Energy firms to be made to switch to cheapest tariffs

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firms will be forced to switch all customers on to the cheapest tariffs, saving people from languishing on expensive, out-of-date deals, Ed Davey, the Secretary of State for Energy, announced yesterday.

Confirming the proposal floated by the Prime Minister in the House of Commons last month, Mr Davey said suppliers would be required to move billpayers to the least expensive fixed or variable price deal.

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."

Suppliers currently have more than 1,000 different tariffs and the average annual dual fuel bill stands at a record high of £1,334.

Angela Knight, chief executive of the industry body Energy UK, said: "We agree with the overall intention of Government but we will need to look at the detail of what is proposed to make sure that there is enough choice for households."

Consumer groups welcomed the deal, but warned that some people could end up paying more because suppliers would be unable to afford to offer everyone the very cheapest deals available now, and would raises prices.

Which?, the consumer group, also wants an inquiry to see if suppliers are ripping off customers.

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 a review in to what's really behind the rising cost of energy."

Ed Davey is chairing next month's Fair Energy Summit, hosted by The Independent, i's sister paper, and Policy Review Intelligence. Consumer groups, charities and other experts will quiz energy company bosses on the Government's plans to make the market work for ordinary people. The summit – supported by British Gas, Co-operative Energy and E.ON – will be held in London on 17 December. Readers are invited to send in their questions and comments to yourmoney@independent.co.uk and take part in a live internet broadcast.