The shadow energy secretary has hit out at energy companies who charged “rip-off” prices for energy plans. Caroline Flint has now called for the introduction of what would be referred to as a “protected” energy tariff and it would be aimed at protecting the most vulnerable customers. This comes as a response to news that energy customers were overcharged a total of £1 billion last year. This new plan would have its rate set by the regulatory body – aimed at people who would be unlikely to switch tariffs.
The Competition and Markets Authority (CMA) revealed that the Big Six energy companies have overcharged people by a total of £1 billion. However the only thing that the government did to try and rectify this action was write a letter to the suppliers. The letter was written by Amber Rudd and parts of it were released to the media. There have since been attempts to retrieve the entire letter, via the Freedom of Information act but these requests have been denied on largely unknown grounds.
Flint has made it clear that the energy companies have not passed on the wholesale reduction of prices to the customers in the UK. She was a contender for the deputy labour leadership and said:
“The CMA are looking at a transitional ëregulated safeguard tariffí. I am calling on the government to back this approach and signal an end to rip-off prices.î
She went on to say that the big six energy companies had been using their “standard variable” tariffs as a means to overcharge about 70% of the customers who are placed on them.
Back in July the CMA finished what had been a year-long enquiry into the energy market by saying that there are millions of people, across the UK, that are paying above the odds for their gas and electricity. They put this down to a lack of competition across the market.
Their investigation revealed that about 35% of the households which had incomes over £36,000 had changed energy provider in the last 3 years, whereas only 20% of households with less than £18,000 had done so in the same timeframe.
The shadow energy secretary pointed to places like the United States where they have a “default tariff” to protect those who do not switch energy suppliers. If this approach were to be taken in the UK, it would mean that energy suppliers would be forced to offer one tariff where the energy rate was set by Ofgem, the regulator for gas and electricity. This set tariff would then become the go to plan for energy customers who did not switch deals.
This default energy tariff would essentially act as a benchmark for the energy companies to try and do better than. In this way the plan is seeing as encouraging a higher level of competition in the gas and electricity markets in the UK.
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