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Energy customers could be automatically switched to fairer deals

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Written by: Emma Lunn
14/12/2020
The energy market will become more competitive with switching suppliers and tariffs to be made easier, under government plans.

The Energy White Paper, published at the weekend, said automatically switching customers to fairer tariffs will be tested in a bid to tackle the ‘loyalty penalty’ where existing energy customers get a worse deal than new customers.

The lowest paid will also receive extra support through an extension of the Warm Home Discount scheme to 2026 to cover an extra three-quarters of a million households and giving eligible households £150 off their electricity bills each winter. The scheme’s extension will be part of at least £6.7bn in support to the fuel poor and most vulnerable over the next six years.

There are also plans to encourage households to move away from fossil fuel boilers, helping to make people’s homes warmer, whilst keeping bills low. By the mid-2030s the government expects all newly installed heating systems to be low carbon or to be appliances that it is confident can be converted to a clean fuel supply.

The £2bn Green Homes Grant, announced by chancellor Rishi Sunak earlier this year, has already been extended for a further year.

The Energy White Paper also sets out ambitious plans to clean up the UK’s energy system, support up to 220,000 British jobs, and keep bills affordable as the country transitions to net zero by 2050.

The paper sets out specific steps the government will take over the next decade to cut emissions from industry, transport, and buildings by 230 million metric tonnes – equivalent to taking 7.5 million petrol cars off the road permanently – while supporting hundreds of thousands of new green jobs.

Alok Sharma, business and energy secretary, said: “Through a major programme of investment and reform, we are determined to both decarbonise our economy in the most cost-effective way, while creating new sunrise industries and revitalising our industrial heartlands that will support new green jobs for generations to come.

“At every step of the way, we will place affordability and fairness at the heart of our reforms – unleashing a wave of competition so consumers get the best deals possible on their bills, while protecting the vulnerable and fuel poor with additional financial support.

“With this long-term plan, we are turning climate ambition into climate action – putting the UK firmly on the course to net zero to end our contribution to climate change as we build back greener.”

Richard Neudegg, head of regulation at Uswitch.com, said: “Keeping bills affordable, especially for the vulnerable, will be crucial if the plans set out are to be truly sustainable. The government is right that those of us who switch are the ones who get the better deals, so looking at ways to get more consumers to move tariffs is welcome. However, consumer choice and empowerment remain key to ensure that providers are still motivated to compete on price, provide good service and continue to innovate to meet the needs of smarter greener homes.

“Trialling and testing different approaches is sensible, as there is a long history of well-intended rule changes that have not worked in practice. It’s no good forcing everyone to switch tariffs if suppliers just whip away the better deals at the same time.

“We’re pleased the government has also decided to review the Warm Homes Discount as there are significant holes in the current scheme. It’s important that this review will be wide-ranging enough to make the scheme fit for purpose for those that need it most.”

Alongside the Energy White Paper, the government has also confirmed that it is to enter negotiations with EDF in relation to the Sizewell C project in Suffolk as it considers options to enable investment in at least one nuclear power station by the end of this parliament. If the project proceeds, it could create thousands of new jobs during construction and operation.

The government also plans to invest £1.3bn to accelerate the rollout of charge points for electric vehicles in homes, streets and on motorways as well as up to £1bn to support the electrification of cars.

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