OFGEM: 5 ways we’ll make energy easier

How is Ofgem going to shake up the energy market.

by Maya Robert on 7 Mar 2013

In this article for uSwitch, Andrew Wright, Senior Partner for Markets for Ofgem tells us how it intends to improve the energy market to make it fairer on its customers.

Ofgem: five ways we'll make your bills easier

What will energy customers get from a simpler, clearer and fairer market?

For a small number of customers the GB energy market works well. With the help of online price comparison sites, such as uSwitch, they can hunt down the cheapest deals online and save money. But even for these customers, the small print can be confusing, meaning you may not end up on the best deal.

The majority of customers don’t even get this far. A large number of them are put off by too many complex tariffs, poor supplier behaviour and a lack of transparency about alternative offers. The aim of our reforms for the energy retail market is to build the trust and confidence of customers. We want them to engage more effectively in the market so they can hold suppliers to account for their prices and customer service.

Simple tariffs

We are proposing a set of reforms for a simpler, clearer and fairer market making it far easier for customers to compare offers.

We will make things simpler by restricting suppliers to just four simple core tariffs per fuel (electricity and gas). This will result in a dramatic reduction in the number and complexity of tariffs in the market.Some disengaged customers will be on unattractive ‘dead’ tariffs –that are no longer available to new customers. We will ensure customers on these deals pay a lower price, by banning dead tariffs and requiring suppliers to switch customers on them to their cheapest variable deal if it offers better value.

Making information clearer

We will also ensure that annual statements on consumers’ energy use and what it costs them are clearer and easier to understand, so they act as a yearly prompt for them to think about whether they are on the best deal. Suppliers will also have to use a new Tariff Comparison Rate in their marketing, such as in newspaper adverts, or on switching websites. The rate will show the cost of the deal in a simple pence per kilowatt hour number.We will make it much easier for customers to compare deals, for example, by requiring suppliers to show their cheapest tariffs on bills. Discounts for dual fuel and paperless billing will also be standardised across all tariffs.

Fairer treatment

Customers deserve fairer treatment from suppliers which is why we are introducing new standards of conduct for suppliers to meet. These standards, like the rest of our reforms, will be backed up with our enforcement powers – meaning we will be able to act against suppliers if they break the rules. This can include fines.

When will the changes be in place?

These are the most radical reforms to the retail market since competition began and we are now in the final stages of putting them in place. The standards of conduct are due to take effect from this summer. The cap on tariff numbers and our other reforms that require changes to companies’ systems are due to take effect from winter 2013-14.

Suppliers tell us that they are serious about wanting to restore customer confidence in the market. Our message is that they should back our reforms now. Only through a simpler, clearer and fairer market will we see more customers switching back on to energy and engaging again, by finding out what the best deal is for them.

Learn more

More information about the Ofgem reforms can be found here: http://www.ofgem.gov.uk/Media/FactSheets/Documents1/Factsheet%20115%20getting%20the%20best%20deal_WEB.pdf

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Ofgem

Join the conversation

Fairbobby

Fairer treatment? All this is nonsense and a blind to cover Government misappropriations from the ordinary Citizen. What price the 10% increase of one’s energy bill without due notice or permission to finance the monumental scam perpetrated by the government on its helpless citizens. Only lunatics, mental defectives or politicians can possibly think that hundreds upon hundreds of wind turbines can possibly supply any significant amount of electricity. One has to conclude that politicians are either abysmally ignorant or criminally avaricious to pursue such policies. In the meantime a few politicians, their relatives and co-conspirators become increasingly wealthy whilst consumers become significantly poorer.
crampster

I feel that Ofgem should look at the fact of changing suppliers can cost up to £30 per fuel ( British Gas being an example).I believe this puts many people off switching,it’s about time something was done.

http://www.facebook.com/people/Amanda-Davis/100002132207814 Amanda Davis

when ever i look into it i check that the difference is more than the cost of switching, which not always is it

crampster

No,I agree with you,that is why I think ofgem should do something about It,I also think all utilities should be not for profit companies (must not go back into public hands)and any profit they do make paid back to there customers.

Jo Westlake

These measures are seriously bad news for a great many people. Getting rid of the no standing charge tariffs will cost certain people a lot of money. In the situation where someone uses electric night storage heating and has a gas fire as a back up for when it is really cold the gas fire will no longer be viable. In the situation where someone has solar pv they would currently switch off the gas from about Easter until October and just use electric. Losing the NSC tariffs really disadvantages these people as they will be paying far more than they currently pay.
Surprised

Fairbobby, what planet are you on? In what set of energy company accounts can you find government control where they could possibly “misappropriate”from you? Energy companies are private companies run by a board of directors, with the aim of making money for their shareholders..

Fairbobby

From Fairbobby,
I refer you to my second entry.

charlielee1

Getting the energy companies to moderate their prices is the only thing OFGEM should do that would please every one Every one that is, apart from people who are making pots of money from fleecing their customers
Pete

I had a company contact me saying how much they could save me on my gas bill and after much chasing around they offered me a deal with EDF, I was not keen on bothering to transfer so I rang British Gas and the straight away gave me a better deal than EDF. Stayed with BRITISH gas! Pleased to see Fairbobby is as cynical as me about politicians.
Anon, northeast

I work for one of the big 6, and there are always customers who are unhappy with what you do for them no matter what. The cheapest tariffs are always the fixed deals, which normally have exit fees and therefore if companies are going to switch people onto these then the customer switches supply, it’s no longer going to be the cheapest option.
And guess what we’re doing on the back of simplifying bills? Well, telling 6+ million customers in writing that we’re simplifying tariffs isn’t exactly free, so of course we’ll put the prices up.
Anon, northeast

Oh and don’t forget the empty properties where a customer’s died… Since ofgem insist we all do away with the high/low rates and just have flat rate+ standing charge, the Estate is going to end up paying a fortune for the house to sit empty while they fail to sell it due to the current climate. Don’t blame the energy companies, we just do what ofgem tell us.
Billy Bear

This proposal, once in place, should improve consumer chances of ensuring they get on the right deal for them-the most cost effective one. I myself having been in my current property for 7 yrs, have remained with Southern Gas/Electric.. Simply not knowing, despite trauling comparison sites endlessly, which way to turn for the best. The whole system at the moment is just simply confusing.. When all we want to know is who is the cheapest provider in our area. So yes, bring it on where it’s all noted down simply in blk&white plz!!
Fairbobby

For the information of Surprised
Looking at a recent bill from British Gas I find they kindly supply me with a graph showing where the money goes, as follows:-
56% gas bought from wholesale markets:
21% delivery to your home:
10% Government obligations and taxes(inc. Green levies and social support):
8% operating costs:
5% profit
It is only from the last 5% that dividend is paid to the shareholder.
I took up the issue with British Gas and informed them I had not agreed to this payment and objected to a public company collecting taxes on behalf of the Government. They were sympathetic but said they had no choice but to do what the Government ordered.
Hope you find this information enlightening.
Reg

I agree that the srapping if NO STANDING CHARGE tariffs for low/very low/energy efficient users would be seriously bad news.However if I have understood Andrew Wright correctly-
“You will only STAY on a dead tariff (could be NSC tariff) if it is still cheaper than your suppliers standard variable rate tariff.” and “We will ensure that customers on dead tariffs pay a lower price,by banning dead tariffs and requiring suppliers to switch customers on them to their cheapest variable rate deal IF IT OFFERS BETTER VALUE”
So if you are already on a NSC tariff and it is cheaper thanyour suppliers standard variable rate tariff then you can STAY with the NSC deal.
http://www.facebook.com/paul.parkinson.520 Paul Parkinson

What a joke. I am a very low user suddenly my npower gas bill is gunna rise from £10 to £145 a year now please tell me how this is supposed to be fairer. I have now changed suppliers but still out of pocket by £50. this government sucks and stuff yr ofgem