ENERGY customers will no longer be penalised for staying loyal to one supplier under new rules.
Regulator Ofgem has announced plans to crack down on the loyalty penalty that has plagued households across Britain for years.
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The watchdog said suppliers will be required to offer all their existing customers the same deals that new customers can sign up to.
It is a temporary decision designed to end the practice of offering cut-price deals to households that sign up to a new supplier.
These deals are only possible because existing customers, including those who do not shop around, are paying a higher price.
The decision comes as energy prices have soared in the last year, and the average energy bill is set to rise further for 22 million households from April.
Ofgem said: “The energy market has faced a huge challenge due to the unprecedented increase in global gas prices; a once-in-a-30-year event. We’re putting in place short-term measures to protect consumers.
“All suppliers will have to offer existing customers the same deals available to new customers.
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“This will ensure customers can benefit from all tariffs available in the market and enable more consumers to benefit when wholesale prices fall.
“We’ll monitor how effective this is before considering whether it should become an enduring measure in the market.”
Most households are unlikely to find a better deal on their energy bill right now.
Fixed deals used to be cheaper than moving on to energy company’s “default” standard variable tariff.
But an energy crisis means that it is no longer the case.
Wholesale gas prices have rocketed and energy companies have passed that on to consumers through higher prices for fixed deals,
The current cheapest fix is now more than £2,000.
Default tariffs are now cheaper as they are limited by the price cap, and more than half of energy companies have reverted to this to keep bills down as much as they can.
The price cap is currently set at £1,277 for average dual fuel bills.
It will rise further in April to £1,971.
Ofgem also announced a new rule for energy firms that it hopes will protect suppliers that are more prepared, by responsibly buying in advance the energy they think their households will use in the future.
The practice – known as hedging – protects companies from wild swings in the energy price.
Many of the more than two dozen suppliers who have gone bust in recent months had not hedged properly.
Under the new plan if a company takes a customer from one of its rivals it will have to pay a fee to the rival, although only if wholesale prices fall.
This might provide some reassurance for suppliers if the price of gas retreats from its historic highs.
“Alongside tougher financial regulation, this will make sure that energy companies do not take disproportionate financial risks and suppliers who have done the right thing by purchasing energy in advance for their customers aren’t penalised, whilst protecting the ability of switching consumers to benefit from cheaper tariffs when prices fall,” Ofgem said.
Although this won’t directly affect billpayers, it should help stabilise the energy market for the benefit of all.
ENERGY BILL HELP
In the first instance speak to your supplier, and don’t stick your head in the sand if you’re falling behind with bills.
Sorting it sooner rather than later means you won’t spiral into debt which could damage your future finances.
There are some suppliers that have charitable trusts, which help you pay off any arrears you might have.
British Gas Energy Trust, for example, runs a scheme where anyone can apply for a grant, and you don’t even have to be a customer.
Other firms that offer grants just to their customers include:
Your local council may also be able to help with cash and grants if you are struggling with bills through the Household Support Scheme
The winter fuel payment scheme, where those getting the state pension can get between £100 and £300 to offset the cost of keeping their homes warm.
Low income households can get £25 a week to help with energy bills during the winter thanks to the cold weather payment scheme too.
The warm home discount scheme means you can a £140 payment that goes toward your heating costs – but you need to act quick as this scheme has already been closed by some energy suppliers.
You could be eligible for a budgeting loan if you’ve been on certain benefits for six months.
But while this can help cover some costs like if your boiler breaks down and you need to replace it, or you need to buy new energy appliances, like a washing machine or tumble dryer, you will need to pay the money back.
So check the other non-repayable help you could get first.
If you’re worried about paying bills, falling behind or are in debt, there are plenty of organisations where you can seek advice for free, including:
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