Energy bill reforms 'don't go far enough'

 

Energy watchdog Ofgem this week published new proposals to simplify gas and electricity bills. The proposals include a no-frills tariff with a single standing charge – set by the regulator – and a simple unit price.

It has also proposed that more innovative tariffs have protection against price rises for the duration of the deal. But Ofgem's plans are not enough, according to Professor Catherine Waddams, of the University of East Anglia's Centre for Competition Policy.

Ofgem said its research found that more than 70 per cent of consumers tested said they would be more likely to switch if tariffs were made simpler.

But Professor Waddams said the university's own surveys did not support that. "Some households are just not the switching type," she said. "Some people are inactive across most markets where they need to take the initiative to switch – such as telecoms, bank accounts, mortgages and insurance."

She believes that energy prices will only improve for consumers if new competitor companies challenge the big firms. "If, as many suspect, the companies are not competing vigorously with each other, these changes alone are unlikely to affect their prices and profits except through new entry to undercut the current big six," she said.

Meanwhile new figures from Consumer Focus show that fuel poverty – when someone has to use a tenth of their income to heat and light their home – is now hitting a quarter of all UK households.

That's an alarming increase from last year, when one in five households were reportedly in fuel poverty. The new figures suggest that more than 5.1m households in England and 41 per cent of households in Wales now suffer from fuel poverty.

"The Government is pushing people further into poverty with its austerity agenda," said Mike Jeram, head of business and environment at the union Unison. "It should be protecting people from unsustainable prices."

In 2011 the big six energy firms increased prices by an average of 21 per cent, leaving fuel prices 88 per cent more expensive than they were five years ago. Average duel fuel prices at British Gas now stand at £1,288.

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