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Removal of the four core tariff cap

How have suppliers changed their deals since Ofgem’s relaxation of the four tariff rule?

ofgem has relaxed its four core tariff rule

The Competition and Markets Authority’s (CMA) investigation into the energy industry ended earlier this year with suggested remedies for the energy market, including removing the four tariff restriction imposed on suppliers.

Previously, suppliers could only put four tariffs each on the open market, in a bid to make choosing a tariff easier for consumers — however many believed this stifled competition and the limited choice held back consumers from getting tailored, and better, deals.

In response to the suggested remedy, Richard Neudegg, Head of Regulation at uSwitch.com said:

“The CMA is right to conclude that Ofgem’s four core tariff cap has actually restricted consumer choice. Relaxing these restrictions will benefit consumers by boosting innovation, choice and competition.”

Ofgem relaxed this rule due to the influence of the CMA’s investigation, and as predicted, suppliers have been increasingly keen to offer new and innovative deals to consumers.

In July, “big six” supplier npower became the first supplier to act on the new rules by launching a competitive tariff at £786 a year (no longer available), bringing its total tariffs on the market to five. Since then, other suppliers have followed suit.

Exclusives

Rather than simply increasing the number of tariffs on the market, some suppliers have chosen price comparison websites to offer exclusive and highly competitive tariffs.

This has included a number with uSwitch from suppliers like British Gas, npower and Bulb — providing deals only available on the site or extra incentives not available from the supplier themselves.

Innovative tariffs

The market has also seen some more unusual tariffs emerge recently; British Gas came forward with their deal offering free energy at weekends to those with smart meters: customers can get free electricity between 9am and 5pm on Saturdays or Sundays.

With more precise usage data becoming available from the smart meter rollout, suppliers may be able to take this one step further and generate more specific deals to offer groups of consumers.

ScottishPower has also released details of their ‘PowerUp’ system: an energy buying model similar to how people buy petrol at petrol stations. Current ScottishPower customers will be able to buy packets of energy in kWhs to then use up and buy more of when it’s needed.

Consumers should be cautious with these kinds of tariffs however, as standing charges and high kWh rates could mean that you’re better off on a different deal, despite how appealing the initial offer may sound.

Overwhelmed by choice?

As the number of plans increases, consumers could feel overwhelmed once more by the amount of deals to choose from — you might want more from a plan than just the biggest saving available.

To better the find the deals you’re really after, the uSwitch energy comparison allows you to filter for plans by particular suppliers, renewable energy, and added rewards and extras, amongst other variables.

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