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Energy Blog Government Proposes Simplified Tariffs

Government Proposes Simplified Tariffs

Chris Hurcombe
by Chris Hurcombe November 21, 2012
Simplified_Tariffs

Private and commercial energy companies look set to have to reduce the number of tariffs they offer under new proposals by the UK government revealed this week.  A bid by the government to end the confusion over business gas, water and electricity bills the upcoming Energy Bill will also include a policy that will force energy companies to put households and other customers onto the cheapest tariff by default. Energy secretary Ed Davey said that the move would help homes and places of work alike deal with rising costs. At an appearance at the energy select committee, Davey said.

“I am determined to ensure all consumers get a better deal on their energy bill and get the cheapest tariff they can,”

Simplified Tariffs

Under the Energy Bill commercial energy companies will be limited to four ‘core’ tariffs per variety of fuel, and each will have to contain one variable rate tariff and a fixed term equivalent – as well as two more.

Secretary Davey said that these two tariffs for each fuel – which will likely be applicable to 85% of customers –  will be clear, understandable and easy to compare for consumers.

Energy suppliers remaining two tariffs are left to their own discretion, with the government expected to use the Energy Bill to encourage green pricing schemes from renewable energy sources.

Consumer groups have surprisingly been quick to slam the proposal by the government, calling it ‘clumsy’ and ‘irrational’.

Several watchdog organisations believe that by simplifying the pricing structure and forcing energy companies to put their customers on the lowest-possible tariff, it will simply be easier to increase the price of the lowest tariff and affect more customers that it would have previously.

Whilst a cynical viewpoint, it would be well within the bill for energy companies to minimise the margins between their cheapest and most expensive tariffs.

Share your thoughts on the proposed changes for simplified tariffs

Share your thoughts on the proposed changes on our Facebook Page or Google+ page or join the conversation on Twitter and tweet your opinion to @CatalystEnergy.

Do you think this is a good idea? or simply an attack on eliminating price competetion in the market place to suppliers service levels instead?