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Ofgem publishes energy market reforms

  • Gas

    The new reforms will limit energy compnies to just four core tariffs per fuel type. Image credit: Dean Strelau/Flickr

Ofgem has today published in detail the reform changes that it trailed last October in an attempt to deliver a “simpler, clearer and fairer energy market.”

The reforms published by the energy regulator include:

  • Limiting suppliers to four “core tariffs” per fuel (collective switching schemes will be able to negotiate bespoke prices).
  • Dual fuel and online account management discounts will remain and not be considered a “core tariff”.
  • Most tariffs will have a standing charge and single unit rate.
  • Prohibit poor value “dead” tariffs. This will ensure that no customers are left behind on poor value, out of date tariffs.
  • Suppliers are required to offer customers details on the cheapest tariff available to them.
  • All information sent to customers must be simplified, personalised and more engaging.
  • Include a new tariff information label and use a new Tariff Comparison Rate (TCR) to help switching.

Ofgem envisages that it will proceed to implement the reforms listed above as soon as this summer, barring an appeal. The energy regulator is confident that the main tariff reforms will all be in place by December 2013 but is also urging energy suppliers to deliver the reforms sooner as the policy position is now settled.

Commenting on the detailed rule changes, Andrew Wright, senior partner for markets at Ofgem said: “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 supplier 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.”  

Ed Davey, secretary of state for energy and climate change, added: “It’s simply scandalous that over eight in ten of households, including the most vulnerable, are put off switching or engaging in the energy market.”

Davey continued: “These reforms are the fastest way to speed up delivery of simpler bills and a fairer system.

Greg Barker, minister for energy and climate change, added: “I urge energy suppliers to get on with it, and make the energy market easier for householders to navigate.”

Responding to Ofgem's Retail Market Review annoncement, Energy UK said: “Energy UK supports the thrust of Ofgem’s proposals. It has taken a lot of work to get to this stage. The new rules contain a lot of detail and have only just been finalised but the industry is committed to implementing changes as quickly as we can.

“These are major changes to the market. The reforms need to be allowed to bed in, with a period of stability for consumers. The impact should also be monitored closely so we can learn for the future.”

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