Ofgem sets out plans to simplify the energy marketRegulator promises action to tackle tariffs

19 October 2012

Poster in street saying 'affordable energy campaign'

Ofgem has today announced a number of reforms aimed at addressing the current energy market failings. 

The Retail Market Review comes after a week of promises from the government to fix the energy market. Which? executive director Richard Lloyd has welcomed the proposed changes, saying 'this is another big step towards helping people get the best price for their energy.'

Keep energy prices in check

Mr Lloyd said: 'These proposals will boost customer power, making it easier to shop around, and should increase the pressure on the energy companies to keep their prices in check.'

Which? research shows the market is far too complicated, with only one on ten people able to find the cheapest energy deal. Energy prices should be presented in a clear, consistent and simple way so people can spot the cheapest energy tariff and move to it.  

Ofgem has outlined its reform plans under three key areas – simplicity, clearness and fairness, details of which are outlined below:

Simpler energy tariffs

The plans include a ban on complex multi-tier tariffs and scraping of uncompetitive dead tariffs (tariffs which are no longer open to new consumers). All tariffs will have to have a standing charge and simple unit price. The regulator will also limit the number of tariffs each supplier can offer.

Clearer energy information

All suppliers will be forced to tell their customers what their cheapest tariff is. This will be personalised to people's own individual circumstances to help them find their best deal. This information will be provided on every energy bill. Suppliers will also be asked to offer a tariff comparison rate, similar to an APR.

Fairer energy tariffs

Ofgem is asking energy providers to default their customers onto the cheapest variable rate tariff when their fixed term contract comes to an end. It has also said that customers must be treated fairly  and that it will act against energy companies who fail to do this.

The regulator is also considering ways to promote more collective switching, such as the Big Switch project run earlier this year by Which? and 38 Degrees.

Ofgem's 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.'

He added: 'We have spoken to thousands of consumers who have helped us shape this package through a period of extensive consumer research, and are very grateful for their input.'

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