Energy regulator Ofgem slams suppliers for complex tariffs

Photo: Matt Cardy/Getty Images
Photo: Matt Cardy/Getty Images
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Energy regulator Ofgem has unveiled plans to ensure customers are offered the cheapest deals by suppliers.

• Ofgem called for energy suppliers to simplify tariffs to ensure customers get the cheapest deals

• The body also urged companies to offer consumers on low incomes details on the cheapest tariff available across the market

It said it wanted a “simpler, clearer, fairer” market, under reforms that will force firms to tell customers about their best electricity and gas deals and cut the number of core tariffs to four per fuel type.

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.

Labour added to the pressure yesterday by announcing it would force a vote in the Commons on reducing energy bills for the over-75s.

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 next summer.

Ofgem also proposed suppliers should offer four core tariffs for both electricity and gas to cut the “baffling” array of deals currently on the market.

It said “dead” tariffs no longer available would be banned to reduce the overall number of price points and reduce the risk of people paying too much.

And in a bid to make the market “fairer”, Ofgem 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.

“We need to open up the books of the energy companies, but these reforms do nothing to improve the transparency of the prices these firms charge their customers.”

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.

Mr Cameron, in attempting to clarify his statement, stopped short of repeating his previous suggestion that companies would be compelled in any way to put customers on the cheapest tariffs.

Arriving in Brussels for an EU summit, he said he wanted to be on the side of hard-pressed people “who struggle to pay energy bills”.

A Downing Street spokeswoman said Ofgem’s proposals were “complementary with what we are trying to achieve”.

She added: “We have been working with them for some time on this and will continue to work with them. As the Prime Minister said, we will use forthcoming legislation to ensure people get the lowest tariffs.”

Mr Davey also welcomed the proposals. He said: “These are the sort of measures I have been urging for some time. They represent a big step forwards in reforming our energy market to help millions of households get a better deal.

“I want an energy market where the suppliers have to work hard to win your business, and then work hard to keep it.”

Audrey Gallacher, director of energy at Consumer Focus, said: “This is a positive package of measures which should help to make the energy market clearer and simpler. Ofgem needed to act to make the energy maze less impenetrable and these are important and overdue measures.”