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Plans to simplify energy market could lead to higher bills

EDF and SSE are among the energy companies which will be scrapping tariffs and potentially exposing their customers to higher prices

electricity billEnergy regulator Ofgem’s Retail Market Review scheme aims to simplify energy plans in order to reduce consumer confusion and add clarity to the market.

The initiative has led energy companies such as British Gas, npower and SSE to reduce the number of tariffs available to a maximum of four and redesign their bills.

The move has prompted energy experts to warn that certain households, particularly those with low energy consumption, could face significant price rises as two tier plans are dropped and replaced with a standing charge.

‘Cack-handed reforms’

Shadow energy secretary Caroline Flint criticised the move: “This is yet more evidence that David Cameron’s cack-handed reforms to energy tariffs have completely backfired.

“He promised to force the energy companies to put everyone on the cheapest tariffs — but now it looks like thousands of Londoners will be paying more than they were before.”

Hundreds of thousands could be affected

As a result of the reforms, close to 175,000 customers on SSE’s Atlantic brand will need to choose a new plan. Customers on an Atlantic deal received a letter from the energy supplier informing them of their options should they choose to stay with SSE.

The energy provider has admitted that scrapping its Atlantic tariffs may result in a certain number of consumers paying more.

Other energy companies are expected to follow suit in the coming months.

A ‘simpler, clearer and fairer’ energy market

Ofgem has stated that the initiative will guarantee a “simpler, clearer and fairer” energy market and will help consumers understand their expenditure.

A recent survey carried out by uSwitch.com revealed that 82% of respondents believe energy bills are the most difficult household bills to understand. The study, which asked consumers about a range of bills, saw energy providers rated bottom of the table when it comes to overall bill clarity. Last year, UK based customers were overcharged by £6.7bn across all household bills.

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