THE GOVERNMENT is expected to get tough on energy companies today, with ambitious proposals to reduce bills for consumers.
Energy secretary Ed Davey is to make a speech this afternoon, in which he is expected to outline plans that he hopes will help consumers reduce their growing gas and electricity bills and make it easier for households to switch providers.
Last month, energy regulator Ofgem unveiled proposals to force suppliers to tell customers about the cheapest tariff they have on offer. The government is thought to favour a plan that limits firms to providing just four various tariffs each for gas and electricity.
The regulator also wants suppliers to simplify the way they express tariffs, including clearly presenting dual fuel tariffs separately.
Earlier this month, Davey said that the government was studying the regulator’s plans, and was “attracted to many” of them. This followed strident criticism of the utilities from Prime Minister David Cameron, who hinted that the government would force firms to put consumers on the lowest tariff.
The Energy Bill is due to be published for its second reading in the next few weeks, and it is also understood to include plans to reform the electricity market to enable investment in low-carbon generation capacity in the UK.
Over the past few weeks, five of the “big six” energy companies – including SSE, British Gas, EDF, Scottish Power and npower – have hiked prices for bills, blaming the increases on the rise in wholesale gas prices.
In a case of bad timing for the sector, this was followed by a Financial Services Authority (FSA) investigation into claims that the UK wholesale gas market is being manipulated, following a whistleblower’s allegations.
The government last week pledged to use the “full force of the law” on those abusing the wholesale market.
Consumer groups have given a cautious welcome to plans for clearer energy tariffs, but questions remain over how the government would force firms to choose and then change customers onto the most cost-effective tariffs. Shadow energy minister Caroline Flint last month accused the Prime Minister of “making it up as he goes along”.