2nd Jan 2014 14:04
LONDON (Alliance News) - UK Energy regulator Ofgem's ban on complex energy tariffs has come into force Thursday ahead of further reforms in April.
The changes are part of Ofgem's directive to create a simpler, fairer and more transparent energy market in the wake of a political storm over energy prices which has now become a key area of policy before the next general election.
From Thursday, Ofgem has now banned suppliers from offering complex tariffs, for instance where consumers are initially charged a higher rate, which falls the more energy they use.
Each supplier has now been forced to provide just four energy tariffs for gas and four for electricity, making it easier for the customer to compare tariffs.
From April, a raft of further reforms are also coming into force including suppliers having to tell consumers regularly in writing which of their tariffs is cheapest for them on bills, annual statements and other communications.
The ban on complex tariffs follows the introduction in October 2013 of Ofgem’s rules for fixed-term tariffs. These rules ban suppliers from increasing prices on fixed-term tariffs. Suppliers are also banned from automatically rolling householders on to another fixed-term offer when their current one ends.
“The aim of our simpler, clearer, fairer reforms is to ensure competition bears down hard on prices. Profits are not an entitlement, they should be earned by companies competing keenly to offer consumers the lowest prices and the best service," Ofgem's Chief Executive Andrew Wright said in a statement.
In December, the UK energy supplier E.On became the last of the big six energy firms in the UK to increase its prices.
The company's said that higher wholesale prices, rising costs for maintaining infrastructure, and the cost of the government's green energy taxes are the main reasons for the price rises.
UK Prime Minister David Cameron recently announced a review of energy pricing and competition in the commons, while Chancellor George Osborne announced that customers of the big six energy companies would see an average GBP50 reduction in their bills based on changes to green and social levies.
Opposition leader Ed Miliband has said Labour will freeze energy prices for two years if it is elected to power in 2015, prompting energy companies to warn that they may not be able to fund investments and warnings from critics who say companies may raise prices even more ahead of any freeze.
Energy Price Increases |
| ||||
|---|---|---|---|---|---|
Energy firm | Gas | Electricity | Dual Average | Start date | |
SSE | 8.20% | 8.20% | 8.20% | November 15 | |
British Gas | 8.40% | 10.40% | 9.20% | November 23 | |
NPower | 11.10% | 9.30% | 10.40% | December 1 | |
Scottish Power | 8.50% | 9.00% | 8.60% | December 6 | |
EDF Energy | 3.90% | 3.90% | 3.90% | January 3 | |
E.On | 4.60% | 3.70% | 3.70% | January 18 | |
By Tom McIvor; [email protected]; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
CentricaSSE