Ofgem proposals ‘a step in the right direction’ but not a long-term solution

citizens advice scotlandMeasures by Ofgem to deliver a more competitive and fairer energy market are “a step in the right direction” towards helping poorest consumers but more needs to be done to help people in fuel poverty, Citizens Advice Scotland (CAS) has said.

Yesterday the energy regulator said four million pre-pay customers would be protected by an interim price cap from next April, saving them around £75 a year.

Ofgem also said it will work closely with suppliers to help disengaged customers, who remain on expensive standard variable tariffs, to shop around and save money. In particular it will trial more effective prompts on customers’ bills to encourage them to compare tariffs.

Ofgem’s announcement followed proposals published last month by the Competition and Markets Authority (CMA) aimed at reforming the energy market.

The CMA’s two year investigation, which concluded last month, confirmed that two thirds of households are disengaged and paying over the odds for their energy compared to those who have switched tariff.

Citizens Advice Scotland welcomed the proposals but warned that they do not represent a long-term plan to support vulnerable consumers on all payment methods.

Craig Salter, energy spokesman for Citizens Advice Scotland’s consumer futures unit, said: “This announcement represents a step towards ensuring that vulnerable energy consumers in Scotland get the support and protection that they need, as well as helping them engage more in the market. The CMA’s investigation has highlighted the failure of market competition to serve those on prepayment meters (PPMs), and it is encouraging to see Ofgem taking action to address this.

“Scotland has a higher proportion of consumers on PPMs than the rest of the UK, and so this announcement is of particular relevance to consumers here.

“When taken along with the fact that PPM customers are more likely to be disengaged from the market, have less access to lower cost tariffs than those using other payment methods, and are more likely to be fuel poor and in vulnerable situations, it is clear that this measure is an important step forward to ensuring that vulnerable consumers in Scotland are not paying too much for their energy.

“While this is not a long-term solution, and much more needs to be done to support all vulnerable consumers on all payment methods, it is a step in the right direction. The impact of this measure has the potential to make a positive difference to the lives of many of the most vulnerable households in Scotland.”

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