Energy companies will only be able to offer four tariffs for both gas and electricity, under plans unveiled by the Government today.
In a bid to ensure a better deal for customers, Energy Secretary Edward Davey today announced a raft of proposals open for consultation until January 2013.
But what are the plans about, and how will customers be affected? The plans
Under the proposals:
- Suppliers will be only be able to offer four "core tariffs" per fuel. These core tariffs will be required to contain one standard variable rate tariff and one fixed term fixed price tariff.
Suppliers will also be required to offer 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," the Department of Energy and Climate Change said.
- "Dead" tariffs will be banned Why the need for these changes?
As it stands, many customers struggle to decipher their bill and work out if they are on the cheapest tariff available.
The huge number of tariffs on offer from different providers can make shopping around confusing, so many customers don't bother to switch.
The Government hopes to resolve this by simplifying tariffs and thereby helping to ensure customers get the best deal.
Limiting suppliers to offering four "core tariffs" per fuel will ensure these two tariff types, which account for 85 per cent of all customers, are clear, simple and easy to compare, the Government claims.
And by banning "dead" tariffs, the Government hopes to ensure customers are not left behind on poor value, out-of-date tariffs.
Announcing the plans today, Energy Secretary Edward Davey said: "I am determined to ensure all consumers get a better deal on their energy bill and get the cheapest tariff they can.
"Bill payers will no longer face the impossible choice between hundreds of tariffs; each customer will have a maximum of four tariffs for gas or electricity per supplier to consider.
"And households will have personalised information from their supplier on their bills about the cheapest tariff the supplier offers for their payment method and the cheapest tariff overall.
"For too long people have been stuck on the wrong type of energy tariff, paying more than they need to. Our new proposals will make things much clearer and easier to understand, so that bill payers can get the best deal and feel the benefit in their pockets." When does the Government hope to bring in these changes?
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.
• Ofgem's plans to simplify energy tariffs: Q&A
• Government proposals to ensure a better deal for energy consumers
