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Radical Changes to Domestic Energy Tariffs
In a recent statement made by Prime Minister David Cameron the Government have made clear their support for the proposed changes prepared by Ofgem concerning the domestic energy market.
Prime Minister David Cameron said: “Even in these tough times when we’re having to take the difficult decisions needed to fix our economy, we’re doing everything we can to help hardworking people and families. That’s why 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. It’s about pensioners being better able to heat their homes in winter, and families better able to cope when the bills arrive.
“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.”
The plans by Ofgem aim to introduce the following, amongst other plans, to the domestic consumers:
- “Four “core” tariffs to cut the baffling array of tariffs currently on the market. That will actually mean four tariffs per fuel type (electricity and gas), which would apply to each payment type.”
- Consumers on ‘Dead’ tariffs will be moved onto one of the new tariffs unless the customer requests otherwise or their current tariff is providing them with “value for money”
- “All tariffs have a standing charge and unit rate”
In addition to the above points these plans will also safeguard consumers in fixed contracts from changes to tariffs mid contract as well as preventing them from being “rolled-over” should they fail to hand in a notice of termination for their current contract.
Ofgem is also keen to rebuild the trust in energy suppliers by encouraging suppliers to actively help their customers to find the best possible tariff for their usage. This will include personalised consumption estimates to make finding cheaper tariffs easier as well as simplifying any information suppliers provide to customers.
Ofgem and the Government are now approaching the final stages of statutory consultation that will hopefully lead to them implementing these ground breaking changes to the domestic energy market. They are optmistic that the consultation period, which ends in March, will conclude positively and enable a smooth execution of the suggested changes that will then come into effect in the summer.