Energy price cap to stay amid automatic tariff switching trial
Ministers plan to extend the price cap on energy bills beyond 2023 and test automatic tariff switching to help stop consumers being ripped off.
Auto-switching is an attempt to boost competition in the energy market and save consumers overpaying on "rip-off" tariffs.
However, the plans have been opposed by the industry, which warned they were "stuck in the past" and risked damaging efforts to go green.
Kwasi Kwarteng, the Business Secretary, said: "We want to unleash a wave of competition within the energy market and keep energy bills low so households across the UK can keep more money in their back pockets."
The price cap was introduced by Theresa May's government in 2019 amid concern that the 15m customers on standard tariffs were being overcharged and could save up to £100 a year.
It was due to end no later than 2023 but ministers are now proposing legislation that would keep it in effect.
They have also announced a trial in which some customers on expensive tariffs will be automatically switched to cheaper rates unless they opt out. Consumers will also get advice on switching to better deals.
The Government hopes the move will protect consumers and "increase competition by encouraging suppliers to introduce fairer but also greener tariffs".
Competition has already increased hugely over the past decade, with a flood of new entrants taking market share from major suppliers such as British Gas and EDF.
Several smaller entrants have gone bust after offering uneconomic cut-price tariffs alongside swings in wholesale and other costs. Many suppliers complain the market is not functioning well for this reason.
It is believed that 5.8m households switched supplier last year, saving an average £290, but that less than half of households regularly shop around.
Anne-Marie Trevelyan, the energy minister, said the Government's proposals could encourage customers to take up renewable energy tariffs, but trade body Energy UK said they risked damaging that effort.
Relations between suppliers and customers are becoming more important in efforts to go green, as households need help from their supplier in changing heating systems and moving to electric cars.
Emma Pinchbeck, chief executive of Energy UK, said: "The energy retail sector has changed beyond all recognition in recent years – and will continue to do so at even greater speed for the benefit of customers - and yet this strategy, which should be looking to the future, is stuck in the past.
"In the net zero energy system, there will be a different, two-way relationship between suppliers and their customers but the proposals around switching risk undermining that future.
"It’s disappointing and concerning that the Government’s approach to the retail sector threatens to cut across their own decarbonisation strategy.”
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