Energy regulator proposes new fixed tariff rollover rules
When an energy customer comes to the end of their fixed-term contract, the provider moves them onto their standard variable tariff which tends to be more expensive.
This requirement was put in place by energy regulator, Ofgem, to prevent suppliers from locking customers into further contracts thereby making it more difficult or expensive for them to switch to an alternative tariff or supplier.
Despite being more expensive, moving to a default tariff means there are no termination fees for switching away to a more competitive provider.
But Ofgem has announced proposals to allow suppliers to roll their customers onto further fixed-term tariffs at the end of their existing deal, as long as those tariffs come without any termination fees, are no more expensive than the default rate and only when a customer hasn’t actively engaged.
Ofgem added that the move to another fixed deal would need to be similar in nature to the current tariff, including tariff type, duration, online account management, meter type and payment method.
It said such a move would help to reduce the number of customers on poor value standard variable tariffs.
A statement from Ofgem read: “We want to make sure that competition in the retail energy market works in consumers’ interests. As part of this, we are committed to helping consumers to move away from poor value default tariffs. The change we propose to make to the rollover rules is one of a number of measures we are taking forward to help and encourage consumers to engage and get a good deal on their energy, while protecting those who can’t engage.
“By way of an example, we are taking forward work to improve the information provided to consumers, including on the end of fixed term notice, in order to help them engage and choose the right deal for them. We have already started this work by introducing principles requiring suppliers to make sure consumers get the information they need to be able to make an informed choice.”
The consultation closes on 15 September and Ofgem said it “intends to move quickly to make a decision on the way forward” and expects to issue a decision in the autumn.