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firms will be forced to switch all customers onto the cheapest tariffs, saving people from languishing on expensive, out-of-date deals, Ed Davey, the Secretary of State for Energy, announced today.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

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

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

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

    The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

    Gaping hole at the heart of the European Union

    Treatment of Greece has shown up a lack of genuine legitimacy
    Number of young homeless in Britain 'more than three times the official figures'

    'Everything changed when I went to the hostel'

    Number of young homeless people in Britain is 'more than three times the official figures'
    Compton Cricket Club

    Compton Cricket Club

    Portraits of LA cricketers from notorious suburb to be displayed in London
    London now the global money-laundering centre for the drug trade, says crime expert

    Wlecome to London, drug money-laundering centre for the world

    'Mexico is its heart and London is its head'
    The Buddhist temple minutes from Centre Court that helps a winner keep on winning

    The Buddhist temple minutes from Centre Court

    It helps a winner keep on winning
    Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

    Is this the future of flying?

    Battery-powered planes made of plastic, and without flight decks
    Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

    Isis are barbarians

    but the Caliphate is an ancient Muslim ideal
    The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

    Curse of Brink's Mat strikes again

    Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
    Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

    'The ministers talk to us about miracles'

    Why Greeks are cynical ahead of the bailout referendum
    Call of the wild: How science is learning to decode the way animals communicate

    Call of the wild

    How science is learning to decode the way animals communicate
    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'