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Ofgem delivers reforms to address on-going consumer issues

Energy regulator starts to roll out market changes

ofgem logoToday Ofgem published its long-awaited rules for delivering what the energy regulator calls a “simpler, clearer and fairer energy market.”

The changes, which are based on two years of research with energy users, deal with the issues of “widespread consumer confusion over energy tariffs, poor supplier behavour and lack of transparency which is stifling competition” have now been confirmed.

Simpler, Clearer, Fairer

The final licence proposals are based around three pillars:

  • Simpler – making it easier to compare suppliers
  • Clearer – introducing new tools to help switching
  • Fairer – building trust in the energy market

What this means for consumers is a reduction in the amount of tariffs any one supplier can offer, and so-called “dead tariffs” will be banned unless they offer value for money.

Suppliers must give all customers bespoke information on the cheapest plan for them, and must use a new Tariff Comparison Rate whenever possible.

Energy providers are now held accountable to enforceable standards of conduct, with Ofgem holding powers to take action against failing suppliers.

A blueprint for a better market

Andrew Wright, Senior Partner for Markets at Ofgem, said of the announcement: “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.

“They have been delivered following two years of engagement with consumers and industry in the most comprehensive ever review of the retail market.

“Now that our proposals have been confirmed it also gives suppliers a unique opportunity to forge ahead, building on the progress some have already made, and begin to restore trust in the energy market. Further hesitation will only delay benefits for consumers.”

‘Time for talk is over’

Ann Robinson, Director of Consumer Policy at, says the reforms are welcome but there is more work to do when it comes to educating consumers.

“The time for talk is now over – the real work starts today. There is now a general acceptance that consumers need and deserve a competitive market that works for them. 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.

“However, simplicity and information are only part of the picture. Consumers need to feel confident, which is why we would urge Ofgem to go the extra mile not just with these reforms but in now educating consumers about how the market works and how they can get the best value. Educated, confident and empowered consumers are key to sparking a healthy, competitive market.

“There are still some crinkles in the reforms to be ironed out. For example the Tariff Comparison Rate 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.

“However, Ofgem has delivered a strong set of reforms and now it is up to the industry to start to deliver. The proof of this pudding will be in the eating though and we will all know that Ofgem has succeeded when growing numbers of households are able to use competition to get better value and cheaper energy bills.”

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