Households could be automatically switched to cheaper energy tariffs
Households could find themselves automatically switched onto cheaper energy tariffs under new government plans set to be released this week.
The proposal is an attempt to crack down on energy suppliers which move customers onto higher “default” deals after their initial contracts end.
The BBC reported that the plan would be unveiled as part of the government’s long-awaited energy white paper, which could be released as early as Monday.
The paper, which has been in the offing for a number of years, is expected to lay out plans to “green” the UK’s energy system over the coming years.
According to the BBC, the government will test two different models for the automatic switching plan.
Under the first, called “opt-in switching”, customers will be offered a simple way of switching to a cheaper deal when their initial contract ends.
And in the second option, “opt-out switching”, customers will automatically be switched to a cheaper tariff when their original deal ends, unless they opt-out.
Hayden Wood, chief executive of challenger energy brand Bulb, said: “Bulb’s called for reforms to stop energy companies penalising loyal customers – so it’s great that the Government’s taking action.
“Millions of loyal households have paid hundreds of pounds over the odds this year through no fault of their own. You’d be shocked if your local coffee shop started charging you more because you’re a regular – it should be no different with energy companies.
“We want greater fairness and transparency in the energy market and this is an important step to getting there.”
Peter Earl of price comparison site Compare the Market said that the if implemented fully the plans could be “hugely beneficial” to households which remain loyal to their supplier.
“Millions of households are stuck on an energy supplier’s standard variable tariff, likely paying hundreds of pounds more than they should be”, he said.
“We are, however, sceptical of the plans for an ‘opt in/opt out’ system for switching tariffs with the same supplier, which might detract people from shopping around for a better deal with alternative and more competitive suppliers.
“If these changes are not implemented properly they risk lulling people into a false sense of security that they are on the cheapest tariff, despite better offers being available elsewhere.”
According to sector body Energy UK, almost 5m people have switched supplier this year – just seven per cent last year, when a record number of households changed energy provider.