LONDON: May stunned the industry last week when she announced a plan to impose price caps on standard variable tariffs (SVT), the basic rate that energy suppliers charge if a customer does not opt for a specific fixed-term deal.
Around 70 percent of households are on SVTs.
Regulator Ofgem had already proposed intervening in the part of the market that supplies more vulnerable customers and it said on Wednesday its new price protection for this sector would protect around 1 million households.
It said it would now consult the industry on the safeguard tariff for SVTs while the government’s draft bill passes through parliament, and said suppliers in the meantime must step up efforts to provide better value deals.
Ofgem chief executive Dermot Nolan said: ”Ofgem shares the Government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.
“The government’s proposed bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.”