Energy industry set for major shake-up

A blue gas flame
Gas - there's change afoot
"These proposals will put an end to consumers being bamboozled by complex tariffs and deliver choice that consumers easily understand" Alisatair Buchanan, Ofgem
  • | by Kristian Dando

The energy secretary, Ed Davey, has revealed further information of government plans to make gas and electricity companies switch people onto the cheapest tariff according to their personal situation by 2014.

Furthermore, the energy firms will have to drastically reduce the amount of tariffs they offer to just four.

The energy companies will be forced to offer two “core tarrifs” that will be offered by all the companies, as well as two additional tariffs unique to them.

Ofgem, the energy watchdog, cautiously welcomed the measures.  “These proposals – based on Ofgem’s Retail Market Review (RMR) - will put an end to consumers being bamboozled by complex tariffs and deliver choice that consumers easily understand," said Ofgem chief executive Alisatair Buchanan. "We are also proposing much simpler information for consumers such as making suppliers give consumers their cheapest tariff on their bill. Ofgem is also going to enforce fair treatment of consumers using licence standards backed by fines.”

Meanwhile, Mark Greening, head of home services at, was more sceptical: "While this announcement is welcomed, it does little to tackle some of the root problems in the energy market. Having a limit of four tariffs per provider for gas and electric will cut down on confusion but it still means 48 potentially complex pricing structures to choose from - and that's just from the 'big six'. It doesn't necessarily stop providers from creating complex tariffs and the campaign for ongoing tariff simplification must continue.”

He also suggested that while tariffs would be simplified, they wouldn’t necessarily get cheaper. "The announcement also does nothing to regulate overall pricing in the energy market. If anything, we are likely to see the very cheapest deals disappear once energy providers are compelled to move large numbers of customers onto their lowest tariff. Whether we will all pay less for our energy as a result of this announcement remains to be seen.

"The Government's brave new energy world is still likely to resemble the Wild West, only the sheriff will have a few new laws to try and enforce order,” he continued. “Customers will still need to pro-actively manage their own energy arrangements if they are to be sure they are getting the best deal available on the market."