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Ofgem unveils energy tariff plans
Ofgem said its plans will put an end to consumers being confused by complex tariffs for gas and electricity supplies
Energy suppliers will be forced to tell customers about the cheapest tariff they have on offer under proposed reforms for the industry unveiled by the energy watchdog.
Ofgem said its 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.
The plans come after Prime Minister David Cameron was accused of backtracking on a commitment to require energy firms to give households the cheapest deals - rather than simply inform consumers what is available, as unveiled by the regulator.
Ofgem is extending proposals unveiled last year to simplify tariff structures and limit core tariff numbers across the whole market. The regulator proposed that suppliers should offer four core tariffs to cut the "baffling" array of tariffs currently on the market. This will actually mean four tariffs per fuel type - electricity and gas - to apply to each payment type.
The watchdog wants to introduce new tools to help consumers switch energy account. As well as giving customers information on the cheapest tariff they can offer them, Ofgem has proposed 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 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."
Asked why Ofgem was not proposing a requirement for companies to move customers onto the lowest tariff, as Mr Cameron suggested earlier this week, the regulator's director of communications Ian Marlee told BBC Radio 4's Today programme: "We will need to look at the detail when the Government comes out with its proposals, but we still think that competition is still the best way to protect consumers in the market."
Angela Knight, the chief executive of Energy UK, which represents suppliers, told Today: "What they have here is a pretty challenging set of requirements on the companies and we will work with Ofgem and others, once we have got the detail, to get what is in the best interests of our customers."
Ms Knight added: "As far as Ofgem are concerned, what they are saying to us is (you should have) a very small handful of tariffs, you have got to be very clear on them and tell your customers about them and give the customer the choice. We need to have a set of proposals that are in the best interests of our customers and I think the customers do want choice. I do believe that choice is the right thing. I don't think we should say to the customer 'You must have this or that'."