Will the coalition’s energy plan really mean lower bills?

 

Energy firms will be forced to switch all customers onto the cheapest tariffs, saving people from languishing on expensive, out-of-date deals, Ed Davey, the Secretary of State for Energy, announced today.

Confirming the proposal floated by the Prime Minister in the House of Commons last month, Mr Davey said suppliers would be required to move bill-payers to the least expensive fixed price or variable.

They would also be required to offer just four core tariffs for gas or electricity, instead of the hundreds currently on the market.

“For too long people have been stuck on the wrong type of energy tariff, paying more than they need to,” Mr Davey said.

“Our new proposals will make things much clearer and easier to understand, so that bill payers can get the best deal and feel the benefit in their pockets.”

Consumer groups welcomed the deal - but warned that some people could end up paying more.

Q Why is the Government acting?

In the past two months most of the Big Six suppliers have hiked prices and the average annual dual fuel bill is at a record high - £1,334. Suppliers have been accused of befuddling the public. The Department of Energy and Climate Change (DECC) says there are 410 tariffs on the market and 650 “dead” tariffs which customers are on, but which are no longer offered to the market.

Q What is it doing?

Plans to force firms to simplify tariffs and switch customers to the cheapest applicable tariff will be written into the forthcoming Energy Bill.

Q How would it work?

Suppliers would be allowed no more than four ‘core tariffs’ for gas or electricity. One of those tariffs would have to be variable – changing in line with wholesale costs – while one would have to be fixed priced, fixed time. Suppliers would be obliged to offer to move all customers onto the cheapest deal for their preference of fixed or variable.

Q What are the benefits?

Millions of customers will pay less. The most expensive quarterly standard payments are up to £300 more than the cheapest internet tariffs. Within the same payment method, customers could save an average of £72 and a maximum of £158 a year.  The price people pay for lighting, heat and power will become more equal.

Q What are the drawbacks?

Energy companies will not be able to afford to offer everyone the very cheapest deals available now, so will have to remove or raise the price of those deals, meaning that some customers will pay more under the new system.

Q. Will I still be able to buy green energy?

Yes. The four-tariff limit should mean that renewable energy is still available.

Q. When will my bill change?

By summer 2014 at the latest, according to the Government.

Q. What else can be done?

Consumer groups want an inquiry to see if suppliers are ripping off customers. Which? warned there was “a worrying lack of transparency in the energy market.”

Richard Lloyd, its executive director, said: “We have seen inflation-busting energy bill hikes at the same time as large profit announcements from energy suppliers, so people will rightly be questioning whether they’re paying a fair price for their energy.

“We are repeating our call for the Government to launch an urgent and swift independent review in to what’s really behind the rising cost of energy.”

Shadow energy secretary Caroline Flint said: “All the Government is really doing is reducing the number of tariffs on offer. If energy companies are only allowed to offer one tariff for every type of contract, that’s not the lowest tariff - it’s the only tariff.

“The cheapest energy deal in an uncompetitive market will still not be a good deal. Unless the Government really reforms the energy market, there’s nothing to stop the energy companies just putting up the prices of all their tariffs.

“The time has come for a complete overhaul of our energy market.”

Compare with the Independent: See how much you could save by switching credit cards. Compare now

Arts & Entertainment
Ricky Gervais at a screening of 'Muppets Most Wanted' in London last month
tvAs the second series of his divisive sitcom 'Derek' hits screens, the comedian on why he'll never bow to critics who habitually circle his work
Arts & Entertainment
Don (John Hamm) and Megan (Jessica Paré) Draper are going their separate ways in the final series of ‘Mad Men’
tvReview: The suits are still sharp, but Don Draper has lost his edge
News
news
Life & Style
Going down: Google's ambition to build an elevator into space isn't likely to be fulfilled any time soon
techTechnology giant’s scientists say there is no material strong enough for a cable from Earth into orbit
VIDEO
News
David Cameron sings a hymn during the enthronement service of The Most Rev Justin Welby as Archbishop of Canterbury, at Canterbury Cathedral last year
news
Life & Style
From long to Jong: Guy Pewsey outside Mo Nabbach’s M&M Hair Academy in west London before the haircut
fashionThe Independent heads to an Ealing hairdressers to try out the North Korean dictator's trademark do
Sport
Vito Mannone fails to keep out Samir Nasri's late strike
sportMan City 2 Sunderland 2: Keeper flaps at Nasri's late leveller, but Black Cat striker's two goals in 10 minutes had already done damage
Extras
indybest10 best smartphones
News
peopleRyan Gosling says yes, science says no. Take the A-list facial hair challenge
Arts & Entertainment
tvCreator Vince Gilligan sheds light on alternate endings
News
Paul Weller, aka the Modfather, performing at last year’s Isle of Wight Festival in Newport
people
Life & Style
Michael Acton Smith founded Firebox straight out of university before creating Moshi Monsters
techHe started out selling silliness with online retailer Firebox, before launching virtual creatures who took the real world by storm
News
Ethical matters: pupils during a philosophy lesson
educationTaunton School's policy of putting philosophy at heart of its curriculum is one of secrets of its success
Arts & Entertainment
Play It Forward: the DC Record Fair in Washington, US
musicIndependent music shops can offer a tempting alternative to downloads on Record Store Day
Sport
video
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Data Analyst - Financial services, Client data, LEI

    £40000 - £50000 per annum + BONUS + BENEFITS: Harrington Starr: A leading, Cit...

    Management Consultancy - Operational Research Analysts

    £35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

    Corporate Actions Consultant - Market data, ISO15022, presales

    £45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: Corporate Acti...

    Prudential Risk/Operational Risk Associate - London

    £350 - £400 per day: Harrington Starr: An opportunity has arisen at a FCA regu...

    Day In a Page

    Ricky Gervais: 'People are waiting for me to fail. If you think it's awful, then just don't watch it'

    Ricky Gervais: 'People are waiting for me to fail'

    As the second series of his divisive sitcom 'Derek' hits screens, the comedian tells James Rampton why he'll never bow to the critics who habitually circle his work
    Mad Men series 7, TV review: The suits are still sharp, but Don Draper has lost his edge

    Mad Men returns for a final fling

    The suits are still sharp, but Don Draper has lost his edge
    Google finds a lift into space will never get off the ground as there is no material strong enough for a cable from Earth into orbit

    Google finds a lift into space will never get off the ground

    Technology giant’s scientists say there is no material strong enough for a cable from Earth into orbit
    Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics

    Is sexual harassment a fact of gay life?

    Westminster is awash with tales of young men being sexually harassed - but it's far from being just a problem in politics
    Moshi Monster creator Michael Acton Smith: The man behind a British success story

    Moshi Monster creator Michael Acton Smith

    Acton Smith launched a world of virtual creatures who took the real world by storm
    Kim Jong-un's haircut: The Independent heads to Ealing to try out the dictator's do

    Our journalist tries out Kim Jong-un's haircut

    The North Korean embassy in London complained when M&M Hair Academy used Kim Jong-un's image in the window. Curious, Guy Pewsey heads to the hair salon and surrenders to the clippers
    A History of the First World War in 100 moments: A forgotten naval victory in which even Nature played a part

    A History of the First World War in 100 moments

    A forgotten naval victory in which even Nature played a part
    Vespa rides on with launch of Primavera: Iconic Italian scooter still revving up millions of sales

    Vespa rides on with launch of the Primavera

    The Vespa has been a style icon since the 1950s and the release this month of its latest model confirms it has lost little of its lustre
    Record Store Day: Independent music shops can offer a tempting alternative to downloads

    Record Store Day celebrates independent music shops

    This Saturday sees a host of events around the country to champion the sellers of well-grooved wax
    Taunton's policy of putting philosophy at heart of its curriculum is one of secrets of its success

    Education: Secret of Taunton's success

    Taunton School, in Somerset, is one of the country's leading independent schools, says Richard Garner
    10 best smartphones

    10 best smartphones

    With a number of new smartphones on the market, we round up the best around, including some more established models
    Mickey Arthur: Aussie tells ECB to stick with Ashley Giles

    Mickey Arthur: Aussie tells ECB to stick with Ashley Giles

    The former Australia coach on why England must keep to Plan A, about his shock at their collapse Down Under, why he sent players home from India and the agonies of losing his job
    Homelessness: Why is the supported lodgings lifeline under threat?

    Why is the supported lodgings lifeline under threat?

    Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
    A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

    A History of the First World War in 100 Moments

    When the world’s biggest shed took over Regent’s Park
    The pain of IVF

    The pain of IVF

    As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal