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Ofgem reforms will force energy companies to reveal cheapest tariffs

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19/10/2012
Energy industry watchdog Ofgem has set out plans to make energy bills simpler, fairer and cheaper for the consumer.

In a bid to reform the energy industry, Ofgem has proposed new legislation that will force suppliers to tell customers about the cheapest tariff they have on offer.

Ofgem has also said that this is the biggest ‘shake-up’ the industry has seen in a decade.

Chief executive of Ofgem, 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.

“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 shakeup of the retail energy market since competition was introduced.”

Ofgem is extending its proposals to simplify tariff structures and limit core tariff numbers across the whole market, while still allowing consumers choice. It is also proposing to make suppliers tell customers about the cheapest tariff they have on offer.

Additionally, it intends to work with suppliers to trial a proposal to provide vulnerable consumers and those who haven’t switched for a long time with information about the cheapest tariff for them across the whole market.

Ofgem also wants to simplify the market by limiting each supplier to no more than four core tariffs for each fuel and ensuring all tariffs are expressed as a standing charge and single unit price.

 

Audrey Gallacher, director of energy at Consumer Focus, commented: “Ofgem proposals will not answer every question. Consumers still doubt the relationship between wholesale costs, retail prices and group profits.

“But we welcome this as a very positive step towards making the market work better for consumers.”

Dual fuel discounts will be presented separately as an additional stand-alone option available to all consumers when choosing a tariff from a supplier.

They will be expressed in pounds and pence rather than as a percentage to give consumers greater clarity, and must be the same across all tariffs.

All other discounts will count as separate tariffs towards the cap.

Ann Robinson, director of consumer policy at uSwitch.com, added: “We are delighted that Ofgem also recognises the extra support that vulnerable consumers need – if competition is to work the market has to be accessible to all.

“However, as households face a winter of energy price hikes many cannot afford to wait for a year before these measures take effect. I would urge consumers to protect themselves now – there is currently £300 difference between the cheapest and most expensive tariffs on the market.

“Consumers don’t have to go online to benefit from these cheaper deals – they can get a comparison over the telephone or can send a copy of their recent energy bill to Freepost uSwitch with their phone number and we will call them back to talk them through their options.”

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