The government has today published proposals designed to ensure that billpayers are moved to better energy deals.
Following the prime minister’s recent pledge to force energy companies to offer the cheapest tariffs to consumers, suppliers will now be legally limited to offering only four tariffs per fuel type.
It is hoped that this will bring an end to the confusion caused by the proliferation of tariffs currently offered whilst collective switching will also be encouraged.
The four tariffs will include one variable rate tariff and one fixed price tariff as these currently account for 85 percent of all customers. Suppliers will have the freedom to offer two other tariffs as they choose to preserve customer choices such as green tariffs. Dual fuel discounts and other lower cost payment methods will continue to be allowed.
The new arrangements must come into force by summer 2014 at the latest.
Energy secretary Ed Davey said: “I am determined to ensure all consumers get a better deal on their energy bill and get the cheapest tariff they can.
“Bill payers will no longer face the impossible choice between hundreds of tariffs; each customer will have a maximum of four tariffs for gas or electricity per supplier to consider. And households will have personalised information from their supplier on their bills about the cheapest tariff the supplier offers for their payment method and the cheapest tariff overall.
“For too long people have been stuck on the wrong type of energy tariff, paying more than they need to. 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.”
Climate change minister Greg Barker added: “The prime minister promised to take action to get people the lowest tariff and he has delivered.
“Today’s announcement marks the end of confusing tariffs that cost too much. It also again shows this government’s determination to get behind people who work hard and want to get on in life and support vulnerable people at risk of being ripped off.”