Competition Watchdog suggests radical changes as households are overcharged…
Currently about 70% of UK households are paying over the odds on energy suppliers ‘standard variable tariffs’ or out of contract rates.
Whenever families move home or their fixed term energy contract comes to an end, they are defaulted on to energy suppliers higher charging ‘standard variable tariff’. With 20.7 million households in the UK as of April to June 2015, the aggregated over payment figure by UK homeowners is approximately £2.9 Billion per year.
In a move to tackle this problem, the Competition and Markets Authority is looking for radical ways to encourage households to engage with the market and seek better deals which could provide typical savings of £200 per year.
These changes could involve forcing households to change their energy supply by terminating indefinite standard tariffs. Customers would be informed that their contract was coming to an end to prompt them into seeking a new deal. Those who failed could be put onto a one-year default tariff which is likely to be set by suppliers and would be sent repeat switching reminders.
Another suggestion would be to impose temporary “safeguard” price caps on the default tariffs which could potentially result in price cuts for millions of families while the CMA introduce new measures to encourage switching.
Whichever methodology the CMA decide upon, one thing is certain, changes are on the way. With this in mind, it makes perfect sense that household’s slash this combined over payment figure and put the typical £200 figure in their pockets rather than the pockets of the energy providers.
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