Britain’s big energy companies will be forced by law to place customers on the cheapest tariff suitable for their circumstances, David Cameron said today.
In an announcement that took the regulator Ofgem and even his own energy department by surprise Mr Cameron promised that the big six providers would be forced to charge their customers at the lowest rate for their type of use.
But Downing Street was unable to provide details of how the plan would work or how such tariffs would be calculated. A spokesman said details would be contained in the forthcoming Energy Bill due to be published in the next few weeks.
Tomorrow the energy regulator Ofgem is due to publish its proposals for simplifying the tariff system as part of its retail market review. It said it had had no discussions with the Government about the plans.
Amid mounting concern about rising fuel bills and a pledge by Labour at its party conference to force energy companies to provide their lowest rates to pensioners Mr Cameron used an appearance at Prime Minister Questions to signal new laws to tackle the often-confusing array of tariffs.
“I can announce that we will be legislating so that energy companies have to give the lowest tariff to their customers,” he said.
Ministers have previously encouraged consumers to shop around and make sure they are on the best available deals. They have also announced moves to require energy companies to inform their customers annually if they could be on cheaper tariffs.
Mr Cameron’s spokesman later said the new measures would go much further.
“We have asked energy companies to take action themselves and make clear what the lowest available deals are,” he said. “The point is, in practice this market is not operating for everyone. A small minority of people are actually switching deals, therefore we need to push some of this responsibility on to the energy companies.”
The spokesman sidestepped questions about whether the announcement had come as a surprise to Energy Secretary Ed Davey.
Asked whether the minister knew about the announcement before it was made, he said: “Clearly there have been discussions about this issue and those discussions have been going on for some time.”
Labour said the initiative was an admission of failure by the Prime Minister after the typical dual-fuel energy bill had risen by more than £200 since the Coalition came to power.
“The Government's last-minute decision is an admission that their 'do nothing' energy policy over the last two years has failed,“ said Labour’s Shadow Energy Secretary Caroline Flint.
”The cheapest deal in an uncompetitive market will still not be a good deal for the public unless we completely overhaul our energy market to break the dominance of the big six energy companies.
The consumer group Which? said Mr Cameron had made a “big statement” but added: “We must now see these words turned into action and see the detail from the Government in the Energy Bill.”