Energy regulator targets new protections for homes and businesses before winter

The energy regulator has published a series of proposals that, it hopes, will provide greater protections for households and businesses in time for the coming winter when gas and electricity charges peak.

Ofgem said it was responding to complaints about poor customer service standards through planned new rules to ensure households can contact suppliers and get support if they are struggling to pay.

In the wake of last year’s collapse of multiple suppliers when raw energy prices surged due to the war in Ukraine, providers will face a minimum capital requirement to improve their resilience to market shocks.

Ofgem said that was an element of its plans to ensure that “consumers benefit from a stable energy market”.

It builds on new rules brought in last November to bolster business models.

It was also to press ahead with measures to ensure households’ credit balances are better protected.

The regulator said it wanted the power to order suppliers to ringfence a portion of those holdings.

For non-household customers, including businesses, Ofgem said it was to examine broker practices amid suggestions that huge commissions are being loaded onto bills.

Energy bills for businesses have proved slower to come down after the spikes witnessed since last summer on the back of unprecedented wholesale gas costs.

Households are back on the energy price cap following the end of the government’s energy price guarantee which limited the amount that customers could be charged per unit.

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Ofgem price cap to £2,074

Market forecasts see annual bills hovering around the current £2,000 per year level – well down on the peaks they would have endured but for the taxpayer aid but still around £1000 up on the pre-pandemic average.

The industry regulator said it was clear that suppliers must do better in their support of consumers – with lines of communication being broadened and open for longer including at weekends.

It was also seeking more effective support for customers struggling with bills, including early intervention to “identify and offer support such as temporary repayment holidays when consumers are unable to pay”.

Its director, Neil Lawrence, added: “The plans we are announcing put the welfare of business and domestic consumers first and set out a comprehensive package to tackle poor behaviour by energy suppliers.

“Good customer service is important for all consumers, but it can make a critical difference to welfare and the safety of the most vulnerable.

“While we have seen good practice from some suppliers, we expect every company to raise the bar to provide a consistent service that customers can rely on – and this mission should be driven from the top.

“We believe these recommendations can make a positive difference to consumers and we aim to have changes in place before the cold winter months return.”

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Cheaper energy bills ‘by 2030’

The prospect of more help for businesses was welcomed by interest groups, especially those hit hardest by rising energy costs.

UKHospitality chief executive Kate Nicholls said: “UKHospitality has continued to raise the reckless behaviour of some energy suppliers with government, with some offering rates well above wholesale prices, hiking standing charges, demanding eye-watering deposits, and, in some cases, refusing to work with hospitality companies.

“A recent member survey shows that energy costs are up 80% year-on-year and almost half of businesses who signed a contract at the peak of the energy crisis fearing their business is at risk of failure.

“Whilst it has been a long time coming, it is reassuring to see that Ofgem is now doing what it can to support the hospitality sector.”

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