Will the coalition’s energy plan really mean lower bills?
Following stints with Reuters and the Press Association, Martin Hickman joined The Independent as a news editor in 2001. He became the Consumer Affairs Correspondent in September 2005 and has run the paper's trenchant campaigns on packaging, bank charges and factory-farmed chicken. He writes on subjects as diverse as food, finance, energy and fashion. With Tom Watson, he is author of a new book on the phone hacking scandal, Dial M for Murdoch - News Corporation and the Corruption of Britain.
Tuesday 20 November 2012
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firms will be forced to switch all customers onto the cheapest tariffs, saving people from languishing on expensive, out-of-date deals, Ed Davey, the Secretary of State for Energy, announced today.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.”
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 The secret report that helps Israelis to hide facts
- 3 Danish TV reporter is all business up top, all party down below
- 4 Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
- 5 Businessman charged £75 for three small bottles of water in London hotel
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...
Day In a Page
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000