Government's energy tariffs pledge could increase bills
Struggling families in the West were yesterday warned they could end up with higher energy bills – all because of changes that are intended to stop people being ripped off.
The Government yesterday published plans to move customers onto the cheapest price available from their supplier by the summer of 2014 at the latest. The measures will limit the energy giants to four tariffs per fuel, and they will have to make bills simpler for customers to understand.
Households will be moved onto the cheapest tariff with their supplier that suits them while maintaining consumer choice, ministers say.
At the moment there are over 410 energy tariffs – with a £300 difference between the cheapest and most expensive.
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However, Energy Secretary Ed Davey could not guarantee the plans would mean all households would enjoy lower bills. And Lindsey Kearton of Consumer Focus warned customers may actually lose out over the reforms.
“What really matters is that consumers have access to energy at an affordable price and on terms that are understandable, with the ability to compare one offer with another,” she said.
The success of the initiative would depend on how energy companies implemented it, and the regulator Ofgem would play a key role, she said.
“There is a risk of unintended consequences and in particular a general levelling up of prices. Ofgem will need to police the behaviour of suppliers and be vigilant about the level of margins that suppliers take from their remaining tariffs. Consumers must not end up as net losers.”
Labour’s Caroline Flint said David Cameron was trying to pull the wool over people’s eyes. She said: “The Prime Minister promised to force the energy companies to put everyone on the cheapest tariff and he has broken his promise. 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.”
Hundreds of thousands of West households are currently regarded as being in fuel poverty, with the Forest of Dean, North Devon, Bristol South and East and Bridgwater having the highest proportion.
Mr Davey said: “I am determined to ensure all consumers get a better deal on their energy bill and get the cheapest tariff they can.”
Energy prices have been soaring far above inflation, but there are fears the reforms could see an end to cheap deals, stop consumers switching and push up bills in the long run. He said he thought many families would get lower bills, but admitted: “I can’t guarantee every single person will end up paying less.”