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“RIP-OFF” energy firms should stop whining and expect the introduction of a price cap as they’ve been overcharging customers for years, according to a Commons select committee report published today.
MPs slammed the big six energy companies, saying that the current energy market is “broken” and penalises customers who do not shop around, according to the business committee’s report on the government’s draft energy price cap Bill.
The committee is calling for an immediate and absolute cap on the most expensive tariffs.
Business Secretary Greg Clark published draft legislation for an absolute cap last year but refused to guarantee that it would be in place by next winter.
The major energy firms raised prices again last year and failed to act on long-term overcharging of customers on default and standard variable tariffs (SVTs), the committee said.
It said there was a two-tier market, with some households paying up to £300 a year more than others, while 12 million customers are stuck on SVTs or default tariffs.
Customers are overpaying £1.4 billion a year under the current system and they should not be expected to have to “constantly defend themselves from excessive prices,” the report says.
Committee chairwoman Labour MP Rachel Reeves said: “Energy is an essential good and yet millions of customers are ripped off for staying loyal to their energy provider.
“An energy price cap is now necessary and the government must act urgently to ensure it is in place to protect customers next winter.
“The big six energy companies might whine and wail about the introduction of a price cap but they’ve been overcharging their customers on default and SVTs for years and their recent feeble efforts to move consumers off these tariffs have only served to highlight the need for this intervention.”
It found that the energy market has been dysfunctional and slammed regulator Ofgem as “too slow and reluctant” to intervene and protect the interests of customers, especially those who are vulnerable.
They conclude by saying in the report that big six suppliers do not need appeal rights to the Competition and Markets Authority (CMA) for this Bill because it could unnecessarily delay the cap.
Ofgem and energy suppliers claim a major obstacle to helping vulnerable customers is the difficulty in identifying those in need.
The committee welcomed a government consultation launched yesterday into data-sharing to let firms identify households on specific benefits who are at risk of fuel poverty.
Disability charity Scope policy chief James Taylor said many disabled people consume more energy and are faced with “sky-high” bills due to their condition.
And Alex Neill of consumer group Which? said: “For millions of people paying over the odds for their energy, the introduction of a price cap will sound like a positive move.
“But the government must ensure that the price cap does not lead to any unintended consequences for consumers, such as poor customer service or higher prices overall.”
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