Mixed response to Ofgem proposals


Utility bill

Ofgem proposals for a "simpler and fairer" energy market have drawn a mixed response from consumer groups, as the regulator called on suppliers to adopt them "as quickly as possible".

The regulator has told suppliers to limit themselves to four "core" tariffs each for electricity and gas and for each type of payment, while all information suppliers send to consumers must be "simplified, more engaging and personalised".

Suppliers will use a new Tariff Comparison Rate (TCR), which the regulator claims will help to simplify the selection process for consumers. And new enforceable standards of conduct will enable Ofgem to take action against suppliers where they have failed to treat customers fairly.

Ofgem launched the last statutory consultation before it decides whether to implement "the most radical reforms to the retail market since competition began". The reforms are expected to come into effect from the summer, but Ofgem said there was nothing to stop suppliers moving to deliver them now. Ofgem senior partner for markets, Andrew Wright, said: "Our reforms today are the blueprint for the simpler, clearer and fairer energy market that consumers deserve. This will provide them with the choices they want alongside the simplicity they need."
However, consumer watchdog Which? said it was "hugely disappointing" that Ofgem had pressed ahead with the TCR format, with Which? executive director Richard Lloyd saying: "While these new rules will help make the market simpler and fairer it's hugely disappointing to see the regulator sticking to its fundamentally flawed idea of how energy prices should be presented. This will fail to help people find the best deal easily and could even mislead millions into paying over the odds for their energy.

"Energy prices are the biggest worry for consumers and our research shows overwhelmingly that people find it easier to spot the cheapest deal for them when prices are presented clearly, simply and consistently - just like on the petrol station forecourt. As Ofgem continues to plough ahead, ignoring what works for consumers, we call on the Prime Minister to intervene again and make good his promise to help hard-pressed households with their energy costs."

Consumer Futures director of policy and external affairs Adam Scorer said: "For a long time the energy market was a perfect storm of higher prices, manufactured complexity and consumer confusion. We welcome today's announcement. Everyone wants a simpler more trusted market. There is a lot in this reform package that could bring that closer. Now Ofgem needs to get on and implement it and energy companies need to respond to the spirit of the reforms."

Ann Robinson, director of consumer policy at uSwitch.com said: "This is now the first step in the process and consumers should soon start to see some of the complexity and the confusion stripped away. There are still some crinkles in the reforms to be ironed out. For example the TCR will actually confuse consumers rather than help them. And there are some areas where we would urge Ofgem to push harder - for example we would like annual statements to look more like annual renewal notices, giving consumers a clear prompt and all the information they need to shop around."

Trade association Energy UK said: "Energy suppliers have already pressed ahead with providing customers with simpler, clearer tariffs. Our members have dramatically reduced the number of tariffs, simplified structures and pledged to help all customers move to the deal that suits them best. Energy UK supports the thrust of Ofgem's proposals."

Energy Secretary Ed Davey said: "I welcome the continued progress of Ofgem's reform of the retail energy market. It's simply scandalous that over eight in 10 of households, including the most vulnerable, are put off switching or engaging in the energy market. That's why I'm backing Ofgem's reforms to make it easier to compare tariffs and switch suppliers. These reforms are the fastest way to speed up delivery of simpler bills and a fairer system. This comes on top of moves in the Energy Bill to give Ofgem new powers to crack down on any rogue switching sites, and to ensure when energy suppliers break the rules, customers can be directly compensated."

© 2013 Press Association