Cameron’s energy plan – will families really save £300 a year?

David Cameron - energy plan

David Cameron - energy planThe government is planning to make energy companies automatically put customers on the cheapest deal – while cutting the number of confusing tariffs on offer. Some claim that this will save families up to £300 a year. Are they right?

Right now people are seriously worried about their energy bills. They’ve risen by £200 in just two years to record highs of £1,300 or more, and have become a huge expense for many people. According to uSwitch, as many as seven in ten households pay over the odds for power – some by up to £300 a year.

The government has cottoned on to the fact that the rising cost of bills could become a serious issue at the ballot box come election time, so all politicians are keen to be seen to be standing up for hard-pressed families against the energy companies.

So what are the government doing?

The government has announced two major changes today:

Firstly, that they will cut the number of confusing energy tariffs.

Right now there are over 500 different energy plans on the market, which can be bewildering and makes it hard to compare like with like.

Under the new proposals, each energy supplier will be restricted to offering a maximum of four tariffs (four for electricity, and four for gas). This should make it easier to compare the price of one energy company against another.

Secondly, that energy companies will be forced to move their customers onto the ‘cheapest’ deal they offer automatically.

(If you wish, you will be able to ‘opt out’ of the cheapest deal and switch to a limited number of other tariffs that will be available – such as fixed price deals, or energy produced from renewable energy).

So does this mean I’ll get cheaper energy bills, then?

This is the £1,300 a year question.

There are two points of concern with these proposals:

Firstly, some worry that energy companies will just offer fewer (but more expensive) tariffs. Energy companies will probably get rid of the rip-off energy plans – but they will also probably get rid of the really cheap energy plans currently available, too.

So if you’ve been on the same tariff for donkey’s years and have never switched, you may well see your bills fall. But if you are a savvy switcher, you may well see your bills rise as the cheapest plans get squeezed out of the market.

Secondly, you will only be moved onto the ‘cheapest’ energy plan that your supplier offers. This does NOT make it the cheapest energy plan on the market!

Again, there are worries that people won’t shop around as they’ll think “I’m automatically on the cheapest tariff – so no need to switch.”

When will these changes come into force?

Concrete changes still remain a way off, and any scheme won’t be in force until 2014 at the earliest.

Why wait? Sort your bills NOW

You can do a simple annual check to make sure you’re on the cheapest deal.

If you haven’t switched for a few years – or ever! – you could save as much as £300 a year by moving to a lower tariff today.

Just enter your postcode in the box below