Three ways a price cap will make energy better
We like to do things a bit differently at Bulb. In our last blog, we announced our most recent price drop, even though other suppliers have increased their prices. Here, we’d like to explain why we support an energy price cap. The media has stated the energy industry ‘distrusts’ the proposed cap. We have a different view.
We think a price cap will help make energy fairer, more transparent and more affordable. Too many suppliers are offering teaser rates and then switching unsuspecting customers onto much higher rates later. Which isn’t right. A price cap will help to stop this practice.
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Wait a minute – what is the proposed cap?
Under the proposed energy cap, the regulator Ofgem would be able to limit the amount energy suppliers can charge for gas and electricity on standard variable tariffs. We’ve written about these tariffs before. To cut a long story short, they are the linchpin of the ‘tease and squeeze’ tactic. Suppliers lure customers in with low, introductory fixed tariffs. Later, they switch unsuspecting customers onto their standard variable tariff at much higher rates. More often than not, these SVTs are hundreds of pounds more expensive than the original fixed offer.
A price cap would limit how much SVTs could cost. Let’s talk about why that’s a good thing.
⚖ 1. How will a cap help make energy fairer?
The current system is not fair. Customers who joined on a low rate find themselves paying considerably more a few months later. Loyal customers who don’t switch away from their supplier lose out the most.
A cap will lessen the gap between ‘best’ fixed tariffs and SVTs. Both new and loyal customers will be offered sensible prices their provider can maintain.
🔎 2. How will a cap help make energy transparent?
The system isn’t transparent either. It’s very hard to find a supplier’s standard tariff, even on price comparison sites. So, when you are choosing a supplier, it’s almost impossible to understand the true cost of your energy.
A cap will make it easier for consumers to get a clear picture of how much their energy will cost in the long term. Cheap, introductory prices that can’t be maintained won’t be a thing anymore. Suppliers will be forced to offer value that lasts.
📉 3. How will a cap help make energy more affordable?
At the moment, most people are paying more than they need to for their energy. SVTs can cost over 50% more than ‘best’ fixed deals. And nobody is switching for a better rate (50% of us have never switched).
A cap will make the market more competitive. To keep customers, suppliers will need to offer good rates that last. Wasteful suppliers won’t be able to hide behind ‘best’ fixed tariffs anymore. And efficient suppliers will be rewarded (hurray!)
Let's make it happen
So, we’re for the cap. We don’t mind who came up with the idea or who introduces it this time – let’s just make it happen. And in the meantime, we’re calling on all energy suppliers to reduce their rates in line with falling wholesale costs. Let’s make energy better. At Bulb, that’s what we’re all about…
We want energy to be fair. That’s why we have one single “Vari-Fair” tariff – if you’re with us, you know you’re on our best deal.
We want energy to be transparent. That’s why we show how our tariff compares to all other suppliers on our homepage.
We want energy to be affordable. That’s why we’re quick to pass savings on to our members. In fact, we just did exactly that.
As ever, we’d love to hear your opinions on this stuff. If you don’t agree (or if you do!), please let us know in the Bulb Community or in the comments section below. Thanks!