Families are to benefit as government acts to drive down energy bills

Business and Energy Secretary Kwasi Kwarteng today (23 July) published proposals to trial automatic switching for customers on expensive default energy tariffs to cheaper deals.

While around 5.8 million households switched energy supplier last year, taking advantage of savings worth on average £290, research by regulator Ofgem suggests that less than half of British households regularly shop around for a better energy deal. The government is determined to tackle the ‘loyalty penalty’, where energy companies place longstanding customers on the most expensive tariffs.

Under plans published today, trials of a new system will take place in 2024, in which some consumers on costly tariffs would be automatically switched to cheaper ones on the market unless they opt out.

The proposals also include creating a framework for ‘opt-in switching’ by 2024, where consumers on the most expensive tariffs would receive personalised switching advice to switch to a better value tariff following recent Ofgem trials that led to greater consumer engagement with the energy market.

The move is designed to protect customers from rip-off energy deals, saving consumers money on their energy bills, and increase competition by encouraging suppliers to introduce fairer but also greener tariffs. Ministers hope the plans will also mean that more consumers will switch to tariffs powered by renewable electricity, as part of efforts to tackle climate change.

The proposals were published as the Business and Energy Secretary announced that the Energy Price Cap, introduced in 2019 to protect the 15 million British households on default tariffs, could continue for longer – ensuring households on the highest tariffs save between £75 and £100 a year on dual fuel bills.

New legislation is planned to allow the cap to continue beyond 2023 if needed, so that consumers who do not shop around for the best deals on their energy – including those who opt out of any future automatic switching system – are protected from rip off tariffs.