Ofgem outlines plans to simplify energy market

Ofgem wants to simplify the energy market, compelling energy suppliers to offer no more than four different tariffs for each type of fuel. This plan will force energy companies to inform their customers about the cheapest deals and pricing plans on offer.

According to Ofgem chief executive Alistair Buchanan, these proposals would bring a “simpler, clearer, and more competitive energy market for all consumers”.

Energy talks are again on the political agenda after the PM said earlier this week that the government would put into law the obligation for energy suppliers to give customers the cheapest tariffs. 

A spokeswoman for the PM said: “[…] As the prime minister said, we will use forthcoming legislation to ensure that people get the lowest tariffs, […] The energy bill will be published in due course and we will take into account the Ofgem proposals.”

It is possible that the government might feel under pressure, because Cameron’s proposal would significantly reduce the competition on the energy market. However, even the less radical proposals suggested by Ofgem would significantly simplify energy bills for the average consumer.

Ian Marlee of Ofgem explained yesterday to BBC radio 4 that they are not pressing for the automatic application of the cheapest tariff for all customers. He pointed out that this choice might curb innovations that may be beneficial for families, such as fixed deals. 

Angela Knight, the chief executive of Energy UK, the industry trade body, echoed Ian Marlee saying: “I think customers do want choice, and that choice is a good thing.” 

Consumer group Which? showed its full back to Ofgem’s proposal in a dedicated article published yesterday on their site.

Which? executive director Richard Lloyd, admitted: “This is another big step towards helping people get the best price for their energy. These proposals will boost customer power, making it much easier to shop around, and should increase the pressure on the energy companies to keep their prices in check.” 

Annalisa Ratti