Ofgem plans add to energy price debate

Hard on the heels of the Prime Minister’s shambles of an announcement over energy prices, Ofgem have published their plans for simpler tariffs.

Their proposals include:

SIMPLER CHOICES

Ban on complex multi-tier tariffs and scrapping of uncompetitive dead tariffs*

All tariffs shown as a standing charge and single unit price

Limit on number of core tariffs each supplier is allowed to offer

CLEARER INFORMATION

All consumers given their supplier’s cheapest tariff on their bill

A Tariff Comparison Rate to compare tariffs ‘like for like’ across the market

New personalised information to help consumers find their best deal

FAIRER TREATMENT

Fair treatment to be enforced by standards of conduct backed by fines

Consumers to default to cheapest tariffs at the end of fixed term contracts

Ofgem to consider ways to promote more collective switching

The proposals were welcomed by Richard Lloyd, executive director of consumer group Which?, who said: “This is another big step towards helping people get the best price for their energy. These proposals will boost customer power, making it much easier to shop around, and should increase the pressure on the energy companies to keep their prices in check.”

However, Caroline Flint, shadow energy and climate change secretary, said Ofgem’s proposals were “only tinkering at the margins. It is deeply disappointing that after spending nearly two years putting these proposals together, Ofgem has once again ducked the opportunity to get tough with the energy giants. We need to open up the books of the energy companies, but these reforms do nothing to improve the transparency of the prices these firms charge their customers.”

These plans are a big step forward in introducing a more regulated energy retail market. Certainly a big step forward for Ofgem who are usually obsessed by market solutions. However, Caroline Flint is correct that, as usual, Ofgem has simply not gone far enough. Certainly less than even the PM was proposing.

For a more entertaining analysis I would recommend reading Iain MacWhirter’s coloum in The Herald. Among other points, he highlights one of my regular complaints, the overcharging of direct debit customers. When I had a large surplus on my acount at the end of the winter, my supplier doubled the estimated gas use for the spring quarter. I pointed out that they were my energy supplier, not my bank!

Iain also draws some conclusions on public ownership, “We are beset with commercial organisations that are too big to fail, too big to bail, too big to trust, and the state is getting ever more involved in managing them”. He uses banks and the rail franchises as examples and concludes, “it is becoming increasingly clear – and not just on the left – that state ownership will not go away and indeed is perhaps becoming more relevant today than at any time over the last 30 years.”

Could not agree more.

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