Ofcom unveils plans to encourage more energy switching

Regulator Ofgem has unveiled plans, in response to recommendations made by the Competition and Markets Authority (CMA), to protect prepayment customers and encourage more energy switching, to help customers save money.

The news follows a two-year investigation which found Big Six companies had been overcharging customers. The investigation also found that two-thirds of householders had been paying more for their gas and electricity than customers who had switched suppliers.

From April next year, prepayment energy customers will be protected by an interim price cap, which is expected to save around four million people roughly £75 per year. The cap will expire in 2020 in time for the rollout of smart meters.

The plans will also require suppliers to hand over the details of customers who been on an expensive default tariff for three years or more, in a bid to encourage them to switch.

Dermot Nolan, Ofgem chief executive, said: “The CMA’s final report is a watershed moment for industry and consumers and points the way to a fairer and more competitive future. We are acting on these reforms and we expect energy companies, consumer groups and government to seize this opportunity to deliver a more competitive and fairer energy market for all consumers.

“We will closely monitor how the energy market develops as these reforms are implemented and will do so with a particular focus on consumer outcomes. We are committed to assessing competition and consumer outcomes in the GB energy market and we will not hesitate to take action if we feel that outcomes for consumers are not as good as they could be.”

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