Friday 22 February 2013

Vital progress made on reducing energy bills

Today the independent energy market regulator Ofgem imposed tough requirements on energy suppliers to ensure they deliver steps towards the Prime Minister’s commitment that all households should be on the lowest available energy tariff.

For too long energy consumers have been bamboozled by an outdated and complex tariff system which makes it difficult for them to decide which tariff they should switch to in order to get the best deal.

To address this, the government has made it clear that a radical shake-up of the energy market is required and that energy companies should start putting people before profits.

Today, we took vital steps in the right direction. Ofgem has set tough new standards of conduct which energy companies will have to adhere so their customers are informed about cheaper tariffs. These important new measures include:

  • Reducing the vast number of tariffs currently offered to consumers to just four simple core tariffs per energy type (electricity and gas) – these core tariffs will be offered to all customers regardless of their payment method
  • Discontinuing certain ‘dead’ or variable tariffs and transferring customers who are on these tariffs to that supplier’s cheapest variable deal if their current deal does not offer them value for money
  • Requiring suppliers to give their customers personalised information on the cheapest tariff they offer which best suits the customer’s needs
  • Requiring energy suppliers to simplify the information they send to their customers
  • Requiring suppliers to use a new Tariff Comparison Rate (TCR) in information they send their customers – making it easier for bill-payers to compare tariffs and choose the best deal

The requirements announced by Ofgem today will come into effect from this summer. Further steps to ensure consumers are on the cheapest tariff suited to their energy requirements will be implemented in the government’s Energy Bill coming into effect in 2014.

Prime Minister David Cameron has backed the requirements Ofgem are imposing on energy suppliers, saying: “I made a personal commitment to help get energy bills down and I’m delighted that Ofgem are taking that forward. The package announced today is a huge step towards energy bills that are more fair for everyone. This is about putting people before profits.

“Our aim is that consumers will get the best possible energy tariff – no tricks, no loopholes – and we will use the powers we gained in the Energy Bill earlier this month to make sure this happens. The Bill will support this package, and make sure that all energy customers are put on their supplier’s lowest variable rate unless they choose otherwise.”

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