Ofgem wants to force energy suppliers to offer cheapest tariff

Energy suppliers will be forced to tell customers about the cheapest tariff they have on offer under proposed industry reforms unveiled by Ofgem to make bills simpler, clearer, and fairer.

 

The energy regulator says complex multi-tier tariffs should be banned and uncompetitive dead tariffs - those which are no longer open to new consumers - scrapped. 

The proposals by the energy regulator increases pressure on the "Big Six" gas and electricity suppliers after David Cameron this week said he would look at introducing legislation to give the to give customers the cheapest possible deal after a fresh round of price increases.

Ofgem wants get to rid of "poor behaviour" by suppliers and a lack of transparency in the market which makes it difficult for users to understand deals being offered.

The energy regulator wants to limit the number of tariffs to four, end complex multi-tier tariffs and scrap those that are no longer open to new consumers.

It wants all tariffs shown as a standing charge and single unit price and a limit on number of core tariffs each supplier is allowed to offer.

Under the proposals, companies may also be forced to tell customers who have not switched for a long time about the cheapest tariff on the market, even if it is with a rival company.

Alistair Buchanan, chief executive of Ofgem, said: "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."

All consumers should be given their supplier's cheapest tariff on their bill as well as a tariff comparison rate to compare tariffs 'like for like' across the market, the regulator said.
Energy users also should be given "personalised information" to help find their best deal and should default to cheapest tariffs at the end of fixed-term contracts.
Ofgem wants to explore ways to ensure switching it easier and the power to fine suppliers if they fall short of the new standards of conduct.
Arriving yesterday in Brussels for an EU summit, Mr Cameron he said he wanted to be on the side of hard-working families who often struggle to pay energy bills.

"We’re going to use the forthcoming legislation, the energy bill, coming up this year so that we make sure, we ensure that customers get the lowest tariffs. That’s what we’re going to do," he added.

Ian Marley, managing director of Markets at Ofgem, told BBC news: "Given the evidence about how the market has gone in the last few years, we want to give customers an effective choice rather than the confusing array of tarrifs which makes it difficult to make that choice."