Tuesday, 27 November 2012

Changes to energy bills

I really welcome proposals to ensure that all households are put on the best deal for their gas and electricity, as published by the Government last week.Energy Bills are probably the key issue that concerns the normal men and women I meet in Hexham.
I have been been a vocal campaigner on fuel poverty, and a critic of Britain's energy market for some time. If this really does end up with millions of households being moved to better energy deals, suppliers being limited to four tariffs per fuel type, and customers moved off poor-value ‘tariffs, then I will be overjoyed. I have been calling on the Government to step in reform to Britain's broken energy market for some time and it seems that we are now getting that action. Everyone can see that households across our region, in both rural and urban areas, are facing a really tough time with their energy bills.

The Government intends to include measures to limit the number of tariffs companies can offer to make switching easier and ensure households are on the best value tariff in the forthcoming Energy Bill. We need this action. Bill payers will no longer face the choice between hundreds of confusing tariffs; households will have personalised information from their supplier on their bills about the cheapest tariff the supplier offers. These reforms will help stop that once and for all.

Measures in the Department of Energy and Climate Change discussion document include proposals to:
  • Limit suppliers to four “core tariffs” per fuel. This will end the proliferation of tariffs that has taken place over the last few years. However, collective switching schemes will be able to negotiate bespoke prices.
  • Require that the four “core tariffs” contain one standard variable rate tariff, and one fixed term fixed price tariff. This will ensure that these two tariff types, which account for 85% of all customers, are clear, simple and easily compared.
  • Allow suppliers freedom to offer the remaining two tariff types as they wish, to preserve customers’ choices, such as green tariffs.
  • Require that suppliers offer just a single price for each of the four tariff types . As Ofgem set out, this requirement would not prohibit discounts for dual fuel or lower cost payment methods.
  • Prohibit poor value “dead” tariffs. This will ensure that no customers are left behind on poor value, out of date tariffs.
The Government wants all customers to have been placed on the cheapest price available from their supplier for the tariff type of their choice as quickly as possible and, at the latest, by Summer 2014. These new measures will also make it easier for consumers to shop around for the best market-wide deal.