The electricity and gas bills of 1m more households will be capped this winter after the energy regulator, Ofgem, extended a price cap for vulnerable customers.

The move is an interim step towards Theresa May’s promise to put a ceiling on bills based on standard variable tariffs, the poor-value rates that about two-thirds of consumers are on. Business secretary Greg Clark criticised the new cap for not going far or fast enough.

Ofgem said the extra 1m households would save £120 on average on their annual dual fuel bill once the so-called safeguard tariff took effect by February.

“This will provide some short-term relief for vulnerable customers ahead of government plans for an energy price cap being realised,” it said.

The cap will protect households that are in receipt of the warm home discount, an existing payment for people on certain benefits. Ofgem said the cap would be extended to a further 2 million people in winter 2018-19.

Dermot Nolan, the chief executive of the energy regulator, said: “Ofgem shares the government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.”

Greg Clark welcomed the regulator’s move but said stronger action was needed. “I don’t think it goes far enough and fast enough. I think it’s important that consumers who are overpaying should be given some relief from that,” he said.

“That’s why I will proceed and bring forward legislation later this week that will compel them to do that.”

A new analysis, released by the Big Deal collective switching site, shows that customers on standard deals with the big six energy providers can pay as much as £225 more than their cheapest deal.

It says that 8m households have been on a standard variable tariff with the big six – EDF Energy, British Gas, SSE, E.ON, Scottish Power and npower – for more than three years, the report said.

The difference between standard variable tariffs and the cheapest available deals at the big six ranges from £55 at SSE, to £225 at E.ON, the Big Deal said.

Consumer groups said the latest move by Ofgem was a step in the right direction before a wider price cap is introduced by the government.

“The implementation of a market-wide price cap is clearly going to take some time, so it’s right that the regulator is looking to more quickly protect the most vulnerable,” said Alex Neill, the Which? managing director of home products and services.

Gillian Guy, the chief executive of Citizens Advice, said the move by Ofgem was “a warning to energy firms that they can no longer get away with ripping off their poorest customers”.

On Thursday, the government is due to publish a draft energy bill for the cap on standard variable tariffs, which is unlikely to take effect until next winter at the earliest.



Nolan said that Ofgem “stands ready” to put in place a broader price cap once royal assent has been given to any bill passed by parliament.

“We are in a position to go forward fairly quickly after royal assent is given. My guess is that all going well, it could be five months [after royal assent]. Possibly it could be more, possibly it could be less.”

John Penrose, the Conservative MP who led calls in his party for a cap before the Tory party conference, said the government should look at introducing the wider cap in time for this winter, rather than next winter.

“Seventeen million households shouldn’t have to wait up to two years for the cavalry to arrive,” Penrose said. ‘We need faster routes to deliver our pledge. We should look at using secondary legislation to get this through parliament quickly and end the rip-off before the cold winter months start to bite.”

Labour also urged the government to act immediately. “The government needs to hurry up and get on with it if customers are to feel the benefit this winter,” said Rebecca Long-Bailey, the shadow business secretary. “It is now mid-October and we are yet to have sight of the legislation, despite Labour’s persistent calls for the government to take action.”

Nolan said it was not for Ofgem to comment on exactly what form a wider price cap might take.



“We will have to see what parliament comes up with and we will consult on that basis,” he said. “It could lead to a number of options. I support any decision of parliament and we will implement it as effectively as possible.”

Nolan said that in the meantime he expected energy firms to do their best to move customers off standard variable tariffs while the legislation worked its way through parliament.



To that end, Ofgem is changing rules that previously meant suppliers had to move customers on to standard variable tariffs at the end of a fixed tariff. Now they will be able to automatically roll them on to another fixed deal, provided it is cheaper.

Scottish Power and E.ON have said recently that they are taking steps to end the standard variable tariffs, switching billpayers to cheaper, fixed-term deals instead.

Nolan said he hoped others would follow, as long as it resulted in consumers being placed on better tariffs. “I’m calling on all suppliers to do more to get people off SVTs,” he added. “The ball is very strongly in their court and I would hope to see action from all suppliers.”

Centrica, the parent company of British Gas, said Ofgem’s move to protect more vulnerable consumers was a step in the right direction. “We now await details of the government’s draft bill and remain committed to acting to improve the functioning of the market for our customers,” Centrica added.

