Ofgem: all power to energy consumers

Ofgem acts to make energy tariffs clearer and fairer - but not necessarily cheaper.

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Last Updated: 31 Aug 2010

The energy watchdog has proposed a new code of practice to make energy tariffs more transparent for consumers, and help sort out ‘unjustified price differences' across payment plans. The aim is to give retail and small business customers greater control over how they pay for their energy. To anyone who's ever felt bamboozled by their energy bills - or how hard it is to get any clarification over what it all means - this news will be welcome.

The new proposals, set to come into play in the autumn following consultation with the energy firms, will force suppliers to provide consumers with a range of measures to make their rights easier to understand: from a standard annual statement with a reminder of the customer's right to switch, to simplified information on tariffs to make price comparisons easier. The regulator is also planning a crackdown on doorstep sales - any bout of arm-twisting will have to be followed up by a written statement proving that the offer made is better than the customer's current deal.

When the watchdog probed the retail gas and electricity markets last year, it found no evidence of price collusion among providers. But there were discrepancies among the different services: people on pre-payment meters paid £125 more on average than direct debit customers at the beginning of 2008. Last year Ofgem found the cost of servicing a pre-payment meter is £85 a year. The discrepancy hardly seems fair when you consider this payment method tends to be sold to the providers' less solvent customers. The measures will also address such ‘discrimination'.

SME owners will be happy too: Ofgem also proposes giving businesses clear contracts with no automatic rollover when the agreement ends. This is no small issue. Earlier this month, the Forum of Private Business found that 74% of SMEs had had problems with one or more of their utilities suppliers, and that for 59% these problems had worsened in the past six months. Gripes included ‘unjustifiably high' energy prices and poor customer service, as well as finding themselves tied into unfavourable deals.

SME owners also reported a lack of confidence in Ofgem - a £35m-a-year regulator which has quietly presided over a sustained period of huge energy price rises. Looks like it will have to rectify that before energy customers will really cheer.

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