August 31, 2017 / 9:25 AM / in 7 months

Ofgem to launch consultation on energy price cap by end-September

LONDON (Reuters) - British energy market regulator Ofgem hopes to speed up the launch of an energy price cap for vulnerable households by publishing a consultation on the issue by the end of September, it said on Thursday.

A gas cooker is seen in Boroughbridge, northern England November 13, 2012. REUTERS/Nigel Roddis

Last month, Ofgem said it could cap bills for some of the most vulnerable households and make switching supplier easier, in response to a government request for it to set out plans to help customers on the poorest-value tariffs.

It said it planned to consult with consumer groups over the potential changes which could cover around 2 million consumers already on discounts to help them heat their homes.

“We plan to publish a fast-track consultation at the end of next month on our preferred option of introducing a safeguard tariff for vulnerable customers early next year,” an Ofgem spokesman said.

Bringing the safeguard tariff into place by early next year would be earlier than the previously expected April start date.

In its national election campaign, British Prime Minister Teresa May’s government said it would tackle high household energy prices if she was re-elected by setting a cap on standard variable tariffs which could affect 17 million families.

In June, the government did not mention a price cap when setting out policy objectives but said it was still committed to helping consumers hit by the most expensive tariffs.

    All of Britain’s biggest energy companies - Centrica’s British Gas (CNA.L), SSE (SSE.L), Scottish Power (IBE.MC), EDF Energy (EDF.PA), E.ON (EONGn.DE) and Npower (IGY.DE) - have announced price increases this year, citing higher wholesale prices and the cost of government policies to support renewable energy generation.

    Utilities have denied overcharging, but last year the Competition and Markets Authority found that British households overpaid a total of 1.4 billion pounds ($1.8 billion) a year on average from 2012 to 2015 because of uncompetitive standard energy tariffs.

    Ofgem data published on Thursday shows that wholesale day-ahead gas prices have more than halved from more than 85 pence per therm in 2013 to around 40 p/therm at the start of May this year.

    Wholesale day-ahead electricity prices were around 40 pounds per megawatt hour at the start of May this year, down from around 60 pounds/MWh in 2013.

    Reporting by Nina Chestney; editing by Susan Thomas

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