Government to backtrack on Cameron pledge to force Big Six energy companies to give customers cheapest tariff

The Department of Energy & Climate Change is expected to further backtrack on David Cameron’s promise to the House of Commons last year that new laws would be introduced “so that energy companies have to give the lowest tariff to their customers”.

Cameron caught his own department as well as the energy industry on the hop in October with his claim at Prime Minister’s Questions. Subsequent criticism has led to the policy being severely diluted.

It is now expected to simply demand that firms limit the number of tariffs they offer to just four and to tell customers about the cheapest one that is “appropriate to them”.

Energy company insiders have given a tentative welcome to the proposals with the Big Six all confident that widescale reductions in the number of tariffs and public commitments to transparency about charges will mean they have already met the new requirements.

There is more concern within the industry about the future role of the much-criticised energy Watchdog Ofgem.

It has been seen as toothless in the face of rising prices and claims of attempted gas price fixing which led to many calls for its dismantling.

But current energy secretary Ed Davey has publicly supported the watchdog leading to expectations that its powers will be beefed up in the Energy Bill.

It’s currently in its Committee Stage which is due to report its findings on 12 February. With the Committee meeting tomorrow, DECC is expected to add its new amendments to the bill, detailing how the Prime Minister’s promise on cheap tariffs will end up.

Ahead of the expected amendment, Caroline Flint, Labour’s Shadow Secretary of State for Energy and Climate Change, 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.”

Ann Robinson, energy expert at uSwitch, warned: “We don’t know what other hidden costs there may be in the Energy Bill. We do know that the £7.65bn earmarked to pay for the new generation of power stations will add £95 to the average energy bill by 2020. So we are understandably alarmed about what further increases may be coming.”

Ed Matthew, director of the Energy Bill Revolution, said: “Although the changes will lead to simpler or less tariffs, which is a good thing, it is unlikely to lead to savings for consumers overall.

“If the Government was serious about bringing down bills they would make super-insulating UK homes the number one economic priority. They have all the money needed to finance such a programme in carbon tax. The question is whether Treasury will swallow it or use it to fund a programme to re-build Britain.”

Yesterday MoneySavingExpert founder Martin Lewis launched a new online energy club which promises to check people are on the cheapest gas and electricity deals - and switch them if they're paying too much.

Today the Cheaper Energy Together campaign launches a new community partnership of 30 organisations including charities, local authorities and housing associations, to negotiate cheaper energy deals. It is being led by not-for-profit organisation thePeoplesPower