Energy companies to improve tariff transparency

The big six energy companies have agreed to tell their customers if they are overpaying for energy and how to switch to a cheaper tariff.

Bills

In a speech to be delivered later today (11 April) the deputy Prime Minister Nick Clegg will announce that EDF, E.ON, British Gas, nPower, Scottish Power and SSE will notify customers of the “best tariff for their needs” at least once every year from Autumn.

Customers will also be offered the cheapest tariff if their contract comes to an end or if they contact their supplier at any time to ask.

The country’s six big energy businesses, which supply 99% of homes, offer more than 120 different tariffs.

It is claimed that seven out of ten people are on the wrong tariff and yet rarely switch, despite the fact that some households could save up to £100 a year.

Consumer Focus will welcome the plans, but warned that the notifications needed to be part of a wider initiative to make energy regain customers trust.

Audrey Gallagher, director of energy at Consumer Focus, says: “That [The plan] is long overdue. “But this is probably only going to work if this is part of a much wider strategy to really help people engage more effectively with their energy bills, really cut their costs and get the best out of the energy market.”

Ofgem, the industry watchdog, recently proposed a standardised format for utility bills as part of a wider push for a radical reform of the industry.

Clegg’s speech follows yesterday’s proposals from the Department of Energy and Climate Change to give Ofgem additional powers to force energy companies to compensate customers and businesses directly that have been miss-sold tariffs.

The announcement comes as the leading energy suppliers struggle to lift consumers’ negative perceptions of the sector following utility bills rising above the rate of inflation amid a difficult economic times.

At the start of the year all six companies launched heavyweight marketing campaigns in a bid to promote recent price cuts to tariffs.

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