Ofgem issues energy tariff plan

More choice for consumers
Published on Friday, 19 October 2012 09:23
Posted by Scott Buckler

Ofgem is consulting on plans for a package of simpler, clearer, fairer measures to improve radically the competitiveness of the household energy market

This follows a commitment to tackle problems of tariff complexity, poor supplier behaviour and lack of transparency identified in its review of the retail market.

Following feedback from consumers and extensive consultation, Ofgem is extending its proposals to simplify tariff structures and limit core tariff numbers across the whole market, while still allowing consumers choice. Ofgem 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.

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 proposing simplifying 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. 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.

These reforms - along with an easy-to-use Tariff Comparison Rate - will give consumers simple choices to help ensure they get the best tariff for them.

Energy policy in Great Britain has, for decades, been committed to effective competition in energy markets, which is also a requirement of European directives. Ofgem has to work within this framework and its reforms seek to increase the competitive pressure on suppliers to keep prices as low as possible and spur innovation and improvements in customer service. However, while wholesale gas costs remain high and Britain needs to invest to secure supplies and meet environmental targets, upwards pressure on prices is likely to continue. This is why Ofgem‟s reforms are vital as they will make it easier for consumers to get the best tariff possible for them.

Source: ©Ofgem

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