Energy companies 'too slow to cut prices' Range of tariffs is also too complex, says Ofgem
21 March 2011
Competition amongst gas and electricity companies is being stifled by a combination of complicated tariffs, poor energy supplier behaviour and lack of transparency, according to a review published today by energy watchdog Ofgem.
Ofgem is proposing major changes to the energy market to force gas and electricity supply companies to work more effectively for consumers. Companies have eight weeks to comply - or risk ending up being investigated by the Competition Commission.
The independent watchdog is also prepared to ask the government for increased powers if they believe its power to protect the consumer needs reinforcing.
Which? is campaigning to make it easier for consumers to find the right energy tariff for your household. Find out more about our campaign and how to find the best energy deal in our terrible tariffs guide.
Lack of energy competition
The ‘Big Six’ energy suppliers - British Gas, EDF, Eon, Npower, Scottish and Southern Energy and Scottish Power - still supply the vast majority of the UK’s energy market. New proposals are aiming to break the stranglehold these large players have on consumers by forcing them to auction 20% of their generation output.
It’s hoped that this will increase pricing transparency, and allow new players to get a foothold in the retail energy market.
Our energy deal comparison service enables you to compare energy tariffs quickly and easily to find the cheapest supplier in your area. See how how much you could save by visiting Which? Switch.
Ofgem has evidence that the Big Six have adjusted prices in response to rising costs more quickly than they reduced them when costs fell – a finding we reported on back in November 2010 in our story 'The truth' behind energy price hike announcements.
Continuing problems with tariff complexity are another cause for concern, with more than 300 tariffs available and a bewildering array of clauses and provisos in the small print. This can make it extremely difficult for consumers to compare tariffs and find the cheapest one for their needs.
Ofgem’s five proposed reforms include price simplification, a reduction in the power of the Big Six, tougher enforcement of consumer-friendly policies, fairer contracting, and improved transparency.
Energy companies 'fail consumers'
Which? head of advocacy Louise Hanson says: 'This isn’t the first Ofgem investigation to show that the energy market is failing consumers. Unless the regulator takes decisive steps to clean up the sector, it won’t be the last.
'Confusing bills, a bamboozling array of tariffs and questionable sales and marketing practices are not features of a market that works well for consumers.
'Making tariffs easier to understand and compare is a step in the right direction and should encourage switching and improve competition, but without price guarantees, people could find the price they end up paying isn't the one they signed up for.'
Lower your gas and electricity bills
You can compare energy prices and switch to a new gas and electricity supplier on Which? Switch. People who switched with us between 1 October and 31 December 2013 are predicted to save an average of £234 a year on their bills.
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