Ofgem reveals first stage of “radical reform” of energy market

Energy companies have seen profit margins increase 733% to £125 per customer, according to industry watchdog Ofgem, as it reveals the first stage of its “radical reform” of the energy market.

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Ofgem claims that margins have increased from £15 in June. All major energy providers have put their prices up in recent months, blaming rising wholesale costs .

The news comes as Ofgem reveals its proposals for the reform of the energy market.

Ofgem’s chief executive Alistair Buchanan says “a radical break with the past is needed” to restore consumers trust in energy providers.

Suppliers will have to simplify tariffs, clarify bills and provide annual statements to help customers compare prices and switch providers more easily.

They will also have to introduce a standard “no frills” tariff with standardised price information.

Ofgem is also developing an Energy Label and standardised bills for every tariff to aid consumer comparison between companies.

Buchanan says: “Ofgem’s tariff reforms offer the quickest way to create a market where consumers can have confidence that prices are set by effective competition. Suppliers have told Ofgem they want to restore confidence in the industry and now they have the chance to do so.

“With £200 billion of investment needed to overhaul Britain’s energy industry and the pressure this and rising energy prices puts on bills, consumers rightly demand a major improvement in the way suppliers behave towards them.”

Ofgem is working with the Department of Energy and Climate Change as it wants to be able to award consumers compensation if suppliers break the rules.

The watchdog will reveal detailed plans to “break the stranglehold” of the “Big Six” energy providers in December and an independent report into making energy companies more transparent will follow in the New Year.

It will also reveal its reforms for the business sector in November.

Ofgem launched its review into the market in March saying customers are “bamboozled” by the sectors complex pricing system.

In August it appointed accountants BDO to investigate wholesale prices and trading profits at the major providers.

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