Ofgem proposals will force companies to disclose cheapest option

The energy regulator claimed the proposals, published today (19 October), would make the energy market "simpler, clearer and fairer" and they arrive as Downing Street faced a backlash following prime minister David Cameron's promise bring in legislation to force customers on to the cheapest tariffs.

The big six energy companies – Scottish Power, E.ON, EDF, British Gas, SSE, and Npower – are facing increasing pressure to be more transparent over their pricing.

Alistair Buchanan, chief executive of Ofgem, said: "Our plans will put an end to consumers being confused by complex tariffs and will usher in a simpler, clearer, fairer and more competitive energy market for all consumers. We have spoken to thousands of consumers who have helped us shape this package through a period of extensive consumer research, and are very grateful for their input.

"I am glad to say suppliers have already responded with some initiatives, but these don't go far enough. Ofgem is determined to press forward with proposals to deliver for consumers the most far-reaching shakeup of the retail energy market since competition was introduced."

Ofgem wants energy firms to show their cheapest tariff on bills, as well as for customers to default to the cheapest option at the end of fixed-term contracts.

Another proposal is that it intends to work with suppliers to trail proposals to provide vulnerable consumers – as well as those who haven't switched for a long time – with information about the cheapest tariff for them, across the whole market.

Ofgem is also proposing to limit the number of core tariffs offered by energy suppliers while "dead" tariffs no longer available will be banned to reduce the overall number of tariffs across the market.

The proposals are an extension of those unveiled last year, which, in essence, simplify tariff structure and limit core tariff numbers across the entire market.

The proposals are now to be scrutinised by the energy companies over an eight-week period of consultation before a possible change to legislation.

Ofgem wants to introduce the reforms by the summer of 2013.

A spokesperson for Npower said he broadly welcomed the proposals, but added that "cheapest is not always best" and pointed to the individual quality of service offered by energy suppliers.

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This article was first published on marketingmagazine.co.uk