Ofgem's discussion paper on the future of domestic price protection - Which? response

Overall we agree that the current default tariff cap has been successful at addressing the loyalty penalty harms it was designed to tackle. Disengaged consumers have paid less than they otherwise would have absent the cap, and we think it likely that price exploitation would return for disengaged customers if price protection was removed. Even when switching was at its highest, 40% of consumers remained disengaged with the market and there will always be at least a substantial minority who need protection from the kind of price exploitation identified by the CMA in the 2016 Energy Market Investigation.

It is plausible that the cap could become difficult to maintain in its current form as usage patterns become more diverse. However, we encourage Ofgem to undertake further detailed analysis of different future scenarios so that policy development can be informed by a better understanding of potential future outcomes both under the current cap methodology and with alternatives. It is difficult to reach firm conclusions on the need for change without at least some indicative analysis on the scale of trade-offs to be made.

There may be cases in which it is appropriate to relax some elements of the three key cap parameters set out in the discussion paper: flat, universal, and stringent. All of the options presented come with trade-offs however, and again we would welcome further analysis on some of the options to better understand how they could actually work in practice and what the level of trade-offs might be.