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More efforts needed to combat energy prices

Forcing energy companies to be more transparent “will not do the trick”, say the think tank IPPR.

The Deputy Prime Minister Nick Clegg has today announced changes which will require energy firms to tell customers about the most suitable tariffs for them, and to offer it if they request it.

According to Mr Clegg, 70% of people currently pay too much for their energy and are on the wrong tariff.

However, Will Straw IPPR Associate Director believes that the new reforms do not go far enough to ensure that all customers are given a fair deal.

He said: “Fewer than one in six consumers switched provider and 60 per cent claim never to have switched.

“Switchers are likely to be younger, more connected and upwardly mobile consumers rather than poorer, older households at risk of fuel poverty.

“Comprehensive reform must ensure that every consumer gets a fair deal from their energy company, not just those willing or able to switch tariff.”

Analysis by the IPPR also indicated that in parts of the country some households were paying up to £330 more than they neighbours, despite using the same amount of fuel. This indicates that some firms fail to offer consumers tariffs which properly reflect the cost of energy.

Mr Straw continued: “Tightening up the rules around tariffs so that the Big 6 are no longer able to use their oligopoly power to price out new entrants is one key reform.

“Ofgem must also crack down on firms found to be breaching their rules on cost reflectivity. Transparency alone will not do the trick.”

IPPR is now calling on the Coalition and energy regulator Ofgem to do more to remove anti-competitive practices in the energy market to encourage more competition between energy suppliers. Licensing requirements must also also be enforced to ensure that tariffs and cost-reflective, and must investigate suppliers who breach this.

Later this month IPPR will publish a report into the efficacity of the energy market as a whole, and the implications this has for the cost of energy.

This was posted in Bdaily's Members' News section by Ruth Mitchell .