New powers to protect energy consumers

Posted on: 25 November 2009 by Mark O'haire

The Queen's speech proposed new laws to protect vulnerable energy customers, but will it ever come to anything?

The Queen's speech outlined proposals for a new energy bill that could give the regulator Ofgem more powers to protect vulnerable customers from fuel poverty.

The term "fuel poverty" applies to energy consumers who spend 10% or more of their disposable income on gas and electricity.

The details of the measures have not been made clear, but would mean that Ofgem would re-assume some of the price-setting powers it abandoned in 2004.

Cynics will argue that the inclusion of the bill is merely a tool to shore up voter support for Labour (it is unlikely that a bill will be enacted before a general election in just a few month's time).

How will savings be achieved?

It is also unclear just how cost reductions for poor consumers could be achieved. Government-mandated and means-tested rebate schemes, which seem to form the heart of the initiative, would take a long time to come into force and are potentially costly to implement.

Perhaps the government would be better off in the short term if it nudged Ofgem to improve transparency in the market that exists today - for example by making it easy and cheap to replace prepayment energy meters (these are quite typical in households suffering fuel poverty) with credit meters.

This would give more consumers access to a larger (and cheaper) range of energy tariffs to choose from.

In the meantime, the best option to save money on gas and electricity is to switch.

By Florian Ritzmann

About The Author

Florian Ritzmann is product director at online comparison service Xelector.com and has been working in the energy industry for over 10 years.

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