The Competition and Market Authority’s plans to make Britain’s energy market more fair and competitive aims to protect the most vulnerable and encourage switching to stop customers overpaying.
Here’s a run-down of the key points:
:: PRE-PAYMENT METERS
The CMA wants to put in place a price cap until 2020 for the four million customers who are on prepayment meters – 16% of households – who have limited competition from suppliers and are more restricted in their ability to switch and find better deals than credit and direct debit customers.
It also plans to lift restrictions for new suppliers to compete for prepayment customers and reduce barriers, such as debt issues that make switching difficult.
:: CUSTOMER DATABASE
Providers could be forced to open up their databases for domestic and business customers who have been stuck on expensive default standard variable tariffs for three years or more. The Ofgem-controlled database would be subject to “strict safeguards” on communication from rival providers and would allow customers to opt out at any time.
:: COMPARISON WEBSITES
Price comparison websites could be given access to customer meter readings and should have the freedom to negotiate exclusive deals with suppliers to help customers find better deals. But they will need to be transparent about how they cover the market and rules on how they display information.
:: FOUR-TARIFF RULE
The four tariff rule introduced last year by Ofgem to ease confusion over the deals available is set to be ditched, as the CMA said it has ended up limiting competition and innovation. This will allow suppliers to offer tariffs aimed at certain customer groups, according to the CMA.
:: NON-ECONOMY 7 METERS
Around 700,000 households are on non-Economy 7 restricted meters, which buy energy at night that can be used whenever needed, and the CMA wants them to be able to switch to cheaper single-rate tariffs without requiring a meter replacement.
:: BUSINESS CUSTOMERS
The CMA wants to improve price transparency, tackle “rollover” contracts by ensuring there are longer notice periods, and end exit fees which prevent switching.
:: OFGEM POWERS
Ofgem is set to be given greater independence, reporting powers and an improved ability to drive forward changes.
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