With a new Tory government in place, energy firms are facing far more interference on tariffs and pricing. Christine Toner reports
While Conservative plans for an energy tariff price cap had been leaked before policies were announced, the Tories’ manifesto would have made uneasy reading for suppliers.
It stated the party will extend the “standard tariff cap” which is currently in place for some vulnerable customers, to others on the “poorest value tariffs.”
The manifesto adds: “We will maintain the competitive element of the retail energy market by supporting initiatives to make the switching process easier and more reliable, but the safeguard tariff cap will protect customers who do not switch against abusive price increases.”
The government will also launch a consultation on extending the cap to micro-businesses. According to the document, the Tories believe the worst hit customers in the energy retail market are households with lower incomes, people with lower qualifications, people who rent their home and the elderly. A Conservative government will “act in their interests”, it says.
The new government will also launch an independent review of costs in the energy market, with the view to having the “lowest energy costs in Europe.”
Lawrence Slade, chief executive of supplier trade body Energy UK, said: “Further intervention risks undermining so many of the positive changes we are seeing in the market which are delivering benefits for consumers.
“We strongly believe that competition and choice is the best way to deliver a better deal for customers. It is essential that any price cap is carefully designed in partnership with industry and consumer groups to protect consumers.”
It is certainly the case that in parallel with increased competition, switching figures have risen in recent years, with a spike in the past two months particularly. The most recent available figures, also published by Energy UK, show there have been 1.8 million switches of tariffs so far this year. The statistics show just over 501,000 customers switched supplier in April – a 14 percent increase compared to April 2016.
As competition intensified during April, the numbers switching from larger suppliers to small and mid-tier suppliers represented three in 10 (31 per cent), a total of 155,558 customers.
Despite encouraging figures showing how customers are increasingly ditching and switching for a better deal, the industry remains anxious about a tighter grip that the new government seems determined to clasp over energy firms.
Government intervention in the utilities and telecoms markets will in fact be one of the subjects that emerges in Credit Strategy’s Household Credit Conference – rebranded from the Utilities and Telecoms Conference – on October 5.
The programme for the conference will tackle occupier debt, market transiency, an economic outlook, fraud and data sharing between energy, water, telecoms firms and even local authorities.
The U&T Awards, sponsored by Court Enforcement Services and Lowell, will take place the same day as the conference at the Nottingham Belfry Hotel.