Energy bills: Still no price cap but at least vulnerable should be protected

While the Government’s much vaunted cap won’t come in time for winter, Ofgem will offer price protection to one million more Britons

More vulnerable consumers are set to be protected from rising energy bills
More vulnerable consumers are set to be protected from rising energy bills

The Government’s plans for an energy price cap are, shall we say, lacking a little energy?

As was predicted when Theresa May tried to refuel the plan, at Tory party conference, to put an upper limit on standard variable tariffs to the benefit of millions of people, it’s not going happen in time for the winter.

The Prime Minister’s “fairer Britain” rhetoric has once again crashed on the rocks of reality, just as it did when she made a big noise about energy prices during the election campaign, only to pass the buck to regulator Ofgem after she scraped back into No 10.

Amid the tumult, the regulator has at least roused itself to do something. The price protection that four million mostly hard-up people on pre-payment meters get is going to be extended to another one million people; those in receipt of the Government’s Warm Home Discount. This will save them £120 a year on top of the £140 they already get.

In the meantime Ofgem says it plans to “work with the Government” so that all those on standard variable and other default tariffs benefit from price protection “as soon as possible if legislation is in place”.

That’s rather a big if. The May Government seems to enjoy the PR win from making a fuss about energy price caps during events such as the general election or Tory party conference, only to back away when it comes to getting down to the nitty-gritty of putting them in place.

Legislation is being prepared, we are told, but as to when it will reach the statute book, who knows or dares to dream?

Ofgem’s latest action will, happily, benefit an increased number of vulnerable people. That is a welcome development.

There are plans to boost their number by a further two million by next winter, although the criteria for identifying them have not yet been established, and the legislation, when it finally arrives, may make the point moot.

Meanwhile, the regulator says it has told the industry to get a move on with its own measures to get more people on to better deals.

Energy providers are far from alone in needing to hurry up.

Still, the reality is that despite the Government marching up to the top of the hill only to march back down again, most of the people who would benefit from an all-encompassing cap should be able to save themselves money now by switching.

Even when it arrives, the cap is supposed to be set at a level that preserves a competitive market below it, so the new entrants that have emerged in recent years should still be able to steal business from the complacent fat cats of the Big Six energy firms. It was their inflated pricing and shoddy service that created the fuss in the first place.

The upshot of all this is that while a long way short of the really radical action the Government keeps promising, the latest announcement by Ofgem will end up with more vulnerable people being protected while everyone else can switch.

That’s not such a bad place to be in.

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