We are working hard to deliver an energy supply that is clean, affordable and innovative, and an energy market that delivers the best possible value and service for energy customers. But the energy market is not working for ordinary consumers. Customers who shop around and switch suppliers can save around £300 each year, but the annual switching rate in September 2017 was just 18%, meaning that energy bills remain higher than they should for millions of households. The Competition and Markets Authority estimated that domestic customers of the Big 6 paid an average of £1.4 billion a year more than they would have done under a well-functioning market over the period 2012 to 2015. Ofgem have already introduced a safeguard tariff cap on prepayment meters, saving five million of the most vulnerable customers an average £60 each year. But this Government wants to go further by putting an absolute cap on default energy tariffs by the end of the year, so that the 11 million households on these rip off tariffs can feel the benefits this winter. I am proud to be leading the drive behind this Bill – my first since becoming Minister, and on Monday we secured the votes needed for the Bill to complete its passage through the House of Commons, and it has now passed to the House of Lords with the expectation that it will become law by this summer.
The cap will offer protection to households across the country from the excessive energy bills that hit the most vulnerable customers the hardest. I know that high energy bills are a big concern for many people locally, and I am proud that we have introduced this smart, temporary, market intervention as part of larger efforts to reform the energy market, giving more power to consumers, increasing competition through the rollout of smart meters and making switching suppliers quicker and easier for everyone.
However, I am also aware that many people across the Constituency, myself included, are not on the gas grid, instead using heating oil or Liquefied Petroleum Gas (LPG). I would encourage consumers who are off-grid to shop around for the best price for each delivery, as this provides the best long term guarantee of competitive prices. LPG customers are also protected by the Competition and Markets Authority’s LPG Orders, which include measures designed to keep the market competitive, such as setting a maximum contract length. On new gas grid connections, I know that Ofgem has set the industry a target to connect 91,000 low income households to the gas grid by 2021.