In an effort to boost competition between energy companies, the government plan to introduce new measures ensuring customers the ability to switch providers in just a day by 2018.
The measures, which are due to be announced this Sunday are a backlash against soaring energy prices for consumers. Currently, the average cost of an energy bill is at a dizzying £1,200 per year.
The government are working with Ofgem to increase pressure on energy providers to make their deals more attractive to consumers by making it far easier to change between them, forcing them to cut down their prices to reduce the incentive to switch.
This comes off the back of an investigation from the Competition and Markets Authority (CMA) that revealed that 56% of households have never switched energy providers and are paying over the odds as a result. Their investigation also reportedly found that as a result, households are currently paying overall £1.2 billion more than they should be for their energy, compared with what theyíd pay if the market was genuinely competitive. They also reported that similarly, small business were paying £500 million more than they should be each year.
ìThatís why we are introducing 24-hour switching by 2018 so they can get the deal that is best for themî said Under Secretary of State for Energy and Climate Change Lord Bourne in response to the CMAís findings.
He only offered tentative support however for the CMAís plans to introduce a fixed limit for energy prices (known as a safeguarding tariff), claiming only that it is ìan interesting idea that has potentialî.
The Department of Energy and Climate Change are set to issue their response to the CMAís findings today, including plans to make the information given to comparison services by energy providers clearer.
All of this ties in to the governmentís plan to make smart meters totally ubiquitous so that energy use can be measured in real time and estimates can stop being used when customers are charged.
Lord Bourne echoed these sentiments saying that ìitís ridiculous that in this day and age energy companies should still be sending estimated bills and in no other industry would this be acceptableî.
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