Proposals for simpler energy tariffs 'could hit low income households'

BillsAfter news that even an accountant couldn't work out energy bills, the industry regulator Ofgem has issued proposals for simplifying energy tariffs to give the consumer a fairer deal.

The independent price comparison service has welcomed some of the proposals but argued that they could also mean low income households could actually end up being penalised.
Ofgem have made several proposals about simplifying the market for consumers - the main one being to introduce one standing charge for all standard tariffs.
Mark Todd, director of the independent price comparison service, explains their concern over this: "There is a danger that these proposals will actually end up hurting those who are low energy users either because they are struggling to pay their bills or because they are being environmentally-conscious.
"By introducing just one standing charge for everybody, it means the pensioner in the small flat pays the same as the millionaire in the mansion and that is completely unfair. Low income households could end up being hit for six.
"Furthermore, what OFGEM is suggesting would effectively wipe out online and green tariffs unless they are fixed-term ones. However, the proposals would still allow energy suppliers to complicate things within the confines of those fixed-rate deals by offering all sorts of different incentives or exit penalties."

There are however certain proposals which appear at least to make a lot of sense. Namely forcing suppliers to publish a standardised metric for their fixed term contracts - almost an APR style comparison so consumers can more accurately assess which are the best deals.
Mr Todd added: "At the same time, it is only fair to point out that there are some good things in these plans. Anything that simplifies the existing morass of tariffs has got to be good news for the customer. A single unit charge will enable to see the cheapest tariff at a glance and banning automatic roll-overs onto new contracts is also welcome as it is one of the main complaints we hear.
"These proposals are heading in the right direction but still need work. Yes, we want a simpler, fairer, more transparent system but it can't come at the cost of penalising those who use the least energy."
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