Blueprint for clearer energy bills due out today

A LONG-AWAITED set of reforms to shake up the energy industry and make tariffs simpler for customers is to be published today by regulator Ofgem.

The reforms aim to create a 'simpler, clearer and fairer energy market'. Picture: PA

The reforms aim to create a “simpler, clearer and fairer energy market” by simplifying the array of tariffs currently on offer to householders.

But consumer group Which? called the measures “disappointing”, saying Ofgem’s decision not to include a single unit price, as used at petrol stations, had missed the chance for a much clearer way of presenting prices.

The reforms insist that each utility firm provides four “core” tariffs for each fuel type – with the majority made up of a standing charge and a single unit rate – making it easier for consumers to compare providers. However, dual fuel and online account management discounts will remain, and will not be considered as “core tariffs” but as a discount.

Suppliers will also be required to give all customers personalised information on the cheapest tariff they offer for them, and use a new Tariff Comparison Rate to help customers compare costs.

Certain expensive “standard”‟ or “variable” tariffs which are no longer available to new customers will be banned in a bid to reduce the overall number of tariffs. Suppliers will only be able to keep consumers on so-called “dead” tariffs if they offer value for money. Otherwise, they will be transferred to their supplier’s cheapest variable deal.

“Our reforms today are the blueprint for the simpler, clearer and fairer energy market that consumers deserve,” said Andrew Wright, senior partner for markets at Ofgem. “This will provide them with the choices they want alongside the simplicity they need.”

Which? has previously called for a reform of the current systems, arguing that customers find it impossible to differentiate between the many tariffs on offer from gas and electricity companies – dissuading people from switching provider and stifling competition in the market.

“While these new rules will help make the market simpler and fairer, it’s hugely disappointing to see the regulator sticking to its fundamentally flawed idea of how energy prices should be presented,” said Richard Lloyd, the watchdog’s executive director. “This will fail to help people find the best deal easily and could mislead millions into paying over the odds for energy.”

Other consumer groups tentatively welcomed the reforms. “We support the reduction in the number of tariffs offered but the key to simplification lies also in the ability of consumers easily and successfully to compare tariffs,” said Norman Kerr, director of fuel poverty charity Energy Action Scotland.

Ann Robinson, director of consumer policy at uSwitch.com, added: “Consumers need and deserve a competitive market that works for them. This is now the first step in the process”

If there are no appeals against the reforms, they are likely to come into effect from the summer onwards, Ofgem said.