Energy watchdog plans for simpler tariffs
Energy regulator Ofgem reveals plans to force suppliers to tell customers about the cheapest tariff they have on offer as part of a package of reforms for the industry.
The announcement comes two days after the prime minister told MPs energy firms would be forced to give households the cheapest deals.
Ofgem said its plans will put an end to consumers being confused by complex tariffs and will usher in a “simpler, clearer, fairer and more competitive” energy market.
Ofgem is extending proposals unveiled last year to simplify tariff structures and limit core tariff numbers across the whole market.
The regulator proposed that suppliers should offer four core tariffs to cut the “baffling” array currently on the market.
Our plans will put an end to consumers being confused by complex tariffs and will usher in a simpler, clearer, fairer and more competitive energy market for all consumers. Ofgem Chief Executive, Alistair Buchanan
This will actually mean four tariffs per fuel type – electricity and gas – to apply to each payment type.
“Dead” tariffs, which are not available to new customers, will be banned to reduce the overall number of tariffs and reduce the risk of people paying too much, Ofgem said.
The watchdog wants to introduce new tools to help consumers switch energy account.
As well as giving customers information on the cheapest tariff they can offer them, Ofgem has proposed a scheme where suppliers offer vulnerable customers and others who have not switched for some time an estimate on the cheapest tariff across the whole energy market.
In a bid to make the market “fairer”, Ofgem plans to ban price increases or other changes to fixed-term tariffs.
The package of proposals will be published before the end of October alongside its non-domestic proposals.
Ofgem is legally required to go through an extensive consultation process but wants to start to introduce its reforms by summer 2013.
Read more: Q&A - consumer energy prices row
An end to customer confusion?
Ofgem chief executive Alistair Buchanan said: “Our plans will put an end to consumers being confused by complex tariffs and will usher in a simpler, clearer, fairer and more competitive energy market for all consumers.
Join us on twitter from 9am to discuss our market reform proposals #simplerclearerfairer
— ofgem (@ofgem) October 19, 2012
“We have spoken to thousands of consumers who have helped us shape this package through a period of extensive consumer research, and are very grateful for their input.
“I am glad to say suppliers have already responded with some initiatives, but these don’t go far enough.
“Ofgem is determined to press forward with proposals to deliver for consumers the most far-reaching shake-up of the retail energy market since competition was introduced.”