New Ofgem rules may enable Britons to cut energy bills

LONDON Fri Jun 21, 2013 11:56am BST

The sun rises behind electricity pylons near Chester, northern England October 24, 2011. REUTERS/Phil Noble

The sun rises behind electricity pylons near Chester, northern England October 24, 2011.

Credit: Reuters/Phil Noble

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LONDON (Reuters) - A number of British consumers may be able to cut their energy tariffs from December under rules proposed by regulator Ofgem that it hopes will encourage competition.

The main energy suppliers all raised heating and power charges during the past exceptionally long winter, at the same time that austerity measures were already squeezing consumers' disposable income.

Prime Minister David Cameron made a personal pledge in October to force energy companies to offer customers their lowest tariffs, a promise the regulator is now trying to deliver.

"Our reforms today are the blueprint for the simpler, clearer and fairer energy market that consumers deserve," Andrew Wright, a senior partner for markets at Ofgem, said in a statement released on Friday.

"This will provide them with the choices they want alongside the simplicity they need."

Britain's energy companies will be forced to offer only four tariff options each for electricity and for gas and help customers find the cheapest offer available to them.

The rules are now open to public feedback and will come into force in December unless they are challenged, Ofgem said.

Six big energy suppliers control the bulk of the retail market and are often accused by the public of abusing their dominant position.

They include EDF Energy, Centrica, SSE, RWE npower, E.ON and Scottish Power.

Energy UK, the association representing the energy sector, said its members had already started offering clearer tariffs and fewer tariff options.

Ofgem is also asking companies to make customers' bills more engaging, a proposal the regulator said should mean consumers will take more interest in their energy usage and encourage them to switch suppliers more often.

"Part of the whole raison d'etre of the reform is to get people engaged with the market," a spokeswoman for Ofgem said.

"We will expect customers to switch to different deals and potentially different suppliers as a result of the reforms."

Britain's Energy Secretary, Edward Davey, said it was scandalous that over eight in ten households were put off signing up with a different supplier.

"These reforms are the fastest way to speed up delivery of simpler bills and a fairer system," he said in a statement.

Consumer Futures, an association representing UK consumers, welcomed the proposals but said further changes were needed to make it easier for users to switch energy supplier.

"Consumers are not just going to wake up one sunny morning and decide that they trust and want to engage with the market," said Adam Scorer, Consumer Futures' director of policy and external affairs.

Ofgem is passing parallel rules to break up the stranglehold the six firms have on the market by forcing them to offer smaller firms access to their energy production and to reveal prices at which they purchase long-term supply.

(Reporting by Karolin Schaps; editing by Jane Baird and Keiron Henderson)

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Comments (1)
StewartRed wrote:
Recent interaction with E.ON revealed the following behaviour.
1. Use of fixed period “plans” (instead of straitforward tariffs) that expire after 12 months, and then automatically revert to the expensive “standard” tariff, unless a fresh choice is made. There is no way to avoid this.
2. There is no way to access the range of tariffs (“plans”) offered by E.ON. They only tell you those that apply to you, after you have answered a string of questions. This tailored info is all you can get, meaning there is no transparency on the range of tariffs.
3. E.ON supply wrong and misleading info on their website and by letter.
Example A: For electricity-only users the website says the cheaper tariff is 3% cheaper. In fact the tariff is 5+% cheaper, AND the cheaper tariff offers various “rewards” not available on the standard tariff. The total effect can be up to 15% cheaper. People may not be bothered to switch for 3%, but 15 (or even 5)% is more significant. The result is more customers stay on expensive tariff by inertia.
Example (b): The letter sent to customers saying their new tariff/plan is the “standard”, also says that new plans are eligible for various “rewards” of money (or Tesco points). It emerges that E.ON do not consider the new “standard” plan is a new plan!
We all make mistakes, but when these erroneous of misleading statements are pointed out, E.ON refuse to correct them.

Jun 21, 2013 3:33pm BST  --  Report as abuse
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