Government has secured a landmark deal with Britain’s six largest energy suppliers that will see them annually inform customers of what tariff is the cheapest and provide them with details of how they can switch.
Speaking to BBC Radio 5 Live, Deputy Prime Minister, Nick Clegg, explained why Government is implementing the new scheme. He said: “You stick to a tariff, you think it’s all a bit complex, you get lots of stuff through the letterbox. You don’t really then make the effort to take the time to look at how you’re using your energy and what tariff would be best for you.”
In a speech later today, the Deputy Prime Minister is expected to outline the purpose of the deal and how it will be implemented, hitting back at growing scepticism around green measures and rising energy bills.
Currently there are more than 120 different tariffs in the market and recent studies have found out that seven out of ten people are on the wrong tariff. The average customer tends to stay on their tariff for years, despite the amount of energy they use varying over time. In 2010, 75 percent of people did not change their tariff.
Deputy Prime Minister Nick Clegg said: “We need to get bills as low as possible. I know that many families are struggling with rising energy bills. We can't control volatile world energy prices. But we can still help people get their bills down.
“So I can announce today that we have secured a landmark deal with the six big energy companies who cover 99 per cent of customers, to give customers a guaranteed offer of the best tariff for them.
“Right now, seven out of 10 customers are on the wrong tariff for their needs, so are paying too much. Yet people rarely switch, despite the fact some families could save up to £100 a year.
“As of this Autumn, your supplier will have to contact you with the best tariff for your needs. And if you call them, they’ll have to offer you the best deal too.
“We’re also working with energy companies to put special barcodes on energy bills. You’ll be able to scan them with your smartphone to get quotes and switch tariff or supplier in a matter of minutes.
“Plus we’re working with consumer groups to make it easier for people to club together and switch supplier. Consumers will be able to use their collective purchasing power to bring down bills.
“We want to see consumers saving money and engage with the energy they use. Precisely the kind of thrift that is good for pockets as well as the planet.”
The deal will mean that, when customers’ contracts are coming to an end, energy companies will be obliged to write to them to inform them of the best tariff available. Those most vulnerable to high energy bills, such as pensioners, will be contacted every six months and customers will be able to call the companies anytime, in order to find out the cheapest available tariff.
Audrey Gallagher, Director of Energy at Consumer Focus, welcomed the news but reiterated that Government must do more to control spiralling energy bills, commenting: “This is probably only going to work if this is part of a much wider strategy to really help people engage more effectively with their energy bills, really cut their costs and get the best out of the energy market.”
Whilst Friends of the Earth's Energy Campaigner Paul Steedman accused Government of “papering over the cracks” with its latest measures, commenting: “Clegg's admission that we can't control world energy prices, points to the real problem for energy customers – that just six big energy firms have us hooked on dirty, expensive, imported gas.
“The Big Six's addiction to fossil fuels saw bills rise by up to 18 per cent last autumn – but despite this the Government wants to fuel their habit by building yet more gas-fired power stations.
“We need Ministers to make our homes more efficient and to switch to clean British energy from the wind, sun and waves we have in abundance.”
Juliet Davenport, CEO and founder of Good Energy, a 100% renewable electricity supplier said: “Today's announcement is welcome, but Government should be looking to these suppliers and asking how others can learn from their best practice.
“Nick Clegg is right in one other sense – investing in green today is necessary for us to meet the challenges of tomorrow. It’s the government’s responsibility to ensure that the UK is in the best possible place to do that by investing in renewables, to deliver us the secure, stable and sustainable energy that is the essential for economic growth.”