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Column: Citizen’s Advice Bureau talks energy tariffs

Citizens Advice Bureau

Citizens Advice Bureau

OFGEM has announced that finding a better deal on energy is getting easier. What does that mean for my energy bills?

A ban on complex tariffs is now in force, to help consumers get the best deals claims the energy regulator. In the biggest shake up to the market since competition was introduced in the late nineties, the reforms aim to make the energy market simpler, clearer and fairer. Households who have never switched could save more than £200 per year.

Suppliers can now only offer customers a maximum of four tariffs for gas and four for electricity, this means that some existing tariffs will be withdrawn. These changes make it far easier for consumers to compare and find the best deals. Complex deals like charging high rates for energy which then fall as more is used will no longer be allowed.

Energy firms must structure their tariffs in two tiers, as a single unit rate and a standing charge. The unit rate is the cost for each unit of electricity or gas, the standing charge is a fixed amount and is a way to recover the costs of getting the gas and electricity to your home. Suppliers will be allowed to set their standing charge at zero. Lower standing charges can benefit people who do not use a lot of gas or electricity, higher standing charges benefit people who use more. We expect that suppliers will offer different combinations, so shop around to make sure you get the best deal for you.

Customers on fixed term deals will remain on that tariff until it finishes - increasing those prices during the contract period is now banned and automatically rolling householders on to another fixed-term offer will no longer be allowed. At this end point, suppliers should automatically put you on the cheapest standard tariff available and it’s worth shopping around to check this is the best deal.

If you have a standard tariff, which is a continuing deal that doesn’t have a fixed end date, you will be contacted by your supplier if the terms and conditions are changing. If the tariff is withdrawn you will be moved to their cheapest equivalent by the summer. This is also the case for special tariffs, for example deals for pensioners, though your supplier may choose to retain this as one of their four tariffs.

April will see further reforms to give consumers clearer, more personalised information on energy. Suppliers will for the first time have to write to customers regularly informing them which of their tariffs is cheapest.

The Citizens Advice consumer service can provide general advice about what the reforms mean. If you have a question about what will be happening to your gas and electricity tariffs and when, contact your supplier. You can find out more about tariffs and how to compare prices for gas and electricity from Adviceguide, the self-help website of Citizens Advice. Go to:

www.adviceguide.org.uk/england/consumer_e/energy_contracts_explained.htm

www.adviceguide.org.uk/england/consumer_e/comparing_prices_for_gas_or_electricity.htm

 

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