Simplifying Energy Tariffs

After two years’ work the energy regulator Ofgem has now finalised its proposals on tariffs, under its ‘retail market review’. Following a commitment at Prime Minister’s Questions in October 2012 the Government is also legislating to provide powers on tariffs in the current Energy Bill. These powers are not strictly needed, given Ofgem’s ability to set licence conditions, but the Government says they are ‘backstop powers’.

Competition in the GB energy supply industry works best if customers find it easy to switch supplier, to better deals. The challenge is to strike a balance between getting simpler and cheaper tariffs for customers, while not actually setting final supply prices and stifling competition in the energy supply industry. Supply price controls were removed in the GB market following privatisation and the introduction of competition.