Time to Bring an End to Overcharging by the Big Six and Back a 'Protected Tariff'

09/09/2015 20:43 BST | Updated 09/09/2016 10:12 BST

Everyone deserves a fair energy deal.

Over four years I have campaigned for a fairer deal for energy bill payers. The Coalition Government's answer was always to advise the public to "shop around". Clearly if you are an active consumer, online and confident of finding a better deal you can make switching work for you. But many people aren't, especially after they may have moved only to find themselves on a worse deal. When comparison sites aren't clear about who amongst the energy companies are paying them commission, confidence in that support is undermined too.

I was proud that Labour was the first political party to organise a collective switch. Similar schemes run by local authorities and others are another way to use people power to pay less. But it is not enough.

In Parliament and the media I have argued many times that customers on the Standard Variable Tariff are being ripped off. 70% of people are on the Standard Variable Tariff and this "sticky customer base", as it is called, pay for better deals for new customers. What sort of business makes its loyal customer base pay over the odds? And who are these people? Research shows that those over-65 and families on low incomes, often on pre-payment meters, are paying the most. These people need protection now.

I was pleased therefore that my concerns have been validated by the recent interim report of the independent Competition and Markets Authority (CMA). It makes clear that the 'Big Six' energy companies have been making more than a billion pounds a year by overcharging those customers that don't switch. They also suggest that a transitional 'regulated safeguard tariff' is one option to protect customers who don't switch.

That is why I am calling on the government, Ofgem and the CMA to support a 'Protected Tariff' for the millions of people who are regularly over-charged.

It would be a price that the energy companies were not allowed to go above, decided on by the regulator. If a household hadn't switched their energy supplier or moved onto another tariff, this is the rate at which they would be charged.

This is not a return to a kind of price capping that existed in the market up until 2001, and which exists for water rates. Companies would still be free to compete to get customers onto different tariffs, and there would be a greater incentive for them to do so. This move could help competition, not hinder it.

It is supported by 'Which?' who have campaigned for a 'price to beat' and by academics like Professor Catherine Mitchell from Exeter University. It is also the system used in a number of other energy markets, including some in the United States.

David Cameron said he'd put everyone on the lowest tariff, but this turned out to be an empty promise. Before he was Prime Minister he said he wanted to do something about energy bills going up when wholesale prices go up but failing to come down when wholesale prices fall. Since the General Election, the new secretary of state Amber Rudd wrote to energy bosses demanding price cuts but to no avail. Despite low wholesale prices, there have been no significant cuts in energy prices for the majority of bill payers.

It's time to bring an end to overcharging by the Big Six. I am calling on the Government to put five years of inaction behind them and ensure everyone pays a fair price whether they switch or not, and back a 'Protected Tariff'.

Caroline Flint is the Labour MP for Don Valley and the shadow secretary of state for energy and climate change