20th Feb 2015 12:57
LONDON (Alliance News) - UK energy regulator Ofgem Friday piled more pressure onto electricity and gas suppliers to assist customers in getting the best deal possible, by ordering suppliers to be more transparent with their branding and deals.
Ofgem said suppliers using white labels - when a product is produced by one company and sold by another - must inform customers of their cheapest tariff regardless what brand it is sold under.
"Ofgem has today set out final proposals for regulating suppliers who sell energy using white labels in the domestic energy market. From July, suppliers will have to be more transparent and tell customers what their cheapest tariff is regardless of the brand they use," it said.
Under current Ofgem regulations, suppliers already have to tell customers about their cheapest deal, but until now this rule hasn?t extended to white label tariffs.
Current white label deals available include J Sainsbury PLC selling energy via a partnership with Centrica PLC's British Gas and Marks and Spencer PLC selling energy through a partnership with SSE PLC.
Under the regulators new proposals, suppliers will be able to have as many white label partnerships as they want, which Ofgem believes will make it easier for new businesses to enter the energy market, something it has been encouraging for a long time.
"It is important that consumers are given the complete picture about all their suppliers? tariffs. That is why we are acting to reduce barriers to white labels entering the market and to ensure suppliers have to tell consumers what their cheapest deal is, whatever brand it is marketed under," said Rachel Fletcher, a senior partner at Ofgem.
The energy market, particularly the 'Big Six' suppliers, has been under intense review recently by Ofgem, the anti-trust regulator Competition and Markets Authority and the UK government's Department for Energy and Climate Change.
The Big Six comprises EDF Energy, E.On, nPower, SSE, Scottish Power Ltd, which is part of Spain's Iberdola Group, and Centrica's British Gas.
On February 11, the CMA said customers were paying considerably higher rates on variable tariffs compared with fixed tariffs, which came after the Department of Energy and Climate Change launched the 'Power to Switch' campaign to encourage people in the UK to switch energy suppliers.
The DECC said there are 13.5 million households in the UK that could save more than GBP200 per year by switching suppliers.
In January, Ofgem urged consumers to switch to a fixed-price energy tariff, despite major firms committing to introducing price cuts to their variable tariffs in February, and said independent suppliers, rather than the Big Six, are offering the cheapest deals.
Ofgem also said in January that the Big Six would see a small increase in profits during 2015, because future wholesale gas prices have fallen by more than the cuts made by the companies to household bills, further stinging the larger suppliers.
SSE shares were down 0.7% to 1,523.60 pence per share on Friday afternoon while Centrica shares fell by 1.7% to 252.86 pence.
By Joshua Warner; [email protected]; @JoshAlliance
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