Energy firms banned from springing price rises on customers

Power companies will have to warn customers of plans to increase their energy bills at least 30 days in advance, under new rules laid out by regulator Ofgem.

Householders will also have to be given a month's notice if their provider plans to make any changes to their contract that will leave them "significantly" worse off.

Firms currently have up to three months after a price change to notify customers.

The new regulations - part of a sweeping reform of the energy market by the watchdog - aim to reduce complexity in energy billing.

"These changes will again show that we are serious about making sure suppliers play it straight with consumers," said Andrew Wright, Ofgem's senior partner for markets.

"We believe 30 days' advance notification of price increases, coupled with our new proposals for more transparency and an end to complex tariffs, will give consumers more power to make informed switching choices."

All of the major power firms have hiked their energy prices in recent months, by an average of 5.9 per cent.

Perth-based Scottish and Southern Energy claimed it had become the first of the major providers to give customers 30 days' written notice when it announced a rise of 9.4 per cent in gas prices at the end of October - while Centrica, which owns Scottish Gas, claimed to have given its eight million customers 30 days' notice of its 7 per cent gas and electricity price hike from 10 December.

Lucy McTernan, chief executive of Citizens Advice Scotland, said: "This measure will certainly make it easier for people to plan their finances, and to shop around to find alternative suppliers who will offer them a better deal. Anything that empowers the consumer has to be a good thing.

"However, the main issue that is causing problems for struggling families is the cost of fuel itself. More notice of price hikes will certainly help, but it doesn't address the central issue, which is that the bills are too high and that far too many people simply can't afford to pay them."

She added: "We are pleased that Ofgem is getting a grip on the industry. But welcome measures like this one must be seen as only one step on the road to getting a fair deal for Scottish consumers."

The warning comes a week after Ofgem said it would refer energy companies to the Competition Commission if they did not simplify their pricing structures. It also recently reminded suppliers that when they write to individual customers to inform them of such changes, they must be able to explain how it will affect them specifically.

Audrey Gallacher, head of energy at Consumer Focus, said: "If people are going to pay more for their energy, clearly they need to know in advance, not as much as two months later.This long-awaited move should help customers to budget for any price rises and make informed decisions early on about whether to switch supplier.

"Other moves proposed by Ofgem in its recent review should also make it easier for customers to compare energy tariffs and switch to a better deal. The challenge is now for energy firms to step up to the challenge of improving the market and for the regulator to keep the spotlight on them until they do."