Energy regulator Ofgem considers new measures to clamp down on overcharging customers

About 5 million people used price comparison websites to search for energy deals last year, but less than half of those people actually went on to switch

Ofgem will also be trialling a new online service aimed at helping customers who have been on poor value standard variable tariffs for three years or more to find cheaper deals (AFP)

The Government’s energy regulator is considering extending a price cap on bills to more households across the UK in a bid to crack down on the most vulnerable customers being overcharged for gas and electricity.

Ofgem said it is considering several options as part of a wider programme, including introducing a “safeguard tariff” for vulnerable consumers. It cited research it had conducted, as well as the findings of a Competition and Markets Authority investigation, which points to vulnerable consumers in particular getting a poor deal when it comes to paying for energy.

“We are committed to ensuring that the more disadvantaged in society are not left behind as we move towards a smarter, more competitive energy market,” said Dermot Nolan, chief executive of Ofgem.

He said that suppliers must “do more to get all their consumers, particularly those on poor value standard variable tariffs, a better deal”.

Separately, Ofgem said it is introducing measures to make it easier to switch energy suppliers for all customers. The rate of switching is currently at a nine-year high, according to Ofgem, but “many people think it’s too much hassle and have never or rarely switched”, it said.

About 5 million people used price comparison websites to search for energy deals last year, but less than half of those people went on to switch.

Ofgem will also be trialling a new online service aimed at helping customers who have been on poor value standard variable tariffs for three years or more to find cheaper deals.

Consumers, by entering their address including postcode and name of current supplier, will be able to see how much they could save by using a different supplier.

The regulator said it is also testing whether writing to customers – including people who are vulnerable and not online – about cheaper offers from rival providers will prompt them to look around for a cheaper tariff and switch.

Finally, Ofgem said it had made a proposal to cap the amount suppliers can charge customers for installing a pre-payment meter under warrant at £150 and to ban these charges altogether for the most vulnerable.

Pre-payment meters are typically installed under warrant when a customer cannot or will not pay their energy bill.

It said that charges for installing meters under warrant can be as high as £1,000 and include court costs and locksmith’s fees. That risks pushing consumers already struggling with debt into further financial stress.

Consumer groups and personal finance experts largely welcomed the move but also expressed caution.

“Ofgem’s proposals make more sense than a blanket energy cap but I’ve yet to be convinced their measures go far enough to support vulnerable households or help people that aren’t motivated to switch,” Hannah Maundrell, editor in chief of price comparison website money.co.uk.

Stephen Murray, energy expert at MoneySuperMarket, echoed her comments: “The general sentiment from today’s announcement is broadly positive, especially in relation to vulnerable customers, but ultimately the proof will be in the pudding.”

Ed Kamm, the UK managing director of First Utility, an independent energy provider, said that the big six energy providers had “exploited vulnerable customers for far too long”.

“It is right and positive that Ofgem is focused on how to reduce the energy costs of vulnerable […] customers, who are more likely to be on a standard tariff with the big six,” he said.

He added, however, that more can still be done including “automatically moving these customers onto their supplier's cheapest deals and showing what savings they could make if they changed suppliers”.

“No vulnerable person should be overpaying for their energy,” he said.