Ofgem reveals energy market 'shake-up'
Published on 19 October 2012 11:30 AM
Proposed reforms by the energy watchdog aim to create a 'simpler, cleaner, fairer and more competitive' energy market.
Ofgem wants to put an end to the vast array of 'baffling' tariffs currently available by making energy suppliers offer four core tariffs.
It also wants to see them inform customers about the cheapest tariff they have on offer, giving households the chance to reduce their energy bills.
The plans, which will be published before the end of October alongside the watchdog's non-domestic proposals, come after Prime Minister David Cameron was accused of backtracking on a commitment to require energy firms to give homes the cheapest deals.
Ofgem's suggestion of a four core tariff policy would mean four tariffs per fuel type - electricity and gas - to apply to each payment type.
'Dead' tariffs that are no longer available will be banned to reduce the risk of people paying too much and cut the number of overall tariffs.
Price increases or other changes to fixed-term tariffs will also be banned to make the market 'fairer'.
Suppliers must offer support to vulnerable customers
In addition to giving customers information on the cheapest tariff, the watchdog wants to introduce 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.
Ofgem chief executive Alistair Buchanan revealed that the package of proposals was developed through feedback from thousands of consumers who gave their opinions on the subject.
'I am glad to say suppliers have already responded with some initiatives, but these don't go far enough,' he said, speaking about the plans.
'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.'
Age UK Charity Director General, Michelle Mitchell, commented: 'Adequate warmth is vital to the health and wellbeing of older people, so energy prices will always be an important issue, and tariff conditions must be clear so that older people can identify which deal is best for them.
'Age UK supports the tariff simplification changes being driven by Ofgem, and will support proposals in the forthcoming Energy Bill which work for greater transparency.'
The watchdog wants to start introducing its reforms by summer 2013, but must first go through a legally required, extensive consultation process.
Copyright Press Association 2012