Energy reform plans slammed by big business

BUSINESS groups yesterday blasted new government plans to ensure lower energy bills for consumers.

Energy secretary Ed Davey announced the proposals, intended to be included in the forthcoming Energy Bill, which will limit suppliers to four core tariffs and ban so-called dead tariffs, so that no consumer is left on an out-of-date deal.

But business groups hit out at the reforms, which followed regulator Ofgem’s earlier proposals.

The Institute of Directors (IoD) labelled the reforms as “missing the point”. “Clumsy regulation restricting choice would simply allow energy companies to increase their lowest tariff, ensuring a higher minimum price for consumers,” said Corin Taylor, senior economic adviser at the IoD.

Issues over a lack of competition also struck a note with corporations.

John Walker, chairman at the Federation of Small Businesses, said: “We need to see the detail since there is a very real risk that forcing energy companies to put customers on the cheapest tariff could erode what little competition there is in the market.”

The IoD warned that the government “should be promoting competition and making it easier for new companies to enter the energy market”.

IN BRIEF: THE REFORMS

■ Limiting suppliers to four core tariffs per fuel, aimed at ending the “proliferation” of tariffs over the last few years. Collective switching schemes will be able to negotiate bespoke prices.

■ Creating – within the four core tariffs – one standard variable rate tariff and one fixed-term price tariff, which account for 85 per cent of customers.

■ The suppliers can choose the remaining two tariffs as they please, such as offering green energy deals.

■ Suppliers must offer one single price for each of the four tariff types.

■ Banning so-called dead tariffs so customers are not left with poor value, out-of-date deals.

■ Placing all customers on the cheapest price available on the tariff of their choice by summer 2014 at the latest.

■ Households to have personalised information from their supplier on bills, detailing the cheapest tariff for their payment method and the cheapest overall.

■ Measures that require suppliers to provide clearer information to help consumers switch.

■ Establishing a co-ordinated network of voluntary organisations and groups to help vulnerable households get a better deal.

■ Proposals for the government to help ensure energy consumers can benefit from innovative technology that helps switching through smartphones and other devices.