OffZem has been criticized for extending rules that would effectively prevent power suppliers from offering deals that are significantly cheaper than the price cap if wholesale costs are reduced.
Martin Lewis of MoneySavingExpert says the changes “sell customers off the river” and “kill the hope of firms launching cheaper deals”.
The changes, which include plans to change the energy price cap every three months instead of every six months from October, will make it harder for people to save on their energy bills, even if wholesale prices fall, said Citizen Advice, a charity.
The regulator said the rules were necessary because otherwise power suppliers who bought power in advance for their customers might be unable to recover their costs. This could lead to more supplier failures, resulting in higher costs for customers.
“We do not consider that we should prioritize the lowest possible prices for consumers at this time in order to enable skilled suppliers to finance their business,” the regulator said.
Lewis, who presents his money-saving show on ITV, was so outraged by the plan that he started talking dirty in the off-game. He later apologized on social media, writing: “I would like to formally apologize to the offzem staff for losing my rag in a background briefing right now and say that its changes are a ‘disgrace’.” He added: “I should have behaved better. My anger is not institutional but personal. “But he did not withdraw his criticism of the proposals.
Excessive rise in wholesale prices over the past year has led to chaos in the fuel market which has led to dozens of supplier failures.
As wholesale prices have risen, millions of households have moved to standard tariffs, limited by the price cap, which reverses changes in the wholesale market and prevents companies from raising prices directly. Fixed-price tariffs, which typically reflect current wholesale prices, have become more expensive than standard tariffs.
The regulator is concerned about what will happen if the wholesale price goes down again, as the time cap on the price cap means there will be a delay in passing these savings to standard tariff customers as well. If some companies start offering cheaper fixed-price tariffs, millions of households may move away from standard tariffs before suppliers have the opportunity to charge them for the expensive energy they have already purchased.
In April, OffGame introduced a charge that suppliers would have to pay a fee to their lost supplier for smuggling a customer when wholesale prices fell – effectively preventing them from offering significantly cheaper deals. Now the regulator has raised fees and said the system will be extended for how long.
Explaining why he was so angry, Lewis writes: “My breaking point was when I heard how, instead of listening to the call to cancel his proposed market stabilization charge, it really made it harder to ‘stop the harmful effects of competition.’ [it aims] To effectively stop firms from lowering prices. ”
“Combine the industry’s demand for a new ‘every three months’ price cap change every three months – carefully incorporated into the first three months to include six-month wholesale prices so that companies don’t have to worry about the highest wholesale prices in history.” Don’t miss it. “
OffGame says customers will still be able to “access significant profits based on the fall in the wholesale market”. Jonathan Briarley, chief executive of the regulatory body, said. “Our retail reforms will ensure that consumers are paying a fair price for their energy and ensuring resilience across the sector.
“Today’s proposed change means that the price cap is more reflective of current market prices and any price fall will be delivered to consumers more quickly.