Kate Hughes: PM throws confusion into energy cycle

Regulator's plans for tariff limits and clearer bills overshadowed by Cameron's pledge

It should have been a powerful hit back against the big six energy companies on behalf of the nation's beseiged households.

Instead, last week's announcement that the energy regulator was moving to simplify and restrict the huge range of energy tariffs and unfathomable bills faced by consumers desperate to minimise the effects of soaring costs, fell into the hole created by David Cameron's seemingly mistaken pledge to force energy providers to place customers onto their lowest tariff. Confused? You're not alone.

Here's what we know. On Friday, Ofgem announced a series of proposals that would "improve radically the competitiveness of the household energy market". They include plans to ban complex multi-tier tariffs, uncompetitive dead tariffs that are no longer available for new customers and to limit the number of core tariffs each supplier is allowed to offer.

A tariff comparison rate will also do away with the impossible task of trying to work out which is better with today's apples vs pears scenario.

Two years in the making, the regulator's aim is to remove the unwieldy and opaque bills that energy companies have been allowed to hide behind for far too long while giving consumers the opportunity to easily grab the best deal on offer.

"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," says the chief executive of Ofgem, Alistair Buchanan. So it's all good news.

Except that, as we know, an overenthusiastic David Cameron has already come out with "I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers." Hmm.

Speculation abounds that this was nothing more than a gaffe, particularly as neither Ofgem, the Department of Energy and Climate Change nor the energy suppliers appeared to know anything about it. Indeed, there must have been a collective blink of surprise up and down the country because if this is any more than a slip of the tongue it's a truly terrible idea. Yes, the guarantee of the cheapest deal sounds great, but the logistics would surely be impossible to fulfil and, crucially, the "lowest tariff" wouldn't actually mean anything because suppliers would rapidly make this one-size-fits-all price a high one.

"This has to be a mistake – the unintended consequences would be to kill competition," adds Ann Robinson, the director of consumer policy at uSwitch.com. "Consumers will be left with Hobson's choice – there will be no spur, no choice, no innovation and no reason for consumers to engage any more.

"The only glimmer of hope would be that smaller suppliers will be able to offer cheaper prices than the big six and therefore competition is able to continue in that arena."

Astonishingly it seems that instead of acknowledging a simple mistake, Cameron is going to stick with it and we wait with wide eyes and bated breath to see what on earth happens next.

Unfortunately, none of this will ultimately lead to what consumers want to hear – that their energy bills will be coming down.

Dismissing the PM's statement for the moment, Ofgem's plans are vital for customer empowerment, allowing us all to shop around with confidence and get a deal that best suits our needs and pockets from our chosen supplier – one that we actually understand.

But they don't go very far to help improve transparency around how these prices are calculated in the first place. Nor, crucially, will they help us battle the effects of the most recent hikes this coming winter as any implementation is still a long way off.

The unpalatable truth is that the price of energy will continue to rise as wholesale prices go up, investment is made in infrastructure and we attempt to curb our carbon emissions as a nation.

Clearly, reducing the amount of energy we buy from suppliers – either by reducing our use or looking to alternatives – is the only option we have left to fight the relentless squeeze.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Suggested Topics
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Assistant / Buyer

    £15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    Day In a Page

    Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

    'The economic collapse has happened. What is at risk now is democracy...'

    If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
    The science of swearing: What lies behind the use of four-letter words?

    The science of swearing

    What lies behind the use of four-letter words?
    The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

    The Real Stories of Migrant Britain

    Clive fled from Zimbabwe - now it won’t have him back
    Africa on the menu: Three foodie friends want to popularise dishes from the continent

    Africa on the menu

    Three foodie friends want to popularise dishes from the hot new continent
    Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

    Who will fill Donna Karan's boots?

    The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
    10 best statement lightbulbs

    10 best statement lightbulbs

    Dare to bare with some out-of-the-ordinary illumination
    Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

    Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

    Briton pumped up for dream meeting with world No 1
    Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

    Nick Bollettieri's Wimbledon Files

    It's time for big John Isner to produce the goods to go with his thumping serve
    Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

    Dustin Brown

    Who is the German player that knocked Nadal out of Wimbeldon 2015?
    Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

    Damien Martyn: 'England are fired up again, just like in 2005...'

    Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test
    Tour de France 2015: Twins Simon and Adam Yates have a mountain to climb during Tour of duty

    Twins have a mountain to climb during Tour of duty

    Yates brothers will target the steepest sections in bid to win a stage in France
    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    Forget little green men - aliens will look like humans, says Cambridge University evolution expert

    Forget little green men

    Leading evolutionary biologist says aliens will look like humans
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy