New rules on fixed energy tariffs

Energy pricesNew rules have come into force which ban energy firms from hiking prices for customers on fixed tariff deals.

Energy regulator Ofgem said providers would also be prevented from automatically rolling customers on to another fixed term contract when their current one ends, which can tie them in with hefty fees and prevent them from comparing the market.

The rules, which form part of wider industry reforms to ensure suppliers treat consumers fairly, come into force today after the watchdog found many providers were able to raise fixed contract prices.

For example, if fixed deals were linked to standard tariffs, they would rise as standard prices increased.

Ofgem said consumers will now have certainty that "fixed means fixed" and that the price and conditions they sign up to will not be changed.

Customers will also be rolled on to variable rate deals when their fixed contract ends, which allow them to switch without penalty.

They will be given more than 40 days' notice that deals are coming to an end to allow time to search for the best deal, during which time there will be no exit fees payable if a customer decides to switch.

The new rules apply to any fixed-term contracts taken out on or after July 15, although the ban on price changes does not apply to so-called tracker fixed-term deals which follow an independent index, or if structured price rises have been set out clearly in advance.

Andrew Wright, chief executive of Ofgem, said the reforms aimed to make it easier for consumers to "vote with their feet ".

"Our reforms seek to give consumers the tools they need to find the best energy deal for them and to ensure that suppliers have to treat them fairly," he added.

The industry overhaul will also see simpler tariff rules coming into force in December limiting suppliers to four core tariffs per fuel, which will apply to each payment type.

Providers will also have to introduce a single standing charge - although this can be zero - and single unit rate in a move that will see complex two-tier tariffs axed.

Reforms simplifying information to consumers will be introduced by the end of next March, while all customers on expensive "dead tariffs" that are no longer marketed must be switched to cheapest variable rate deals by June 2014.