Move to simplify energy tariffs in Britain


Edward Davey,
Energy Secretary
London, U.K. — (METERING.COM) — November 21, 2012 – The British government has published proposals to limit the number of tariffs available to energy consumers in what it says is a move to help households get on the best deal for their gas and electricity as soon as possible.

The proposals, which are now open for consultation, include limiting suppliers to four “core tariffs” per fuel. This is intended to end the proliferation of tariffs that has taken place over the last few years.

Further, the four “core tariffs” must contain one standard variable rate tariff and one fixed term fixed price tariff that are comparable like with like across the market. This will ensure that these two tariff types, which account for 85 percent of all customers, are clear simple and easily compared.

The remaining two tariff types can be offered by suppliers as they wish, to preserve customers’ choices, such as green tariffs.
“I am determined to ensure all consumers get a better deal on their energy bill and get the cheapest tariff they can,” commented Energy Secretary Edward Davey. “Bill payers will no longer face the impossible choice between hundreds of tariffs. And households will have personalized information from their supplier on their bills about the cheapest tariff the supplier offers for their payment method and the cheapest tariff overall.”

The government says in the discussion document that currently only the most active “switchers” can be confident they are on the best deal for them. The majority of consumers tend to be on their supplier’s standard variable tariff or on “dead” tariffs that are no longer open to new customers. However, various factors deter people from switching, including a lack of awareness of the savings that can be made from switching, complex tariff structures, a baffling array of tariffs and confusing information on bills.

The document notes that a number of the large suppliers have sought to address some of these issues and have taken steps to reduce the number of tariffs they offer and simplify their structure, redesign bills and build trust with consumers. Some suppliers have introduced price comparison metrics or similar tools.

The current proposals are aimed to make the process go further and faster, and the ambition is that by summer 2014, all customers will have been placed on the cheapest price available from their supplier for the tariff type of their choice.

Other points in the consultation include proposals to establish a network of voluntary organizations and community groups to help vulnerable households get a better energy deal, and addressing barriers to collective switching and purchasing.

The consultation, Ensuring a better deal for energy consumers, is open until January 4, 2013.