UK Government calls for evidence on default energy tariffs

On the same day that Ofgem announced a welcome reduction in the energy price cap from April 1, the UK Government published a call for evidence (CfE) centred around how default energy tariffs may evolve in the future.

All suppliers are obliged to offer a default tariff, and this is what all customers are moved to once a fixed-term contract expires or they fail to choose another tariff. The Government estimates that default tariffs are currently being applied to some 86% of households due to a lack of competitive energy deals, although this is expected to change as the market becomes more competitive again.

The new CfE follows a previous one about innovation in the retail energy market, in which several stakeholders expressed concerns about an evolving energy market potentially affecting default tariffs in future. For example, it quotes Citizen’s Advice as noting that market pricing on a half-hourly basis may, in future, influence the conventional tariffs offered by energy providers, including the default ones.

Changing shifts in energy usage seem to be driving this potential change. For example, the owners of electric vehicles could be defaulted to a tariff that incentivises them to charge their vehicle during off-peak periods in order to better reflect the wholesale market, as energy costs can vary greatly over the course of a day.

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