Brand-loyal power customers should be rewarded, not exploited, Kwarteng proposes

Compulsory personalised advice on switching to green tariffs is being suggested

Loyal energy users penalised by suppliers who hook them into expensive default tariffs could be the exception, and not the UK norm, if success smiles on a government initiative announced today.

Beis today published proposals for an industry trial, whereby long-standing customers should be automatically switched by their suppliers into more competitive charge scales. An agreed pilot could start in 2024. 

The ministry’s Energy Market Retail Strategy for the 2020s draws on Ofgem’s research. The regulator found that less than half of domestic consumers investigate cheaper options in depth, even as their existing deals are ending.

The government also wants to extend the Energy Retail Price cap, introduced in 2019 to protect around 15 million homes on default tariffs. Beis believes the cap has already saved households on highest charge scales up to £100 a year. Kwarteng wants his powers to maintain it stretched to 2023 or beyond, should the regulator or ministers deem this necessary. 

Today’s paper seeks industry and consumer group’s views on the move. Also contemplated is compulsory personalised advice on switching to cheaper or green tariffs. 

As many as 5.8 million householders switched accounts last year, each saving on average £290, Ofgem calculates. 

Secretary Kwarteng noted, “Although more of us are now shopping around for the cheapest tariffs, the existence of better deals on the market is not sufficient in itself to drive consumer behaviour. 

“That’s why we will make the switching process even easier so we can tackle the ‘loyalty penalty’ and ensure everyone pays a fair price for powering their homes”.

He also announced, “To better protect the most vulnerable energy consumers, the government is also extending the Warm Home Discount Scheme, which will knock £150 off the electricity bills of many pensioners and low-income families, until 2026 – supporting an extra 750,000 consumers. A total of three million households will now benefit from the scheme.”

Consumer groups loved Kwarteng’s announcement. Power retailers loathed it. 

Citizens Advice claims to have advised 2.4 million Brits in 2020. Its chief executive Dame Clare Moriarty, said, “This strategy should protect customers from the loyalty penalty and make it easier for them to choose energy products that save them money. It will also help consumers reduce their carbon footprint, by expanding protections for buying green products and services.

 “The government’s commitment to keeping the price cap in place until such protections are no longer needed is good news for customers” Moriarty went on.  “It is especially important at a time when many households face significant financial challenges resulting from the pandemic”.

For retailers, Energy UK was caustic.  Chief executive Emma Pinchbeck said, “This strategy, which should be looking to the future, is stuck in the past”.

“Retailers are playing a crucial role in helping deliver Net Zero, supporting customers as they switch to electric vehicles and low carbon heating systems and guiding them through the smart tariffs and technologies that will benefit them.  In the net zero energy system, there will be a different, two-way relationship between suppliers and their customers. 

“The proposals around switching risk undermining that future”, said Pinchbeck 

“It’s disappointing and concerning that the Government’s approach to the retail sector threatens to cut across their own decarbonisation strategy.”


Please enter your comment!
Please enter your name here