Millions of households are to be moved to better energy deals, with suppliers limited to four tariffs per fuel type, and customers moved off poor-value 'dead tariffs' under new government plans.
Proposals to ensure all households are on the best deal for their gas and electricity as soon as possible were published on 20 November, following Ofgem's Retail Market Review and thePrime Minister’s call for simpler, cheaper tariffs.
The proposals seek to strike the right balance between helping consumers in a market in which the majority of people currently do not engage, while maintaining consumer choice and incentives for suppliers to compete and innovate.
Energy Secretary Edward Davey said: "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.
"The discussion document seeks views on how the detail of these proposals could operate in practice and the government intends to include measures in the forthcoming Energy Bill.
"I am determined to ensure all consumers get a better deal on their energy bill and get the cheapest tariff they can,” Davey added.
"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."
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.
Katja Hall, Confederation of British Industry chief policy director, said: "The government is right to focus on the challenges householders and businesses face on energy prices. In the short-term, we need to make sure consumers are on the best deal and encourage improved energy efficiency, but this is no silver bullet.
"To manage energy bills over the longer term we need to maintain a competitive retail market, but also build a reliable, affordable and low-carbon energy mix, and the much awaited Energy Bill could help achieve this.
"Billions of pounds of investment depend on getting this bill through Parliament and onto the statute books, so the Government must stop dragging its feet and publish the bill before the end of month, as promised."