Energy suppliers forced to tell customers which is the ‘cheapest’ tariff

Energy firms - mistrust

Energy firms - mistrustEnergy regulator Ofgem will force suppliers to offer the cheapest tariff to customers, it has been announced today. Does this mean your fuel bills will come down?

Over the past couple of days there has been huge confusion over how the energy sector is to be reformed, with the government issuing contradictory statements. But now energy regulator Ofgem has revealed that it plans to force energy companies to offer customers their cheapest gas and electricity tariffs.

Ok, so what’s going to change?

The main changes Ofgem aim to bring in are:

  • Forcing energy suppliers to tell customers about the cheapest tariff they have to offer.
  • Reducing the hundreds of confusing tariffs available by making each energy supplier offer no more than four primary tariffs for each fuel type. (So no more than four electricity tariffs and four gas tariffs per company).
  • Making energy suppliers contact vulnerable customers (and those who haven’t switched their energy tariff for some time) to inform them about the cheapest tariff available across the whole market – not just the cheapest option their company offers. (At the moment this is just a trial suggestion – don’t be surprised if this doesn’t make it into law!)
  • Stopping providers charging different rates depending on how much fuel you use (currently low energy users tend to pay more per unit of energy than high users).
  • Simplifying energy bills (including showing the discount you get for bundling your gas and electricity together in pounds and pence rather than as a percentage).

Sounds like good news.

It is, up to a point. Frankly, anything would be an improvement on the current state of affairs. Right now there are nearly 1,800 different energy tariffs on the market – and three quarters of us are on the most expensive ones, according to consumer watchdog Which?

Energy companies offer big discounts to new customers (and those who switch) – but they treat customers who don’t switch as nothing more than cash cows. And with energy bills now reaching £1,300-plus a year in some cases, our udders are getting a little sore. If you’ll excuse the disturbing metaphor.

So will this mean my fuel bills come down?

No. What it means is that you’ll be told if your energy provider has a cheaper energy plan than the one you are currently on. It will still be up to you to arrange to switch.

Also remember that you will only be told about cheaper tariffs available from your provider. So if you’re with British Gas, you’ll only be told if British Gas has a cheaper tariff that could save you money. You won’t be told about any cheaper deals other companies may be offering. That’s up to you to find out (unless, potentially, you are classed as a ‘vulnerable’ customer).

Finally, bear in mind that these changes won’t come in until summer 2013 at the earliest.

How can I save money this winter?

You can potentially shave hundreds of pounds off your energy bill right now by switching your energy provider. All you need to do is enter your postcode below:


    For more info on switching, see here.

    Switching is still the best way to save money. Welcome as the Ofgem changes are, they still won’t tell you which are the best deals across the whole market.

    When you get down to it, energy is like anything else you buy: if you want the best deal, you need to shop around.