Plans to tackle the “loyalty penalty” paid by consumers on their energy bills and support them to make their homes more energy efficient have been welcomed by campaigners.
The Government said affordability will be at the heart of plans to clean up the country’s energy system.
Competition in the energy retail market will be boosted as the issue of longstanding customers paying more than new ones is tackled.
Households failing to regularly ditch and switch their energy tariffs can potentially end up paying as much as £300 more annually than they need to, according to previous estimates.
Energy price caps were previously introduced to protect against over-charging, but concerns remain that some households are still paying more than they need to.
The Energy White Paper is our new, ambitious plan to put the UK at the forefront of the green industrial revolution, supporting up to 220,000 British jobs and keeping bills affordable as we transition to #NetZero— Alok Sharma (@AlokSharma_RDG) December 14, 2020
👉 https://t.co/Lfe98iiCdQ pic.twitter.com/yud7LahkbG
Business and Energy Secretary Alok Sharma said a wave of competition will be unleashed “so consumers get the best deals possible on their bills”.
A consultation will take place by March 2021 on how current rollover tariff arrangements can be reformed to boost competition.
The Government will test methods that households could use to save money on bills, including automatically moving them to fairer deals with opt-in switching.
It will also look at how the development and uptake of innovative tariffs and products could be encouraged.
And the Government will consider how mortgage lenders could support homeowners looking to improve the energy performance of their home.
Buildings will be made more energy efficient, with a move away from fossil fuel boilers over the next 15 years as people replace their appliances, which the Government said will help make people’s homes warm and comfortable while keeping bills low.
A future homes standard will be established to ensure new-build homes are “zero-carbon ready”.
The Government added that at least £6.7 billion will be provided in support to the “fuel poor” and most vulnerable over the next six years.
The Government will engage with consumer groups and the industry during 2021.
Testing new ways to tackle the loyalty penalty is the right approachAlistair Cromwell, Citizens Advice
Responding to the Energy White Paper, Alistair Cromwell, acting chief executive of Citizens Advice, said: “We think the Government should introduce a net-zero homes guarantee that would make sure people get the information and advice they need.
“It would have strong consumer protections to give people confidence and would put in place support and funding for those who need it.”
Commenting on measures tackle the loyalty penalty, he added: “The transition to net zero must be fair and needs to avoid the past problems in the retail energy market, which led to the introduction of the price cap.
“Testing new ways to tackle the loyalty penalty is the right approach, and we look forward to working with Government and Ofgem on helping consumers get a better deal.”