You are here: Home - Household Bills - News -

‘Lowest suitable tariff’ to be introduced for energy customers

Written by:
The Government is to oblige energy providers to automatically switch their customers onto the lowest suitable tariff for their circumstances.
‘Lowest suitable tariff’ to be introduced for energy customers

Later today Energy Secretary Ed Davey will outline plan for introducing legislation to this end, fulfilling a pledge made by David Cameron last month.

Gas and electricity suppliers will be restricted to offering four different tariffs for each, in an attempt to introduce clarity for consumers who are often confused by the vast array of tariffs currently on offer.

Davey is expected to announce that the four allowable tariffs will be a fixed price for a fixed term, a standard variable rate, and two others based on different criteria such as the payment method selected or whether green energy is a factor.

Providers will be forced to move customers onto the lowest tariff unless they opt out.

Critics have warned that the move could damage competition in the market.

Kate Rose, head of energy at commented:

“There is a risk these plans could give consumers a false sense of security in that as they are on a cheaper tariff with their current supplier they are on the cheapest tariff in the whole market which will not always be the case.

“Simplification of tariffs to enable easier comparison by consumers is a positive step forward and will help consumers ensure they understand the options available to them and is likely to engage more people into switching supplier.

“Making consumers aware of cheaper options is also a positive step, however consumers have different needs and we believe suppliers should be engaging consumers on the best tariff for them to meet their individual needs rather than simply the cheapest available. This could be motivated by price but also the percentage of renewable energy or a fixed price contract that offers price security.

“With rising costs it is unlikely however that consumers will see tariffs reducing in price. As these plans are implemented and larger numbers of consumers are switched to cheaper tariffs, to cover the costs of supply it is likely these cheaper tariffs will continue to increase in price.

“Even with suppliers alerting consumers of cheaper tariffs, consumers should still shop around as switching supplier could provide greater savings.”

Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Sales of top-end London property slump

In Greater London, sales of multi-million pound homes have decreased by 53% as the effects of new tax legislation takes...