Jane Lucy, CEO and Founder of The Labrador discusses why recent supplier hikes are a testament to why price caps will never solve the UK’s broken energy market.
Today, Ofgem has announced that the £1,137 a year cap will be implemented as of the new year, saving customers between £59 and £120. This cap was introduced to prevent suppliers from overcharging customers by placing an upper limit on how much they could charge, based on typical use. However, the declining number of tariffs available for under £1,000 has shrunk from 89 to 4 and the price of the cheapest tariffs has risen by 21%.
Jane Lucy, CEO and Founder of The Labrador is of the opinion:
‘Price caps will never be the way to solve the UK’s energy market as they undeniably reduce competition, promote lethargy and consequently, make consumers mistakenly believe that they are getting the best deal when this is not the case. There is stark evidence of this as following the price cap announcement, the energy industry has become incredibly turbulent with British Gas, EON, Scottish Power and EDF all raising their prices. With a third of dual fuel tariffs exceeding government price cap, it is undeniably apparent that the price caps are having the opposite impact on the energy market, with suppliers considering it a target as opposed to a measure that protects customers. The only way we can ensure a competitive market is not solely with a price cap, but by enabling customers to switch energy providers with ease’.