Government’s energy tariff plans unveiled
Energy Secretary Ed Davey yesterday unveiled the Government’s plans to ensure that all consumers are offered the cheapest energy deals available to them.
Following confusion after Prime Minister David Cameron announced last month that legislation would be put in place to ensure greater transparency in the system, Mr Davey clarified today that energy companies will be forced to offer customers their best-value packages.
The Energy Secretary explained that dual fuel discounts for customers who use just one company for both their electricity and gas are to be scrapped. Instead, companies will need to offer consumers their best prices with both a fixed and variable option.
Companies will now be forced to lower the number of options available to just four in order to avoid confusion.
This comes after the Government came under criticism over the fact that many households are believed to be paying far more than necessary for their gas and electricity because of the complex system of rates.
In 2011, the average price for electricity was raised to £455 – an increase of £38 – whilst the average gas price rose to £720, which was an even greater increase of £62.
The Government’s plans have unsurprisingly seen criticisms by the major energy companies. The Chief Executive of trade association Energy UK, Angela Knight, said that the move could see some cheap deals disappearing entirely.
She explained: “If that is what the Government wants, that is fine. What it will do is potentially remove some choice away from people. Certainly it is the case that if you have restrictions and constraints, then you can’t offer everything and you can’t offer the variety of choice.”
However, others have agreed vociferously. Analyst John Musk said: “Fewer tariffs to choose from means the companies have got less to compete on because they’re not competing on the quality of the product because ultimately they’re providing a commodity.”
A spokesman for David Cameron disagreed however, saying that the move was designed to help families afford to heat their homes properly.
The spokesman said: “Our objective here has been to work to help hard-working families who often struggle to pay their energy bills and that’s what our proposals are designed to do.”