02 January 2014
Ofgem’s ban on complex energy tariffs has come into force today 2 January 2014, in a bid to make the energy market ‘simpler, fairer and clearer’ for consumers.
The ban includes tariffs such as those where the consumer is initially charged a higher rate, which falls as more energy is used.
The reforms also mean that once a consumer has decided how they want to pay for energy they will have just four tariffs to choose from for gas and four for electricity, from each supplier.
Under Ofgem’s reforms, suppliers must structure their tariffs using only a single unit rate and, if they choose, a standing charge. Some suppliers have tariffs with a zero or low standing charge, and if consumers consider these tariffs better suit their needs, we expect that suppliers will keep offering them.
The ban on complex tariffs follows the introduction in October 2013 of Ofgem’s rules for fixed-term tariffs. These rules ban suppliers from increasing prices on fixed-term tariffs. Suppliers are also banned from automatically rolling householders on to another fixed-term offer when their current one ends.
Andrew Wright, Ofgem chief executive, said: ‘The aim of our simpler, clearer, fairer reforms is to ensure competition bears down hard on prices. Profits are not an entitlement; they should be earned by companies competing keenly to offer consumers the lowest prices and the best service.
‘Now it is up to suppliers to build on our reforms to restore consumer confidence in the energy market. There are good signs that they are taking up this challenge.’