06 February 2024 , 13:01
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Ofgem is cutting the time energy suppliers have to complete a switch before they must pay compensation.
Under current rules, energy firms must pay customers £30 compensation if the switch is not completed within 15 working days. However, this is changing and will be reduced to five days from April.
It comes after Ofgem launched a consultation on the changes last September. The energy regulator said more people are switching gas and electricity providers after more fixed tariffs returned to the market.
Latest switching figures from the end of 2023 show an increase of 9.3% compared with October 2023. The number of people switching is also nearly three times as high as November 2022.
Melissa Giordano, deputy director for retail systems and processes at Ofgem, said: “Customers who see better energy deals on the market or experience poor service must be able to vote with their feet and move energy supplier – quickly. As regulator, we have already slashed the amount of time within which suppliers must switch a customer by two-thirds to just five working days.
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“We are now going further by requiring any supplier who misses that deadline to pay the affected customer £30. We are already seeing switching levels up from last year, and now, this new move – welcomed by leading charities – will further empower customers to take control of their energy bills this winter and beyond.”
The Ofgem price cap is currently set at £1,928 a year for the average dual fuel household paying by direct debit. But despite what its name suggests, the price cap doesn’t actually set a limit on how much you will pay for energy.
Instead, it sets a limit on unit rates for gas and electricity - so your total bill still depends on how much energy you're using. The headline price cap rate is used to illustrate what someone with typical energy usage can expect to pay. Ofgem assumes the average household uses 2,700 kilowatt hours of electricity and 11,500 kilowatt of gas.
The price cap also sets a limit on standing charges, which is what you pay to be connected to the grid. You should keep in mind there are different rates for prepayment customers and those who pay on receipt of their bill.