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Energy tariff reforms called into question

The Big 6 energy suppliers have attacked proposed reforms of the domestic energy market, claiming that consumers could be left paying more.

Ofgem, the energy regulator, plans to cut the number of tariffs energy suppliers can offer customers and wants to encourage switching. It hopes the changes will make the domestic market “simpler, clearer and fairer”, but some suppliers believe the reforms could mislead customers and stifle competition.

SSE, nPower and EDF Energy argue that under the new system, customers could be mislead into opting for tariffs that appear cheapest in the short term, when they could be better off opting for a fixed long-term deal that would protect them from rising energy costs.

“A snapshot forward-looking view of the cheapest tariff may well, in hindsight, turn out not to have been the cheapest,” nPower said.

The claims have been backed by energy comparison website uSwitch, who “agree that consumers could end up with higher prices, less choice, more confusion and even less reason to trust the industry.”

Ann Robinson, Director of Consumer Policy at, commented:

“The energy sector is developing at such a pace and it’s important that suppliers are able to innovate and offer consumers new tariffs and choices that are in keeping with the times. Limiting suppliers to a choice of four tariffs could stifle innovation and lead to Hobson’s choice for consumers.

“There is also a danger that prices could converge, leaving little difference or incentive for consumers to shop around. This could damage competition, and ultimately lead to higher prices across the board.”

James Constant, CEO of Business Juice added

“This well meaning proposal is actually a concerning development for the energy industry, the principle of simplification sounds great but ultimately removes real choice from the market and lead to short termism. This is a dangerous game for UK businesses that currently benefit from bespoke pricing for their business’ specific needs. Removing this benefit may sound attractive in the domestic market, but it will simply be a disaster for true competition in business energy.”

Whilst there are no such plans for the non-domestic market, it’s important that you consider the impact of rising energy costs on your business’ energy bills. Just last week the price of gas increased significantly due to an extended cold snap and a failed pipeline. To protect yourself from unforeseen price rises you should contact an Business Juice and look for a longer term contract, fixing while the market is relatively healthy, and before additional long term price risks have been factored in.


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