or direct mail will almost certainly switch them off the idea of changing energy company,” he warned.
Instead he said we need a proper fuel poverty strategy targeted at those most in need. “Radical thought may be required. But simple thought means the focus on the price message has caused everyone to lose sight of the bigger savings, which could be as much as £200 a year through energy efficiency,” he said.
The main proposed measures to be introduced are:
