Ofgem’s proposed a ‘radical overhaul’ of the energy market. Great news for consumers who are confused by energy tariffs and bills, but is it enough to make energy companies play fair?
I’m an energy company, and have I got an amazing deal for you! How much do you pay for your gas and electricity? I bet it’s too much?
OK, so what I’m going to do is drastically reduce the cost for you – my favourite new customer. How? I’m just better value. Sign here. Thanks.
The problem with switching your energy supplier
Sounds too good to be true, right? Well, exactly. At the moment there’s a real problem with the sale of energy tariffs, and it’s something we’d like Ofgem to take notice of.
If you compare different energy suppliers and find a much cheaper deal than you have with your current supplier, you’d probably assume that the best thing to do is switch. That way you’ve got the cheap price and you’ll pay less.
The huge problem is that there’s no guarantee that deal will still apply by the time your switch has gone through. So you could have a brilliant price when you sign up, but in the six weeks that it takes to move to your new supplier, they could whack the price up.
Ofgem’s crackdown on energy companies
Today Ofgem announced that they are unimpressed with the way the energy market is working. They slammed energy companies for offering a confusing array of tariffs and a lack of transparency in their pricing.
This review is a welcome step forward, as it’ll encourage (and eventually compel) companies to play fair with their customers – at least in terms of the information they have to provide.
They’ll have to offer costs that are easy for us to compare and stop offering two-tier standard tariffs. Good news for you, as it means you’ll be able to compare your energy costs more easily, and switch to a cheaper one if you like.
Ofgem should insist on price guarantees
Sadly there are still some fairly big omissions in Ofgem’s review, the main one being a price guarantee. If energy companies were made to guarantee prices for the time it takes you to switch companies, the situation I explained at the beginning of this post wouldn’t happen. The price you’re quoted when you sign up will be the price you pay when you start with your new supplier.
That doesn’t sound like too much to ask, does it? And yet Ofgem haven’t mentioned a price guarantee in their overhaul.
We’re pleased that Ofgem’s announced a radical overhaul, as the energy market is clearly failing consumers – only 24% of people think their energy company is ‘trustworthy.’ What’s more, only 25% of of people make the effort to switch their energy tariff.
But the main issue we have with the review is that it isn’t quite ‘radical’ enough. If we’re pulling skeletons out of the closet, why not have a thorough spring clean in there too? Let’s get to the bottom of all the issues at once, and make sure that in future, switching energy company is simple, transparent and fair.