The government has unveiled a number of additional measures designed to encourage consumers to switch their energy provider and help to drive down energy bills.
The coalition is a big supporter of energy regulator Ofgem’s reforms to make the market fairer and more transparent for consumers through the simplification of tariffs and introduction of obligations for suppliers.
The legislation, which will be backed through the government’s long-awaited Energy Bill, will see customers moved off poor-value “dead” tariffs, reduce the number of core tariffs offered by gas and electricity providers to four for each fuel, and make bills easier to understand.
Now, in a government response to the discussion document ‘Ensuring a Better Deal for Energy Consumers’, Energy and Climate Change Secretary Ed Davey has revealed that the government is pushing for further legislation to help protect consumers and encourage them to switch supplier.
Mr Davey set out a number of proposals, which he says will hopefully convert consumers who have been loathe to switch in the past, and convince them that there are tangible savings to be made.
This can be achieved by ensuring customers on uncompetitive legacy tariffs and people who are on fixed deals are automatically moved to their supplier’s cheapest variable rate tariff – in the latter case, when the fixed deal ends.
Energy suppliers will also have to inform customers about the cheapest deal that suits their individual preferences and then give them the opportunity to switch.
In a bid to bring the energy market “into the 21st century”, Mr Davey says that energy suppliers should provide information to consumers in a format that would be readable on a smartphone or tablet, while Ofgem will be granted the power to ensure that customers can be directly compensated if their energy provider breaks any of the rules.
Feeling the pinch
Mr Davey pointed to government figures which show that the majority of households are put off switching supplier because of confusing tariffs and difficulty in comparing products from suppliers.
“When consumers are feeling the pinch, it’s not right that 84% of households, including the most vulnerable, are put off switching or engaging in the energy market,” he explained.
“Fundamental to overcoming this is Ofgem’s reform of the retail energy market. This will make the market simpler and fairer, and we’re using the Energy Bill to make sure these reforms are not delayed or frustrated.”
However, Mr Davey noted that the government and energy sector can do more to put the best deals “on a plate” for people, and announced a new £900,000 fund to set up a Big Energy Saving Network, which will help to co-ordinate and provide advice on switching, tariffs and government support, and ultimately help to reduce consumers’ energy bills.
The outreach network, which will include Citizen’s Advice Bureau, Energy Saving Trust, Age UK, National Energy Action and Action with Communities in Rural England, will be designed to help the most vulnerable people across the country.
“Trusted experts will provide meaningful, comprehensive advice on getting the best deal and support from government programmes. I want to turn the non-switchers into savvy switchers,” Mr Davey concluded.
Further information on the reforms and the effect on consumers is set to be announced when the government publishes additional details on the Energy Bill in early June.