A fairer deal on energy for consumers

Getting a better energy deal for retail consumers has been easier since the start of year, following Ofgem’s ban on complex tariffs kicking in, says the regulator. The changes are part of Ofgem’s reforms for a simpler, clearer, fairer energy market; the biggest changes to the retail energy market since competition was introduced in the late 1990s.

From January, Ofgem is banning suppliers from offering complex tariffs, for example where consumers are initially charged a higher rate, which falls the more they use. The reforms also mean that, once a consumer has decided how they want to pay for energy, they will have just four tariffs to choose from for gas, and four for electricity, from each supplier. Together these changes will make it far easier for consumers to compare deals and find the best tariff for them.

Under the reforms suppliers must structure their tariffs using only a single unit rate and, if they choose, a standing charge. Some suppliers have tariffs with a zero or low standing charge and, if consumers consider these tariffs better suit their needs, Ofgem expects suppliers to keep offering them.

From April this year, a further range of reforms is coming into force to give consumers much clearer information on energy. For example, suppliers will have to tell consumers regularly in writing which of their tariffs is cheapest for them on bills, annual statements and other communications.

·      Meanwhile, npower has agreed to pay £3.5mn to help vulnerable customers after an investigation by Ofgem found that the supplier had breached its marketing licence conditions. npower accepts the finding. Ofgem’s investigation centred on the sales processes and information used by npower when customers were making decisions about whether to switch supplies to npower.