New rules for energy companies come into force today. They’re now banned from increasing prices on fixed-term energy tariffs, and they won’t be able to automatically roll you over to a new fixed-term contract.
Ofgem today announced that a number of new rules had come into force as a part of its Retail Market Review. Energy suppliers can no longer increase prices on fixed-term energy tariffs. And when you come to the end of your fixed-term contract, your supplier won’t be able to automatically roll you over to another tariff without contacting you about it first.
As with our campaign on price rises during fixed mobile phone contracts, we’ve always thought that fixed should mean fixed. We argued for these changes to the energy market since 2011, so we’re pleased to see Ofgem implementing these new rules.
In more good news, energy companies will also have to tell you that your fixed-term contract is coming to an end around 40 days before the end of the contract. And if you decide to switch during this notification period, your supplier won’t be able to charge you a termination fee (even if there was originally one in place!)
Energy deal price changes
However, the regulator will still allow variable price tariffs on a fixed-term basis, as long as any changes in price are set out in advance, on specific dates and with specific amounts.
We think there’s a danger with this, because you could lose out if you’re not fully aware of all the T&Cs. For example, there’s the potential for energy companies to try and tempt you with a low introductory rate and then hit you with a price rise in the winter, even if these were already listed in the small print.
Ultimately, we think Ofgem should have gone a step further. All fixed-term tariffs should be at a fixed price. We think that the only time where this is acceptable is if the fixed-term tariff is tracking an independent index, which the supplier has no control over.
Will Ofgem’s new rules make you more inclined to sign up to a fixed energy deal? Have you ever been automatically rolled over onto another fixed contract or had to pay a cancellation fee?