Industry-regulator OFGEM maintains that its goals regarding simplifying the
energy market are quite simple and sincere; indeed, it cannot be ignored that a
less-than transparent energy market has for too long been flooded with a surplus
of complicated-sounding tariffs that add varying degrees of confusion to the
process purchasing energy for one's home.
This assertion, which is accompanied by the assumed consequences of a cheaper and more competitive energy market, has developed into the spearhead with which OFGEM is pursuing its bold market reform plans; however, it is being widely-ignored that the maze of discounts and payment plans which OFGEM would happily see eradicated in fact benefit UK customers far more than the industry would care to admit.
Prior to that instigation of this heavily-contested industry-wide action, UK energy suppliers were in a position in which they could create tariffs structures that boasted a dizzying amount of stipulations in small, fine print; however, the ways in which suppliers are now being encouraged by OFGEM to structure their energy plans strictly marginalises the ways in which customers are able to save money on their energy bills.
Indeed, simplifying tariff structures does little in order to make energy more affordable. In truth, OFGEM's plans actually enable energy suppliers to establish a drastically higher baseline price for energy use that will never be as competitive as the majority of tariffs on offer at present – even when coupled with any number of discounts. Furthermore, because the majority of fixed-rate plans stand to be erased from the market, customers could be faced not only with the loss of vital discount plans, but also with the idea that ever-increasing household energy bills will never truly be capped.
Not only do these consequences of tariff simplification negatively affect customers, but they also pose a negative impact upon the already minimalistic level of competition amongst nation-wide energy suppliers. If all of the UK's 17 energy suppliers were to establish a like number of tariffs, it is fair to assume that an almost universal standard tariff price would re-establish the monopolisations some energy suppliers hold on certain regions within the nation – simultaneously crippling the existing market that encourages energy customers to switch providers in order to find the cheapest deals on offer. Therefore, in essence, the only ones who stand to gain from OFGEM's tariff simplification – as it currently stands – are energy suppliers.
In fact, several of the UK's foremost suppliers are already beginning to cash in on these reform ideas. British Gas announced last week an ambitious tariff restructuring which saw several popular discount tariffs removed from the market – meanwhile, Scottish Southern Energy chose in February to pre-empt OFGEM's reform legislature by radically reducing the number of tariffs they had on offer from a 68 to just 4. Needless to say, the majority of tariffs being removed from the market are those which boast fixed rates, online and dual fuel discounts and customer incentives – meaning that customers are already unknowingly being weaned off of the discounts that have kept them from living in potential fuel poverty.
According to the Daily Telegraph's Rowena Mason, around 80% of energy customers in the UK are currently participants of discounted energy plans that stand to be erased, and are set to lose an initial £130 in fuel discounts should the nation's other energy suppliers wish to follow the example of British Gas and SSE. UK homeowners were shocked last year to find that average fuel prices have risen to a high of nearly £1,300 per year – and, while the Department for Energy & Climate Change (DECC) predicts that up to 40% of UK households may be living in fuel poverty by year's end, OFGEM should recognise that their current plans for tariff simplification fail to benefit those who are truly in need.
It is for this reason that several energy suppliers have argued against the looming legislature, and have pressured OFGEM into delaying enacting the reforms; however, as previously stated, wheels have already been set in motion which have seen several energy suppliers commended for simplifying the industry – when in truth, they are only perpetuating a level of hypocrisy within the energy market that overcharges already wary homeowners.
With any luck, OFGEM may buckle under the pressure of critics and strongly rethink a number of its reform methods; indeed, tariff simplification is a noble pursuit – assuming that it is pursued in a fashion that truly benefits consumers. In the meantime, however, customers should recognise that a lengthy list of energy plans, while daunting, means a potential world of savings on annual household bills. A certain degree of confusion admittedly accompanies this level of choice; however, customers should find solace in the fact that there are 100% free and impartial energy services, such as Energylinx, that are prepared to sift through all of the fine print in order to find customers the best deals on the market.
(article from Energylinx - provider of comparison services to domestic customers)
This assertion, which is accompanied by the assumed consequences of a cheaper and more competitive energy market, has developed into the spearhead with which OFGEM is pursuing its bold market reform plans; however, it is being widely-ignored that the maze of discounts and payment plans which OFGEM would happily see eradicated in fact benefit UK customers far more than the industry would care to admit.
Prior to that instigation of this heavily-contested industry-wide action, UK energy suppliers were in a position in which they could create tariffs structures that boasted a dizzying amount of stipulations in small, fine print; however, the ways in which suppliers are now being encouraged by OFGEM to structure their energy plans strictly marginalises the ways in which customers are able to save money on their energy bills.
Indeed, simplifying tariff structures does little in order to make energy more affordable. In truth, OFGEM's plans actually enable energy suppliers to establish a drastically higher baseline price for energy use that will never be as competitive as the majority of tariffs on offer at present – even when coupled with any number of discounts. Furthermore, because the majority of fixed-rate plans stand to be erased from the market, customers could be faced not only with the loss of vital discount plans, but also with the idea that ever-increasing household energy bills will never truly be capped.
Not only do these consequences of tariff simplification negatively affect customers, but they also pose a negative impact upon the already minimalistic level of competition amongst nation-wide energy suppliers. If all of the UK's 17 energy suppliers were to establish a like number of tariffs, it is fair to assume that an almost universal standard tariff price would re-establish the monopolisations some energy suppliers hold on certain regions within the nation – simultaneously crippling the existing market that encourages energy customers to switch providers in order to find the cheapest deals on offer. Therefore, in essence, the only ones who stand to gain from OFGEM's tariff simplification – as it currently stands – are energy suppliers.
In fact, several of the UK's foremost suppliers are already beginning to cash in on these reform ideas. British Gas announced last week an ambitious tariff restructuring which saw several popular discount tariffs removed from the market – meanwhile, Scottish Southern Energy chose in February to pre-empt OFGEM's reform legislature by radically reducing the number of tariffs they had on offer from a 68 to just 4. Needless to say, the majority of tariffs being removed from the market are those which boast fixed rates, online and dual fuel discounts and customer incentives – meaning that customers are already unknowingly being weaned off of the discounts that have kept them from living in potential fuel poverty.
According to the Daily Telegraph's Rowena Mason, around 80% of energy customers in the UK are currently participants of discounted energy plans that stand to be erased, and are set to lose an initial £130 in fuel discounts should the nation's other energy suppliers wish to follow the example of British Gas and SSE. UK homeowners were shocked last year to find that average fuel prices have risen to a high of nearly £1,300 per year – and, while the Department for Energy & Climate Change (DECC) predicts that up to 40% of UK households may be living in fuel poverty by year's end, OFGEM should recognise that their current plans for tariff simplification fail to benefit those who are truly in need.
It is for this reason that several energy suppliers have argued against the looming legislature, and have pressured OFGEM into delaying enacting the reforms; however, as previously stated, wheels have already been set in motion which have seen several energy suppliers commended for simplifying the industry – when in truth, they are only perpetuating a level of hypocrisy within the energy market that overcharges already wary homeowners.
With any luck, OFGEM may buckle under the pressure of critics and strongly rethink a number of its reform methods; indeed, tariff simplification is a noble pursuit – assuming that it is pursued in a fashion that truly benefits consumers. In the meantime, however, customers should recognise that a lengthy list of energy plans, while daunting, means a potential world of savings on annual household bills. A certain degree of confusion admittedly accompanies this level of choice; however, customers should find solace in the fact that there are 100% free and impartial energy services, such as Energylinx, that are prepared to sift through all of the fine print in order to find customers the best deals on the market.
(article from Energylinx - provider of comparison services to domestic customers)
