What is a vulnerable customer 'safeguard' tariff?
The retail market is not working for consumers who remain on their supplier’s default deal. Our work, and the Competition and Markets Authority’s investigation, has shown there is little competitive constraint on the prices suppliers charge these customers. As a result, millions of consumers are paying more than they should be. We are particularly concerned with the impact this has on vulnerable consumers. These consumers are more likely to find themselves on a default deal, and because of their circumstances, can suffer more harm as a result.
We are implementing measures to improve competition in the retail energy market, in particular by targeting barriers to consumer engagement, which should bring benefits to most consumers. However, it will take time for these benefits to reach the most disengaged vulnerable consumers, some of whom may never be able to fully participate in the market. These consumers are suffering now, and need assistance as quickly as possible.
On the 2 February 2018, Ofgem extended this price protection to a further one million vulnerable customers receiving the Warm Home Discount. We are consulting on further price protections, for both vulnerable customers and for all customers on standard variable and default tariffs. You can find further details on our Retail Price Regulation page.
When can customers benefit?
On the 7 December 2017, Ofgem decided to modify the standard conditions of the electricity and gas supply licences by inserting new standard condition 28AA to regulate charges for domestic customers who receive the Warm Home Discount (WHD). The main effect of this change is to extend the scope of the existing prepayment meter (PPM) safeguard tariff to protect around one million consumers who receive WHD, who are also on their suppliers default tariff. These protections began rolling out from the 2 February 2018.
The WHD safeguard tariff will end in December 2019 if it has not already been replaced by other price protection. For instance, either by a wider vulnerable safeguard tariff or the government’s temporary price cap for customers on standard variable and default tariffs.
We have issued a statutory consultation on the 6th September 2018 which outlines our proposals for a default tariff cap for standard variable and default tariff consumers. We have proposed that WHD customers’ current protection will be replaced by this price protection if it is introduced. We are expecting it will come into force by the end of 2018.
For more information see: https://www.ofgem.gov.uk/publications-and-updates/default-tariff-cap-overview-document
Customers can find out more about the safeguard tariff at Energy plans: What is the energy safeguard tariff (or ‘price cap')?
Information on the safeguard tariff levels for each region and meter type can be found on our industry guidance page. You can also see a visual breakdown of the different cost factors that influence the tariff level each time we update it on the Ofgem Data Portal.