Ofgem vows to crack down on 'confusing' energy tariffs

As household bills soar, big-six suppliers may be forced to offer consumers a single no-frills option

Ofgem, the energy regulator, vowed to clamp down on the big-six suppliers yesterday by dismantling the complex system of tariffs that it says stifles competition by confusing customers.

Click HERE for graphic: On The Up: Fuel Prices (285.9kB)

The regulator revealed that the big-six average profit per household soared from £15 to a record £125 a year since June, following a round of price hikes that has left more than a quarter of Britain's homes in fuel poverty, where energy bills account for at least 10 per cent of post-tax income.

Ofgem said it was important for customers to be able to identify the cheapest deals and switch easily between suppliers. With a bewildering array of 400 tariffs to choose from and confusing bills, customers are paying more for their gas and electricity than they need to, Ofgem said. Alistair Buchanan, the chief executive, said: "Radical change is needed."

Ofgem is proposing to force suppliers to offer a single "no-frills" tariff. The regulator would fix a "standing charge" per unit, on top of which the energy suppliers will have to offer a variable price per unit, making bills clear and price comparison easier.

The only variable element on the bill would be the price the company is charging for a unit of gas or electricity. Although Ofgem will allow the big six to offer other "innovative" tariffs, they will need to fix their prices for the duration of the deal.

Ofgem will publish a more detailed version of its proposals in November when it will consult with consumer groups, energy companies and other interested parties. Mike O'Connor, chief executive of Consumer Focus, said: "Consumers are faced with a thicket of energy tariffs that can seem designed to confuse all but the most persistent and numerate consumers."

By making it easier for customers to compare prices, the proportion of customers switching providers each year will significantly increase from its present level of about 15 per cent, consumer groups argue. As a result, competition will increase and prices will come down.

With the recent round of price hikes adding £175 to the average British combined gas and electricity bill – taking it to £1,170 – utility bills have become a politically sensitive issue. Chris Huhne, the Energy Secretary, has convened an emergency summit with the big six, consumer groups and Ofgem on Monday to "see what more can be done".

The big-six supply arms were barely scraping a profit before the summer and have tended to operate at a loss in the past six years, effectively being subsidised by the healthy profits made from their energy-generation units. But wholesale gas prices rose by 40 per cent in the past year and coal costs soared, so the price of producing electricity has also soared, reducing the scope of the big six to hold down utility bills.

Start your day with The Independent, sign up for daily news emails
Voices
Barn owls are among species that could be affected
charity appeal
Sport
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy as ECB finally wield the axe
Life and Style
food + drink
Arts and Entertainment
a clockwork orange, stanley kubrick
film
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas