Ofgem: simpler tariffs will restore consumer trust in energy industry

Energy regulator Ofgem says its proposals to make gas and electricity tariffs simpler to understand will result in more customers switching to cheaper price plans, restoring confidence in the industry.

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Consumer trials conducted by Ofgem found that 85% of people were able to identify the cheapest deal in less than a minute under its “no frills” proposals for energy providers to set a single standing charge and a simple unit price – meaning consumers have just one unit rate to compare, rather than being “bamboozled” by a complex pricing system.

This compares to just 44% of consumers being able to select the cheapest tariff under current pricing arrangements.

More than seven out of ten consumers tested said they would be more likely to switch energy provider to one that was more suitable to their needs if tariffs were made simpler, Ofgem says.

Energy companies including British Gas, EDF, E.on and Scottish and Southern Energy, have all announced that they are exploring options to make their pricing simpler after Ofgem first set out its tariff simplication plans in October.

Ofgem says its research shows that customers are “disillusioned” by complex pricing and that only a “radical break with the past” will restore consumers’ confidence in energy suppliers.

Alistair Buchanan, Ofgem’s chief executive, says: “Ofgem is now calling on all suppliers to back its reform programme, which gives energy suppliers a chance to draw a line under the past and an opportunity to restore consumer trust.”

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