Industry NewsThe energy prices offered to UK domestic end-users and small businesses are to be made simpler and more stable under new plans from Ofgem. The regulator feels that the variety and nature of the tariffs on offer currently confuse most customers and do not encourage them to seek better deals elsewhere. The tariff changes are just part of a wave of reforms set to be unveiled by Ofgem and the Government in order to improve competition and encourage the investment required for security of supply. The nature of the changes and the tone of their delivery indicates that the authorities are going to take a very hard line on this issue and are unlikely to accept any objections from the energy industry.
In unveiling the proposals, Ofgem commented, "Competition is being stifled by a combination of tariff complexity, poor supplier behaviour and lack of transparency and that radical change is needed." The change the regulator is pushing forward on includes the option for a regulated 'no frills' tariff of a single unit price and fixed standing charge for the industry. In addition, end users wishing to retain some variety in their tariff options will still be protected from price increases for the duration of their contract. Furthermore, suppliers will be required to provide standardised pricing information to better allow consumers to compare offers.
Later this year and into 2012, further market changes will be announced, including further details of the Energy Market Reform (EMR), plans to improve wholesale market liquidity, as well as proposals to improve the transparency of supplier accounts.
Welcoming the changes, Energy Secretary, Chris Huhne, commented, "Both the Government and regulator Ofgem are working to boost transparency in billing and increase competition in the energy market to help keep prices down. I want to give Ofgem more teeth and customers more rights, including a faster switching time and better information from suppliers."