Source · Select Committees · Public Accounts Committee
Recommendation 25
25
Rejected
Government develops new energy market consumer protection as retail market struggles financially.
Conclusion
Following our evidence session government announced in its spring statement that it would maintain the EPG at £2,500 until the end of June 2023.63 The government has committed to consulting on amending the EPG as soon as is feasible after April 2023, so that those who use very large volumes of energy have their support capped, whilst ensuring most households can continue to benefit. The Department is also leading on developing a new approach to consumer protection in energy markets from April 2024, working in conjunction with Ofgem, including options such as social tariffs as part of wider retail market reforms. The objective of this new approach will be to deliver a fair deal for consumers, ensure the energy market is resilient and investable over the long- term, and support an efficient and flexible energy system.64 The Department told us that it had received lots of representations from industry groups and from consumer groups about how the different models for the price cap might play into the options for the future. It also told us that Ministers will want to look at the role of the price cap when considering the vision for what comes after the EPG.65 Energy UK told us that it thought the retail market was also not currently working for suppliers. Household customers owe about £25 billion of debt now and on average retail energy companies make around 2.5% loss a year.66 Impact of gas prices on electricity prices
Government Response Summary
The government states it agrees with the committee's implied recommendation but explicitly rejects the previously noted plan to cap energy support for very large users, deciding that Energy Price Guarantee support should remain universal. It also confirms existing energy support measures and cost-of-living payments.
Government Response
Rejected
HM Government
Rejected
5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 5.2 The price cap of £2,074 for Q3 2023 was announced by Ofgem on 26 May 2023 and prices are forecast to continue to fall. Energy prices are affected by a range of factors and government is planning for a range of possible scenarios. This planning is being guided by extensive experience in delivering household support last year that is also taking onboard the lessons learned from doing so. The EPG will remain in place as a safeguard over this coming winter in the event prices spike again, and the EBDS will continue to provide support to non-domestic customers who have a contract with a licensed energy supplier until 31 March 2024. Some non-domestic customers who procure their energy from unlicensed energy providers will also be able to claim support under the Non-Standard EBDS until then. 5.3 In the meantime, the government has already committed to provide up to £900 in cost- of-living payments over 2023-24 paid across three instalments to the most vulnerable households on eligible means-tested benefits. This is in addition to £150 for pensioner households and £300 for individuals on eligible means-tested disability benefits. 5.4 In relation to capping support to those that use very large volumes of energy, high energy use is unavoidable for certain vulnerable households, for instance as a result of necessary medical equipment. As such, government have concluded that it should not progress with this option, and that support through the Energy Price Guarantee (EPG) should remain universal.