Households paying expensive standard tariffs for gas and electricity are to be automatically moved on to a cheaper deal as the government moves to tackle “rip off” bills.
The Department for Business, Energy and Industrial Strategy (BEIS) said on Friday that an automatic switching system would be trialled in 2024. The scheme is intended to eliminate the “loyalty penalty” in which longstanding customers end up on the most expensive tariffs if they fail to act when their deal ends.
More Britons are shopping around for the cheapest tariffs, but the business secretary, Kwasi Kwarteng, said the “existence of better deals on the market is not sufficient in itself to drive consumer behaviour”.
The trial will involve households on expensive default energy tariffs being switched to a better-value plan unless they choose to opt out. Ministers also hope it will mean more consumers switch to tariffs powered by renewable electricity.
The government said the energy price cap, introduced in 2019 to protect the 15m households on default tariffs, would also be extended. New legislation will enable the cap to continue beyond 2023 if needed, meaning consumers who do not shop around or opt out of any future automatic switching system would still be shielded. The warm home discount scheme, which gives low-income households a £140 discount on their bill, would also run until 2026, it said.
“An automatic switching system would ensure households get a fair deal, while new price cap legislation will enable continued protection until we’re confident the market is sufficiently competitive,” Kwarteng said.
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