Safeguard energy tariff comes into effect

The safeguard tariff, which is set in line with Ofgem’s Vulnerable Customer Cap, came into effect today (2 February 2018).

Announced by Ofgem last October, it is designed to reduce the energy bills of one million vulnerable households, as all those who qualify as vulnerable and are on standard variable tariffs (SVTs) will be moved on to safeguard tariffs. The safeguard tariff already applies to customers on prepayment meters.

But half a million low-income households face missing out under Ofgem’s proposed new safeguard price cap, National Energy Action (NEA) warned in November, because they are working age and so do not automatically qualify for the Warm Homes Discount (WHD), which is the basis Ofgem is using to determine eligibility for the safeguard tariff.

Also the number of WHD discounts is capped and smaller suppliers do not have to provide it, meaning their customers are not able to access the safeguard tariff, according to the NEA.

Ofgem believes the safeguard tariff will save customers £120 a year, but said it is designed to be temporary – it will fall away when the government’s proposed price cap is implemented.

Critics claim this will potentially leave the same vulnerable customers at the mercy of a cap that might leave room for rises though.

Which? welcomed the move, but noted this still won’t be the cheapest tariff available, and encouraged consumers to consider switching suppliers. Alex Neill, managing director of Home Products and Services at Which?, said: “It’s right that the safeguard tariff is extended beyond prepayment meter customers to help some of the UK’s most vulnerable households, who often struggle to pay for their energy bills.

“But this safeguard tariff will still not be the cheapest deal on the market and anyone overpaying on a poor value tariff should look to switch away to a better deal immediately, as they may save up to £305 a year.”