Ofgem unveils energy sector plans
Published 19/10/2012 | 07:32
Energy suppliers have been attacked by the industry watchdog for confusing consumers with complex tariffs as it unveiled plans to ensure customers are offered the cheapest deals.
Regulator Ofgem said it wanted a "simpler, clearer, fairer" market under reforms that will force energy firms to tell customers about their best electricity and gas deals and cut the number of core tariffs to four per fuel type.
Consumer groups welcomed the proposals, but the Labour Party accused Ofgem of "tinkering at the margins", while environmental campaigners said the plans failed to "get to the heart of the problem".
The announcement comes after Prime Minister David Cameron was accused of backtracking on a commitment to require energy firms to automatically give households the cheapest deals - rather than simply inform consumers what is available.
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."
The regulator is legally required to consult on its proposals, but wants to introduce its reforms by summer 2013. As well as giving customers information on the cheapest tariff they can offer them, Ofgem proposed that suppliers provide vulnerable customers and others who have not switched for some time details of the cheapest tariff across the whole energy market.
The regulator proposed that suppliers should offer four core tariffs per fuel type - electricity and gas - to cut the "baffling" array of deals currently on the market. "Dead" tariffs no longer available will be banned to reduce the overall number of tariffs and reduce the risk of people paying too much, Ofgem said. And in a bid to make the market "fairer", Ofgem said it plans to ban price increases or other changes to fixed-term tariffs.
Shadow energy and climate change secretary Caroline Flint said: "It is deeply disappointing that after spending nearly two years putting these proposals together Ofgem has once again ducked the opportunity to get tough with the energy giants."
The Prime Minister plunged energy policy into confusion with his surprise announcement that the Government would legislate so that gas and electricity companies "have to give the lowest tariff to their customers".
Energy Secretary Ed Davey distanced himself from the proposal and No 10 said energy firms would be obliged only to "offer" the cheapest tariffs.