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Ofgem publishes plans to simplify energy bills

Ofgem is proposing stringent new measures to help simplify energy bills and increase competitiveness in the household energy market.

The new measures will see a ban on complex multi-tier tariffs, a limit on core tariff numbers and debut plans to make suppliers inform customers about the cheapest tariff available.

Introducing the new proposals, 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. 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."

Under the proposals, the energy regulator is looking to restrict the amount of available core tariffs for each fuel type to just four. In addition, all tariffs will have to be expressed as a standing charge and single unit price to alleviate further confusion. Dual fuel discounts will also be added separately as an additional stand alone option when choosing between the four core tariffs.

The consultation paper appears to confirm the Prime Minister’s pledge this week that Government will “ensure that customers get the lowest tariffs”, stating that: “Suppliers will be required to give all their customers personalised information on the cheapest tariff they offer for them.” Furthermore, Ofgem will be running a pilot scheme for vulnerable customers whereby suppliers will be forced to inform them about the “cheapest tariff for them across the whole market”.

However, Ofgem was keen to stress its independence from Government policy, stating on Twitter: “We are an independent regulator, our proposals are separate from what the PM announced.”

Commenting on Ofgem’s proposed plan, Energy and Climate Change Secretary Ed Davey, said: “I welcome the proposals Ofgem has set out today – 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 on their energy bills.

“I want an energy market where the suppliers have to work hard to win your business, and then work hard to keep it. Making bills simpler and easier, for instance by actually putting the best tariff on the bill, is a really important part of that.”

Juliet Davenport, CEO & Founder of Good Energy, a 100% renewable electricity supplier was not as optimistic as Davey, stating: “We’re still lacking much of the detail needed to understand what Ofgem is actually proposing, and key questions remain around exactly what kind of tariffs suppliers will be able to offer in future. The energy market will see a lot of change in the coming years and it’s important that consumers are able to benefit through innovation like local tariffs for communities close to wind farms or demand-shift tariffs linked to smart energy technology.”

Davenport concluded: “If we want a smarter, greener energy market then it makes sense that we have smarter, greener energy tariffs. We hope that the final detail of Ofgem’s proposals will reflect that.”

*Source - Solar power portal

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