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New rules to limit energy tariffs suppliers can offer

John Fitzsimons
by Lovemoney Staff John Fitzsimons on 21 February 2013  |  Comments 7 comments

Ofgem has outlined new rules for energy suppliers to come in this summer, including limits to the number of tariffs they can offer and the introduction of a new Tariff Comparison Rate to make comparing and switching easier.

New rules to limit energy tariffs suppliers can offer

Energy regulator Ofgem has confirmed tough new standards of conduct for energy suppliers which will come into force in the summer.

Suppliers will be restricted to offering no more than four simple core tariffs per fuel type. Ofgem claims this will “put an end to the complex and confusing range of offers consumers currently have to pick though”.

Still a lot of deals to choose from

That still sounds like a lot of deals to me though.

Dual deals won't count as tariffs either, but will be viewed as a 'discount' to be applied uniformly across the tariffs

Four tariffs for gas, four for electricity, plus the dual fuel ‘discount’ to take into account, from each supplier – sure there may be a reduction in the number of deals to choose from, but there will still be an awful lot of different tariffs on offer. I don't see this change making things much less confusing or complex.

Making things clearer

Other elements of the new rules include forcing suppliers to make their bills more transparent, with information on the cheapest tariff available for them. A new Tariff Comparison Rate will need to be included in communication with customers, to help them compare tariffs. This sounds very sensible to me – trying to compare tariffs at the moment is an utterly bemusing process.

Ofgem has proposed a pilot scheme where suppliers offer vulnerable customers, and those who haven’t switched for some time, a personalised estimate on the cheapest tariff from across the energy market.

Building trust

The regulator is also focused on building trust in the energy market. That means Ofgem will be able to take action, in the form of fines, where it feels energy suppliers have not treated their customers fairly.

There will also be added protection for people on fixed-term contracts, including banning both price changes and rolling customers onto further fixed-term contracts without their consent.

What do you think? Is limiting the number of tariffs on offer enough? How would you like to see your energy bills made clearer? Let us know your thoughts in the Comment box below.

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Comments (7)

  • Latent
    Love rating 21
    Latent said

    I would like to see a price per unit and all suppliers have to use the same unit. I don't care what that unit is, Ofgem can make one up, it's not difficult.

    Report on 21 February 2013  |  Love thisLove  0 loves
  • jamiecfc1
    Love rating 42
    jamiecfc1 said

    I have just spoken to E-On who tried to convince me to switch to them. They explained about their new tariff and the lady informed me that just about every energy company was reverting to the "standing charge" that most of them got rid of a few years back. I wrote to Ofgem and asked them how reintroducing a standing charge (i.e paying for gas and electric - whether you use it or not) was in any way "fair". Ofgem told me that they had said no such thing and it was the energy companies that were doing this off their own back. When you consider that Npower (as an example) will charge you (if you have both gas & electric) £1 PER DAY (£365 PER YEAR) whether or not you use any electric or gas.. If this is what a "fairer" system means then bring back the old unfair one. So far I've only found Scottish Power who don't charge a standing charge, so I'll be switching to them I think.

    Report on 21 February 2013  |  Love thisLove  0 loves
  • Latent
    Love rating 21
    Latent said

    It's ok, they're just scum and we have scum in government allowing them to do it. The other scum in parliament aren't any better.

    Report on 21 February 2013  |  Love thisLove  0 loves
  • bengilda
    Love rating 100
    bengilda said

    It is unfortunate that the somewhat incompetent Ofgem has not properly grasped the problem and definitely not found the answer. A much more defined and limited tariff series is required for domestic customers with the mechanisms of tariff construction firmly laid down.

    Tariff construction should be designed to not only provide a simple and fair pricing structure but should also incorporate an encouragement for energy conservation (perhaps the unit rate starting lower for the first so many units and then slightly increasing in fairly generous steps).

    To this end the Standing Charge should be included within the usage rates thus benefitting the economical user like pensioners and others who are energy usage conscious. This Standing Charge should be laid down by Ofgem in conjunction with energy network transmission companies and be the same for all energy suppliers.

    Report on 21 February 2013  |  Love thisLove  0 loves
  • fenemore
    Love rating 251
    fenemore said

    You can blame those wonderfully naive politicians for this whole sorry mess.

    You cannot bring competition into energy if ALL the companies have to buy their energy from the same source. It is complete and utter nonsense. Even the most basic grasp of economics tells you this.

    Those same sources are able to manipulate the wholesale price at a whim, then sit back and watch all the suppliers running around like headless chickens. It has nothing to do with global demand - restricting supplies to push up prices is a method as old as the hills. Trouble is none of our politicians have ever lived in the real world - I doubt one of them is capable of running a lemonade stand.

    Restricting suppliers to just 4 tariffs and being forced to offer you the lowest is again stupid beyond belief. You might as well just have the one tariff - after all. there wont BE any customers on the higher ones!

    Report on 21 February 2013  |  Love thisLove  0 loves
  • barrycash
    Love rating 4
    barrycash said

    This is a step in the right direction. However it does not address the basic problem that when trying to sign up a new customer the major companies salespeople frequently resort to simply telling lies.

    Report on 21 February 2013  |  Love thisLove  0 loves
  • sketharaman
    Love rating 8
    sketharaman said

    Seems like the market is ripe for a third-party web-based tariff selection service like the US BillShrink.com (now called TruAxis).

    PS: @lovemoney: These days, it takes me at least three attempts to successfully log in and post a comment to an article on your website. I keep getting the following error message after I enter my username and password: "Sorry, an error occurred while processing your request.". Things were fine before. I'm facing this problem only in the last 15 days or so. Hope you can fix it quickly. Thanks in advance.

    Report on 23 February 2013  |  Love thisLove  0 loves

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