Energy regulator Ofgem has confirmed plans to close the ‘loophole’ surrounding green tariffs that would have exempted them from the looming price cap.
In a consultation launched today (25 May 2018), Ofgem confirmed it was minded not to provide exemptions for renewables tariffs from the proposed caps. However the regulator is considering potential derogations from the cap for tariffs that “genuinely adds to support for renewable energy” which incurs materially higher costs.
Ofgem said its initial analysis had not only found that more than half of green tariffs on the market are fixed, but that those customers on green tariffs tended to pay around £300 a year more for their energy than those on SVTs.
This played a considerable part in the regulator’s desire to prevent some suppliers from “gaming” the system using a possible exemption for such tariffs.
The consultation opened today and is to remain open for one month, closing on 25 June 2018.
The potential loophole was first mooted earlier this year and sparked some debate within clean energy circles. Hayden Wood, co-founder at clean supplier Bulb, has welcomed Ofgem’s latest move, claiming it to be a “big win” for consumers.
“Bulb warned that the first draft of the rules would allow unscrupulous suppliers to game the system by using the green loophole to claim exemptions from the cap, so it’s great that the regulator has listened. Now it’s important to implement the cap quickly so that it is in place ahead of winter,” he said.