News this week has revealed energy regulator Ofgem has adjusted its safeguard tariff, controlling the maximum price of each unit of energy.
In one of its twice yearly adjustments, the regulator says the increase is justified, with £47 a year due to higher wholesale energy costs on a variable tariff with safeguard tariff rising to £1,136 in October for pre-paid fuel.
The safeguard tariff stops suppliers from overcharging customers on poor value deals because suppliers have to keep their prices below the level of the safeguard tariff. It was introduced in April last year for prepayment meter customers.
In February this year, Ofgem extended the safeguard tariff to protect 1 million more vulnerable consumers who are on poor value standard variable tariffs and receive the government’s ‘Warm Home Discount’.
Dermot Nolan, chief executive of Ofgem, said: “Around 5 million households, including some of the most vulnerable, remain better off and are no longer overcharged for their energy thanks to the safeguard tariff.
“Any price rise for customers is unfortunate. But while the level of the tariff will rise in October, these customers can be confident that this increase is justified and that their energy bill reflects the real cost of supplying gas and electricity. There are also better deals on the market for those who want to save even more money by switching.
“Ofgem is working to put in place price protection for 11 million more households on poor value deals so that everyone pays a fairer price for their energy.”
Is this another blow for the most vulnerable in society, or a sensible way of encouraging people to consider switching supplier, leading to those on poor value deals paying a fair amount for their energy?